The Country Manager,
What is your assessment of the performance of
My reflections on on the performance of our business in 2013 were that the year in question was a steady year and there were a number of big formative things that were done to set the industry on a good footing for growth, which will continue and potentially accelerate in 2014. We ended the year announcing a major managed services contract with MTN.
This is indicative of an important trend in the Nigerian telecommunications industry which saw a number of third party support engagements announced. We are building a very formidable ecosystem in the telecoms space where we have major companies taking major parts of the undertakings that have been for a long time, considered core activities by the mobile operators.
There was a strong growth in the number of customers in the year 2013. Operators gained a very significant number of customers last year and of course, we saw quality of service staying top of the agenda and noted that operators were working hard to keep up with the demand.
Data service is yet to come of age in
Ericsson is a major equipment vendor providing services to telecoms operators. To what extent have your operations impacted on telecoms growth in the country?
We are the leader in second, third and fourth generation technology. When digital telephony started in
Today, our business is more balanced between selling hardware on one hand, selling services on the other. There is a balance between the two businesses. So that is a slight change from where we were back in the early years but we expect both directions to grow. We will continue to provide hardware and services to our customers.
In addition to that, we also provide counsel to our customers, government, regulators about what is best practice in the industry. We share with Nigerian operators, what we have seen worked particularly well in other countries and we apply what has worked in other countries to Nigeria.
In the last 13 years of GSM operation in
Let's start with where it was, I have often remarked about how I would walk 20 minutes to the telephone room to make a phone call home when I was in the
Growing to 120 million customers at the end of 2013, is a pretty formidable accomplishment. If we think back the days before 2000, teledensity never got into double figures whereas in the space of a mere 10 years even 5 years, there were millions and millions of people who had access to telephony. They could reach any one on the face of the earth with the handset in their hand.
Even with the advancement in technology, subscribers still suffer poor service quality. Why is it so?
It is true that subscribers experience a level of frustration in service quality. When designing the mobile network, you put in all the capacity you need for the most intensive demand. The point at which you estimate that demand will be highest, is what you have to build your network for.
For example, if everybody wants to have dinner at one time and there are 10 of you in the house, your dining table must have 10 chairs but it means that apart from the once in a month dinner for everybody, the table may not be fully used every day and that is the same for mobile networks.
Mobile networks are dimensioned for the most intensive demand and most of the time that network is empty. At most, 25 per cent of all cell sites can be described as heavily used while the rest of the network are less heavily used. This is where the issue service quality comes in. Most times it is guess work, but it is guess work about how you should dimension your network, and that is the challenge. Sometime you see that there is a lot of density of people in a particular location, a lot of density in calling activity and then quality of service falls off. Unfortunately, it is those times that stick to the mind and condition our thinking.
One of the real problems about where the service quality issue originates from is the legacy. When the licences were given, there was really limited backbone transmission. What happens is that, you decide where you want to cover and the next thing you do is build a transmission network so that information can travel from one site through a local hub, onto a backbone network and terminate on the other side of the extreme. That did not exist in any meaningful sense, so it had to be built. MTN first built the Y'ellobhan, a microwave network until they encountered the difficulty with harmattan and the winds which obscure microwave and interfere with it. So they had to start building fibre. But fibre has its own problems in a developing country that is fast changing. Fibre frequently gets dug up or cut among changes in the landscape and so that disruption is very significant.
Creating that transmission network and maintaining it remains a challenge till this day because fibre is not as readily available as people would like it to be but also where it is available it quickly gets undermined. But the other thing is that it is an enormous cost and an operational complexity.
When I worked in
How can service quality be improved upon?
To improve quality there are some basic things to do. If we can improve access to power, that will solve a lot of the problems. Many of the operators are already thinking about talking to the distribution companies and doing something about it. If you think about
The second thing is in the area of transmission networks. I think that the government is doing some very sensible things. There is a ruling on sharing fibre infrastructure and not simply replicating it which makes sense. I think there are some bottleneck areas, where because of the nature of the bottle neck, it is hard to get a cost efficient price for access to fibre. So generally speaking, the open access arrangement is sensible because they provide for people to share. It is in a lot of people's interest to have them share fibre because of the enormous capacity in it.
