The Way Forward for CDMA in Nigeria

Akin wove his way through the bustling Lagos traffic and finally arrived at the client’s office for the scheduled debrief session just 10 minutes ahead of time.

He hoped to use the few spare minutes he had to do some due diligence to the project at hand and proffer some tips to the client on the mode of execution during the meeting.

He brought out his USB device to surf the internet only to discover there was still no internet connection. Few weeks ago, it was announced that his internet provider had been acquired by a giant GSM operator, he thought that meant the services could be spread to a wider coverage area as he usually had limited coverage when he travelled out of town.

He had subscribed for the annual plan as he had been doing for the past three years and it helped to ensure stability for his consulting business which depended largely on internet access.

He would have to tether his phone and use his GSM phone internet connection which bills him for every kilobyte and has proved to be a very expensive option.

Akin and several other young people like him across Nigeria who have active subscriptions on their CDMA network have been left to wonder if the news of their provider’s acquisition means a sudden termination to their services or if the discourse on the total dearth of CDMA in the country is one to believe.

CDMA which stands for Code Division Multiple Access is a mobile communication technology where several transmitters can send information simultaneously over a single communication channel.

CDMA uses spread spectrum technology allowing many users to occupy the same space time and frequency allocations in a given band/space.

CDMA has been globally acknowledged as a better technology compared to alternative technologies such as Global System for Mobile Communications (GSM) and is also believed to be more cost effective for operators as the CDMA capacity advantage leads to lower tariffs.

Interestingly, the first set of Private Telephone Operators (PTO) in Nigeria offered services via the CDMA technology. Multilinks was the first to begin operations in 1998 while the likes of VGC Communications, Intercellular, Mobitel and EMIS were the preferred networks of many Nigerians in the early days of the telecom revolution when the new GSM entrants had exorbitant call rates with SIM cards being sold as high as N30, 000 upon entry.

During the period of its dominance, CDMA provided excellent voice clarity for both local and international traffics while its data quality has often been described as first rate yet it is still unknown why the CDMA sector in Nigeria is nearly extinct.

A close look at the Nigerian Telecommunications industry, one can deduce that the business model of the average Nigerian CDMA operator made it unable to compete on the same platform with GSM service providers. Almost all the CDMA operators where locally developed, with no international investors or technical partners involved in the management of their service.

GSM providers like MTN, Airtel (formerly Econet), Globacom and Etisalat due to their size and international affiliations were able to attract financing and support from foreign banks and international finance brokers.

Another factor that could have worked against the CDMA operators could be there network spread, most of them were located in urban cities like Abuja and Lagos, extending their services to other regions or cities meant going back to the regulator for additional spectrum which usually came at a cost. The guidelines on their licensing hindered their spread.

This inability of CDMA operators to spread massively in the beginning compared to their GSM counterparts is probably the major impediment to growth in that sector.

Stiff competition and the tough business landscape in Nigeria made co-location impossible in the early day thus operators had to build and maintain their telecom infrastructure across the country.

The announcement earlier in January 2016 that the only standing CDMA operator in the country, Visafone Communications Ltd. had been acquired by mobile network giant, MTN put the current count of CDMA operators in the country at zero. At the time of its acquisition, Visafone had about 2 million active subscribers who are currently in limbo on the status of their services after the acquisition.

“I hope the government through the NCC can give the CDMA operators a favourable licensing environment so as to continue operations, Akin said, “Because there have been at least six CDMA operators in Nigeria from Multilinks to Starcomms who have either exited the market or folded up citing unfavourable business conditions as a cause. To paint a clearer picture, in 2001, there were 12 CDMA operators in the country and at 2016 there is none.”

Perhaps due to the highly competitive environment among the GSM operators that causes them to churn out varieties of exciting products for their subscribers, at the same time lowering call tariffs and cost of SIM cards.

This could have taken its toll on the CDMA operators who continued to lose subscribers and at a time when the GSM operators had about 148 million active lines, the CDMA operators could only boast of 2 million.

While the over 2 million subscribers like Akin are in an indeterminate state as to what will become of their subscriptions, the more nagging concern is of what the future holds for CDMA operations in the country and the telecommunications sector at large where the GSM operators are the ones who have the major control of the market.

It has been predicted that in the near future, mobile operators on different platforms including GSM and CDMA will migrate to the Long Term Evolution (LTE). With LTE operators will get a speed of up to 37.5MB per second on the device as against the 3.1MB that is currently available on the 3G networks.

Observers are of the opinion that MTN acquired Visafone to access the 800 MHz spectrum band, which will enable it provide 4G LTE services.

Earlier in 2007, MTN bought VGC Communications Limited (VGCCL), a Lagos-based Private Telephone Operator licensed by NCC to provide cabling and radio, telephone services nationwide and had laid extensive fibre optic cables, and Internet service provision.

This places MTN in a position to be a single dominant player in the voice and data markets in Nigeria’s telecommunications industry.

The question in the minds of many in the light of recent developments is ‘how will the CDMA sector thrive if it is not proactively encouraged by the NCC to do so?”

Pundits however believe that there is hope for CDMA because 3G technology performs better on CDMA while the Point of Sale (POS) Terminals, the key driver of the Central Bank of Nigeria (CBN) cashless policy initiative works better with the CDMA technology than with the GSM technology.