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Addressing cost issues in 5G

Nigeria is on the verge of deploying 5G as the government has given the telecoms regulator the go-ahead for the implementation of the policy. Many stakeholders are, however, worried that the service may not be affordable to many Nigerians due to the high cost of securing spectrum by the operators. SAMSON AKINTARO reports

With the recent approval of the country’s 5G policy by the Federal Executive Council (FEC), Nigeria is set to join the rest of the world in deploying the latest technology that has been described as an economic booster. Already, the Minister of Communications and Digital Economy, Prof. Isa Pantami, has directed the Nigerian Communications Commission (NCC) to prepare for immediate and effective implementation of the 5G policy for the quick rollout of the technology. While the service, when deployed, is expected to impact every sector of the economy and provide opportunities for many Nigerian youths, there are concerns that many Nigerians may not be able to afford the service. This is premised on the high costs of deployment, which include the cost of securing the spectrum from the Nigerian Communications Commission (NCC) and other associated fees.

FEC’s approval

Announcing the approval of the 5G policy by the Federal Executive Council earlier this month, the Minister of Communications and Digital Economy, Dr. Isa Pantami, said National Frequency Management Council (NFMC) would soon release 5G spectrum to NCC for the Mobile Network Operators (MNOs) that meet all the required conditions. According to him, the National Policy on 5G was developed over a two-year period due to the need for extensive stakeholder engagement and the need to ensure adequate public awareness and sensitisation. “The stakeholder engagement was thorough and multi-sectoral in nature. It also took into account the report of the three-month 5G trials that commenced on November 25, 2019. The report critically reviewed and studied the health and security implications of deploying 5G in Nigeria,” the minister stated. He added that leading international organisations such as the World Health Organisation (WHO) and the International Telecommunications Union (ITU), an organ of the United Nations, had confirmed that the deployment of 5G networks leave no adverse health effect and are safe. While ordering NCC to begin implementation immediately, Pantami said that with the approval of the 5G national policy, which was a product of extensive consultation, “the next big task ahead of NCC is to begin immediate implementation to push forward the country’s march to the increased digital transformation of the economy.” In response to the minister’s directive, the telecoms regulator has also announced that it would soon publish an implementation roadmap for the deployment of 5G across the country with service roll-out obligations for telecom operators.

Operators’ concern

Meanwhile, as preparation continues on the processes that will lead to spectrum auction for the deployment of the service, operators have expressed worry over the cost of the resources that will be auctioned by NCC. Speaking on behalf of the operators, President of the Association of Telecommunications Companies of Nigeria (ATCON), Ikechukwu Nnamani, had noted that the high cost of spectrum would make the service inaccessible to the masses and may hinder the rollout of the service. While acknowledging that 5G deployment is far more capital intensive than 4G and other lower technologies, he said Nigerian Senate had, during a recent public hearing on the technology, expressed concern that the operators might pass the cost to the subscribers. “There is no doubt that the operators are going to spend a lot of money to deploy 5G and they will have to recoup their investments from the service. The only way the cost can be lowered for the subscriber is for the telecom regulator to make the 5G spectrum cost as low as possible,” he said. More worrisome for the operator is the plan by NCC to increase the cost of spectrum by 400 per cent. This is part of the provisions of the draft spectrum regulations recently released by the telecoms regulator. Spectrum, the frequencies that are used to transmit sound and data across telephones, is considered as the life-blood of a telecom operator. For 5G deployment, the Commission had recently disclosed that each slot of the spectrum would be going for a fixed price of N75 billion, adding that through auction, it could go as high as N100 billion.

Operators’ reactions

Speaking at a public hearing organised by NCC on the regulations, the telecom operators pleaded with the regulator to maintain the status quo in terms of spectrum pricing. Specifically, Airtel noted that the 400 per cent increment would have a negative impact on the industry, especially with the need for more rollout of 4G networks and the impending 5G. According to the report of the public hearing, “Airtel requested the Commission to retain the subsisting regime to support the expedited deployment of 4G/5G technologies for the continued growth and development of a more robust digital economy.” Similarly, VDT Communications, another telecom operator, “observed that the unit price perMHz for each licensing region was increased by 400 per cent and opined that there was no clear basis to arrive at the unit price per MHz.” The company suggested that the second schedule to the regulations should be reviewed to consider and reflect the market value, which should be directly proportional to frequency spectrum size. However, responding to the concerns of the operators, NCC said the pricing formula was set out in 2004 and the present calculation was based on Consumer Price Index. The Commission described the Frequency Spectrum Regulations as a vehicle that enables the Commission meet its sole and exclusive mandate in Section 121 of the Nigerian Communications Act by equitably assigning this scarce national resource. It added that the purpose of the review was to further ensure that frequency spectrums are assigned and managed in a way that ensures fair pricing and efficient deployment of attendant services.

Choice for subscribers

While many Nigerians are anticipating the launch of the technology, which promises a better experience and creates new possibilities, the cost factor may hinder many from using it. However, according to the ATCON president, Nigerians, who may not be able to afford 5G service, would continue to enjoy the current 3G and 4G. According to him, just as the arrival of 4G did not end 3G and 2G, the launch of 5G in Nigeria will also not end other technologies. “The consumer will have the freedom to choose any technology they want as all will be running side-byside,” he said. Corroborating this, the Director of Technical Standards and Network Integrity (DTSNI) at NCC, Bako Wakil, said the Commission had chosen the 3.5GHz spectrum band for 5G deployment in Nigeria because it allows other technologies to run concurrently. “We are not going to have a complete 5G network in Nigeria, the technology will work alongside 4G, 3G, and 2G,” he said.

Last line

While it is good that the subscribers would be able to continue with other technologies after 5G had been deployed, NCC needs to look into the issue of pricing, starting from the spectrum auction to service delivery, to ensure that the masses are not left out of the 5G revolution.

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