In all of these, is Ericsson talking with the operators and suggesting better ways to improve service quality among telecoms operators?
Obviously this is known to the operators and it's being addressed because they are talking to us all the time about it. The problem is that the bigger networks have more points of failure and that means it's a bigger and more complex job to do. MTN has over 10,000 base stations and that means 10,000 more points of failure, in fact in every base station, there are about 3 to 4 points of failure and Etisalat has half the number of base stations and one third of the number of customers. Etisalat has a formidable challenge and they have done a very good job in building the network up to the standard it has gotten to. Just that MTN has a bigger problem and they also have to think carefully because there are areas in the network that you have to judge; how much capacity do I need? How many customers do I need to serve at peak period?
You talked about alternative power supply, looking at Nigeria's environment, what source of power supply do you think will fit into the system?
I would like to think that if the baseline is diesel generators then the easiest next step is really thinking about how to do a partnership with the generating companies and the distribution companies to access power and then deliver them to the cell sites. In many of our sites we have blue batteries which are high capacity batteries that hold the power for a long time without too many loses. In some instances we can use solar. We are hundred miles north of the equator, so solar may make sense. For solar however, it is not very clever with the high capacity system. Solar is usually used where there are low energy base stations for small distances. We have not found solar to work effectively where you have got high demand of 300 to 400 watts. You will need a solar panel which is the size of a whole plot to drive a full power base station and that just doesn't scale.
For the small site, we call them rural coverage site where you want to cover two or three small villages then you can put up a low power base station with a limited reach and that will be sufficient. You have that with the battery system. This solution uses about 30 to 40 watts compared to ten times that for a full size base station.
Do you see migration from 3.5G to 4G LTE as a solution to address poor service quality in the country?
Yes and no, actually. I think that the challenge is one that over time will be resolved. In
LTE will aid operators in terms of the efficiency in which their resources are used and also because it gives them the opportunity to get more yield from their networks and with the hope that they will be able to do something called re-farming which is to re-use some of their existing spectrum which is being used today. So enormous improvement in efficiency, improvement in yield because of the data customers and what they are prepared to pay for a higher speed data and that benefits the operators. So it's a good thing. It's not about the technology per se but about making sure that the networks are optimised to give the best customer experience.
In Etisalat's network, they made a change of vendors and they mentioned that they made an extra
You talked about operators entering into managed services. What would you say is driving this. Is it the need to improve service quality?
We offer these services for many companies in different countries and therefore we have access to a level of expertise. Operators are operators, but generally speaking, we would have more experience over time. So we bring that deeper experience, ways of working, tools and methods to bear.
Some of those the equipment are very expensive for a network to use for just one network. MTN is a big customer, but even for a big customer we manage total networks with over a billion customers globally. So some of the tools that we can deploy and then share globally are much more cost effective than MTN could ever make them.
The big thing is the opportunity to achieve scale, therefore gain access to much more sophisticated tools and systems in ways of working. The contracts we do in
CDMA operators are not doing well in
Even for the people who have GSM, the LTE technology is still a new technology so they have to move to that. If they have 2G, 3G technology devices then they can make additions that are not too expensive or demanding. If you look at markets where there is intense competition, where prices have fallen strongly and where margins are under pressure, then new ways of working and new models come to mind. New model is what
The regulator is about issuing new licences and it is planning to license infrastructure companies this year. Do you think it will improve broadband services going forward?
If there are more infrastructure companies out there, that is a good thing. But infrastructure is really expensive. To lay fibre costs anywhere between
In relation to providing wholesale services to mobile operators through the infrastructure companies, that will transit traffic from their base stations to various locations and to data centres, yes there is an active market for that. It's not clear how much fibre there is on the ground and so the decision whether to add is one that has to be considered very carefully because everybody says they have got 10 to 15 kilometres of fibre. It's not definitely clear exactly where it is to know where there are bottlenecks. That is a study that has to be made and maybe the government can help by publishing an online data based on where there is fibre, how much there is and how much demand there is.
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