5G: Telcos mull phased rollout, fear consumers’ weak purchasing power

TELECOMMUNICATION companies may delay the commercial rollout of fifth-generation technology due to the weak purchasing power of their customers as a result of inflation.

In a panel session during The AfricaNXT Conference 2022, the Nigerian Communications Commission disclosed that Nigerians might have to buy new devices in order to be able to enjoy 5G services or use alternate broadband devices.

The NCC team that spoke during a panel session said most devices present in the nation do not have 5G capabilities. They added that in two years, there would be one billion 5G devices in the world.

According to GSMA, the industry organisation that represents the global interests of mobile network operators, most people in Nigeria and other sub-Saharan African countries spend 100 per cent of their income on entry-level Internet-enabled handsets.

Ericsson in its ‘Mobility Report: November 2021,’ disclosed that 5G subscriptions would hit 660 million globally in 2021. It added that counties like Nigeria would begin to have discernible amounts of 5G subscriptions by 2022.

In an interview with our correspondents, experts have said rising inflation may hamper the commercial rollout of 5G services in the nation as consumers may not have enough disposable income to buy 5G devices.

A source in one of the telecommunication companies confirmed that telcos were concerned about recouping their investment cost on 5G. According to the source, one of the companies that won the licence for 5G in the nation is planning to prioritise rollout in industrial areas for now.

The source said, “In rolling out, we would prioritise the industrial application of 5G. You know what 5G can do to gaming, the companies focused on things like these are going to be our first customers. And also, people that really have money, who want to experience 5G, will be able to afford the devices.

“The rollout is capital intensive. Even for us, we cannot roll out en masse. The cost of bringing in the equipment for instance is expensive. And after bringing in 5G equipment, if people cannot access it, we would run at a loss.

“Although in bridging the gap, there is something called device funding, where we partner with OEMs that will bring in the devices. People that are interested in these devices will pay instalmentally. That is another way of managing that. So, consumers may not totally pay for the devices at once. If we make device funding facilities available, people will be able to pay in bits.

“More than anything else, we are prioritising the industrial applications more because companies would be able to pay for it. Gradually, we would roll out to consumers, individual users. Our rollout would be focused mostly on Lagos, maybe Abuja and Port Harcourt, and maybe Kano. At the initial stage, 5G isn’t going to be an en-mass market rollout.”

According to a professor of Economics and Public Policy at the University of Uyo, Akpan Ekpo, people who want to use 5G will need to spend more.

He said, “For people who want to use 5G, they will spend more. However, not everyone will want to use 5G, which is a problem. If the macroeconomic condition of the nation improves, people will want to use 5G. For now, 5G is for people who can afford it, maybe the elites.

“This means that a lot of people are excluded from technology. The operators must have done their research to know how many people must use 5G for them to be able to make good returns.

“Definitely, if few people are using 5G they may not recoup their returns and this becomes a problem. So, I suspect that if they feel that they may not recoup their returns, they may bear part of the cost. Companies make what we call maximum profit. They may just make a normal profit.”

A senior lecturer of Economics at the Pan Atlantic University, Dr Olalekan Aworinde, added while 5G has cost benefits, rising inflation would mean that people have to spend more to get 5G devices.

He said, “There are costs and benefits to 5G rollout to the economy at large. Presently, the devices we have now would not be able to accommodate a 5G network, so if it is not able to accommodate a 5G network, this means we may need to purchase new devices in order to be able to use the 5G network.

“The implication of this is that people will have to spend more to purchase those devices. On the consumer side, there is going to be an increase in the level of expenditure.

“My worry here for the consumer, especially with rising inflation, and since some of them are salary earners with fixed income, is that they won’t be able to afford it.”

The President of the National Association of Telecoms Subscribers, Adeolu Ogunbanjo, said the rollout for 5G would be shaky as a result of low disposable income.

He said, “Things are getting inflated. Inflation is now getting high. A lot of things are getting more expensive, costlier than in the last one, two months.

“Definitely, low purchasing power will affect the rollout, and the teledensity will obviously decrease because people will not be able to readily afford phones that will be used to deploy the 5G technology.”

He added that people might continue to use 2G, 3G, and 4G devices for a while until they are able to afford 5G devices.

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