High cost of 5G devices affecting launch in Nigeria —IBM

As Nigeria prepares for its 5G rollout in August, Temitayo Jaiyeola speaks to Vice President, Global Telecommunications Industry, IBM, Craig Wilson, on the possibilities, challenges, and affordability of this new technology, and how Nigerians will benefit from it

A lot has been said about the potential of 5G. With your experience in the industry, how will 5G transform Nigeria’s digital economy?

The immediate opportunity for 5G in Nigeria’s digital economy is to use Fixed Wireless Access to bridge the gap in enhanced broadband connectivity for homes and enterprises, both large and small. Key sectors in the region that could benefit include manufacturing, agriculture, financial services and oil and gas industries. An important benefit of 5G is that it enables open ecosystems to thrive. Open, cloud-native architectures and operating models will allow Nigeria to develop a vibrant local ecosystem that can help drive innovation and economic development. 5G growth in the region is expected to develop rapidly in the second half of the decade and continue into the 2030s. The economic impact of mid-band 5G will be around 0.4 per cent of GDP in 2030 in Sub-Saharan Africa.

Since 4G rolled out, penetration has peaked at around 40 percent in the nation. Will the uptake of 5G perform better than this? How can operators roll out this network in an effective way?

GSMA Intelligence believes 4G will remain dominant, with 5G connections making up only 3% of total mobile connections in Africa by 2025.

The roll-out of 5G will be carried out in phases, beginning in urban areas with a need for high-quality broadband, and Nigeria expects to have 5G coverage of major cities by 2025, according to Nigeria Minister of Communications and Digital Economy Isa Pantami. The International Telecommunication Union said regional governments must streamline regulatory conditions to facilitate 5G deployment, providing regulatory flexibility for innovative 5G propositions and addressing the consumer barriers to adoption – both of which will contribute to effective rollout.

Nigeria has a big Internet access gap, is 5G primed to bridge this gap? For 5g to have an impact on the  continent, how much investment is from a continental perspective?

A sweeping majority of Nigerians – 88 per cent – lack access to smartphones with 4G-like speeds for Internet connection and the capacity to use the Internet on a daily basis, according to the Alliance for Affordable Internet. Based on the access and backhaul infrastructure available in the country, a model for the deployment of 5G services in urban, suburban and rural environments must be developed. Today, 4G network services are only available in urban areas, so a continued investment toward rural areas is essential. A phased 5G network rollout, starting from operational fibre optic and microwave node locations, is recommended for an impactful transition. Today, Ethiopia, Botswana, Egypt, Gabon, Kenya, Lesotho, Madagascar, Mauritius, Nigeria, Senegal, Seychelles, South Africa, Uganda, and Zimbabwe are all testing or deploying 5G. Nigeria issued spectrum licenses in March, and is hoping to possess the widest 5G network in the continent this year. The Nigerian Communications Commission has indicated that it is targeting August 2022 for commercial deployment.

How will 5G accelerate the fourth industrial revolution on the continent and in Nigeria?

The most impactful benefit of 5G is by creating an underlying platform that enables existing technologies to be deployed in new and better ways, for example IoT. While the claims that 5G will usher in the fourth industrial revolution are bold, they are indeed possible. Opportunities in agriculture and healthcare are key verticals where 5G will enable significant transformation in both operating cost models and in the ability to introduce exciting new innovations that were not previously possible.

With 5G, seamless online actions are set to create more data traffic from the continent. What are some of the security challenges this might pose?

The move to 5G networks and distributed architectures introduces a few cybersecurity challenges to be addressed, including: Expanded threat surface across a hybrid cloud network, with a vast number of distributed end points that need to be secured; complexity and scale heightening the need for AI and automation to be infused across the security landscape; a shortage of cybersecurity skills and personnel. The best way to safeguard against these inherent challenges is for 5G Operators to “design in” security across every part of their organisation, with modern DevSecOps methods and CI/CD processes.

 Faster Internet will create a better backbone for Over The Top services such as WhatsApp calls, chats, and more, threatening traditional revenue streams of telcos. What can telcos do to create new revenue streams?

Telcos must use the move to 5G and cloud native technologies to regain control of their business and their architectures. A study last year by the IBM Institute of Business Value found that a majority of high performing telecom operators expect to continue to outperform the industry by adopting secure, open hybrid cloud architectures and ecosystems to capture “platform control points” consistent with digital businesses.

