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

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

The Nigerian Communications Commission stated at a panel discussion at the AfricaNXT Conference 2022 that Nigerians may need to purchase new gadgets or use alternate broadband devices in order to enjoy 5G services.

During a panel discussion, the NCC team stated that most devices in the country do not have 5G capability. They also predicted that one billion 5G devices would be in use around the world in two years.

according to the GSMA, an industry organization that promotes the global interests of mobile network carriers.

Most people in Nigeria and other Sub-Saharan African countries spend 100% of their money on entry-level Internet-enabled handsets and according to Ericsson’s ‘Mobility Report: November 2021,’ global 5G subscribers will reach 660 million in 2021.

It went on to say that by 2022, countries like Nigeria would have noticeable quantities of 5G subscriptions.

Experts also revealed that growing inflation could stymie the commercial launch of 5G services in the country since consumers may not have enough disposable income to purchase 5G devices.

According to a source from one of the communications companies, telcos were concerned about recouping their 5G investment costs. One of the companies that got the 5G license in the country, according to the source, is planned to prioritize rollout in industrial zones for the time being.

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 Akpan Ekpo, a professor of Economics and Public Policy at the University of Uyo, people who wish to use 5G would have 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.”

While 5G has cost benefits, Dr Olalekan Aworinde, a senior lecturer of Economics at Pan Atlantic University, added that growing inflation would mean individuals would have to spend more to purchase 5G gadgets.

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.”

Adeolu Ogunbanjo, President of the National Association of Telecoms Subscribers, claimed the 5G rollout would be fragile due to low disposable money.

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 however noted that people may continue to use 2G, 3G, and 4G devices for a time until they can buy 5G gadgets.

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