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Video content: Data cost denying Nigerian telcos revenue

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Analysts say a reduction in the cost of data will help operators earn more from video content distribution

 

T

elecommunications operators in Nigeria have been unable to maximise revenue from their recent venture into video content distribution because of the high cost of data, Afrinvest has said in its telecoms industry report.

 

 

Aside from that, the investment company identified weak connectivity as another factor denying the operators revenue from the new services.

 

 

While highlighting new trends in the telecoms space, Afrinvest noted that telecom operators in Nigeria have joined the video content distribution business, just like other operators globally, although at a slower pace. According to the report, with the likes of MTN music+, SuperTV app (9mobile), Airtel Wynk, Airtel Play Portal, 3flix Mobile TV and now Airtel TV, the content space is gradually gaining grounds in Nigeria.

 

 

Globally, video streaming services amassed $245.3bn in 2018 and is predicted to reach $688.7bn in 2024, at a CAGR of 19.1 per cent. “This creates an environment that offers the opportunity for expansion in the telecoms industry. Examples include AT&T, 9mobile, and recently, Airtel Africa (Airtel TV),” the report stated.

 

 

Afrinvest, however, noted that users required a stable internet connection, which many operators in Nigeria are not currently able to deliver.

 

 

“A major source of revenue is through data consumption needed to stream this service. For instance, Airtel TV is available to subscribers on its network and can only be viewed through the purchase of data from its network. This strategy prevents the company from increasing revenue.

 

‘Nonetheless, success in the content space will depend on the ability of telecom providers to reduce the cost of data, provide a strong internet connection and add more recent content to the apps,” the company advised.

 

 

Before now, some stakeholders, including the Minister of Communications and Digital Economy, Dr. Isa Pantai, had appealed to the telcos to reduce the cost of data, especially in the wake of the coronavirus pandemic pushing many Nigerians to rely on the internet for many activities.

 

Currently, one gigabyte of data costs N1000 on the average across the networks. While this may be lower compared to the cost about five years ago, it is believed to be far higher than what is being charged in other countries.

 

According to the global coalition for cheaper access, Alliance for Affordable Internet (A4AI), the price of 1GB of mobile broadband data should not be more than two per cent of monthly income.

 

 

Applying this to the new minimum wage of N30, 000 in Nigeria, it means the cost of 1GB data should not cost more than N600. That also goes to say that when the minimum wage was N18, 000, data subscription of 1GB should only cost N360.

 

 

The operators have, however, attributed the high cost of data to several factors in the operating environment. These, according to the operators, include the issue of multiple taxations, high cost of Right of Way, and the high cost of building infrastructure.

 

 

Meanwhile, the Nigerian government is set to raise the bar for the operators in terms of the speed of their services. While most of the operators’ 4G services currently deliver a speed of 1.5 megabytes per second, (Mbps) or less, the government in its new National Broadband Plan (NBP 2020-2025) has raised the benchmark speed for broadband service in Nigeria to 25 megabytes per second.

 

 

According to the minister, “this new broadband plan is designed to deliver data download speeds across Nigeria, a minimum of 25Mbps in urban areas, and 10Mbps in rural areas, with effective coverage available to at least 90 per cent of the population by 2025.”

 

 

This means that broadband users in a city like Lagos would be able to download one gigabyte video under one minute, while people in the rural areas would be able to download the same in 160 seconds.

 

 

 

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