There have been questions raised on the affordability of 5G. Is this a legitimate concern?

The cost of a 5G device currently runs around  $350 USD, making them unafforadble for many. However, some device manufacturers have commited to bringing costs down to around $150 USD. Still, many industry analysts believe that 5G devices need to be at about $50 USD to support mass adoption across Africa. The high cost of 5G phones is a major impediment, and it impacts the launch the fifth generation network on a commercial scale when there are not enough mobile devices capable of receiving it. We can see the effects on 5G rollout when we compare Africa to other continents. Globally, the rollout of 5G has been in process since 2019. Yet deployment across Africa has been much slower, with only 6 African countries having launched the network.

 COVID has made digital the new normal on the continent, how prepared is Africa, and Nigeria? And what are the key lessons if the continent is to leverage this new normal?

While Africa has been hit hard by the COVID pandemic, workers and enterprises have responded to the challenges with great resilience and adaptability. However, the pandemic fundamentally altered where and how people work, upending many long-standing norms and practices. One of the most prevalent changes to training and collaboration has been the growth of digital training courses, which have been adopted by more than half of enterprises. The three key takeaways to leverage this new normal are: The first is the deregulation to accelerate the growth of large firms. The growth of large firms increases a country’s resilient economic transformation. With more assets, they are inherently more resilient and are better equipped to endure economic storms. Policymakers should prioritize policies for facilitating the entrance and growth of such firms, through domestic deregulation and encouraging foreign direct investment.  The second one is agricultural productivity-led growth and the development of the agro-food system. A second strategy leading to increased resilience and transformation is to improve agricultural productivity-led growth and the development of the agro-food system. The third is the support for smaller businesses. Globally, small businesses have been hit the hardest by the pandemic. Those businesses that are best able to adapt to digital ways of working (including remote work) and that are more insulated from global supply chain constraints are in a better position to rebound. Additionally, the ability to improve productivity or reduce cost through cloud based “as a Service” consumption of compute and connectivity has benefitted many sectors of the economy – both large and small.

What are some of the efforts IBM is making to improve the telecommunication industry on the continent?

There are a few significant efforts IBM is making in Africa to support telecom development, including Digital4Agriculture Initiative. IBM’s Digital4Agriculture Initiative (D4Ag) aims to foster African start-ups in the agricultural sector and strengthen the long-term living conditions of local small farmers by increasing productivity and quality. With the help of digital expertise from IBM Services and access to accurate weather data provided by IBM’s The Weather Company, D4Ag is helping over 36 African agricultural companies better prepare for the digital future. Another one is satellite towers. IBM is working with a global business partner to introduce AI based solutons to reduce cell tower energy costs and improve sustainability. We are working with a large regional telecom operator to pilot this solution in Africa. The other one is micro-lending via Blockchain. In many emerging markets, food retailers along with smallholder farmers, struggle to secure loans and develop a credit history. And without the proper financing, scaling a business is nearly impossible. To tackle this, IBM has rolled out a pilot withh Kenya-based food logistics startup, Twiga Foods, to facilitate micro-lending options for food vendors using blockchain.

Increasing data traffic is inspiring a rise in the number of data centres in Nigeria and Africa. What level of new growth is expected in the data centre sector? Is Africa primed for fullscale local cloud hosting capabilities?

Technologies such as the cloud, big data, and IoT generate more data through high-end applications and need more efficient systems for data processing. These technologies are growing the demand for advanced IT infrastructure in the African data center market. Enterprises prefer servers that can reduce space in the data center environment without affecting performance. The competition between branded and ODM server suppliers will continue because multiple enterprises opt for server infrastructure based on open community designs (OCP). The increasing demand for server shipments will continue to grow moderately as enterprises move to the cloud or colocation platforms for their IT infrastructure operations. The data centre market in Africa has attracted significant investments in recent years, led by Nigeria, South Africa, Kenya, Egypt and Ethiopia. Global cloud service providers, including IBM, are expanding their presence with new cloud regions. In fact, more than nine data centres in Africa have added as much as 30,000 square feet or more of additional space each in 2021. Several local governments are supporting these initiatives by developing special economic zones, and industrial parks, which provide tax exemptions for data center development.