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<h1 class="title">Nigerian online content and services begins to make inroads despite the lack of affordable, reliable broadband</h1>
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<p><a href="http://www.balancingact-africa.com/news/en/issue-no-578/top-story/nigerian-online-cont/en">http://www.balancingact-africa.com/news/en/issue-no-578/top-story/nigerian-online-cont/en</a></p>
<p><br></p><p>Nigerian bandwidth is improving but ever so
slowly. There is no sign of a broadband strategy to power this process
forward. However, despite this unpromising soil for growth, there are a
number of interesting start-ups in the online content and services space
that are beginning to establish themselves. Russell Southwood tries to
read the tea leaves in a country where data is hard to come by.</p>
<p>At STM1 level, international bandwidth is now down to US$225-250 per
meg and will continue to drop once WACS and ACE become operational.
There also some signs that up-times are improving on national routes,
particularly as carriers fight it out to deliver international bandwidth
from Glo and Main One. </p>
<p>Slow improvements on the data access front</p>
<p>However one operator who buys on this route says that carriers still
only achieve around 95% up-time. Nigeria has three big cities where the
Internet needs to establish a critical mass – Lagos, Abuja and Port
Harcourt – which is which is why performance on routes like these is
critical. Regular use will not become a fact of life if the service is
not reliable to the customer.</p>
<p>The key barrier now is the high cost of delivering this bandwidth at a
wholesale level. One operator told us that wholesale capacity delivered
in Lagos cost US$500 against US$2,000 in due to high national backbone
charges and the same story came back from a range of different people.
There are five carriers on this route but magically they all seem to
offer broadly similar rates.</p>
<p>Among others, Glo has bought down retail customer data prices by 50%
over past year. Prices will continue to go down as volumes rise. One
operator reported a 60-75% jump in data use and another told us that
there had been a five fold increase in data requirements for a
well-known smartphone. According to Main One, the University of Nigeria
had bought a 45 meg connection and is already bursting out of it. But as
one interviewee told us:”Internet is still a relatively expensive
experience.”</p>
<p>The use of smartphones and feature phones continues to rise. One of
the larger mobile operators already has 60% of its subscribers on
S40/Java devices. Smartphones are no more than 10% but this is a small
percentage of a huge number of subscribers.</p>
<p>60% of Glo’s 17 m active and non-active users have S40/Java devices.
Smartphones are no more than 10% and many are bought in the grey
market. Another large mobile operator says it 25% of its subscribers on
feature phones. Banky Ojutalayo, Executive Director, Starfish Mobile
pointed out that:”People continuously change phones, maybe 2-3 times in
12 months for reasons of fashion and theft.” No right-minded middle
class Nigerian has less than 2-3 phones.</p>
<p>Tablets? There are probably tens of thousands out there. In June of
this year, I saw no tablets in a weeks interviewing in the tech
community. This time I saw a much larger number. News channel Channels
TV is doing an iPad app which will be launched shortly. But one person
reported frustration at the bandwidth not being good enough to download
Blackberry apps.</p>
<p>Local access delivery continues to be a weak spot. However, one
operator is planning to roll out near ubiquitous Wi-Fi coverage in key
urban centres in the next 12 months. Glo is testing LTE and waiting for
spectrum to be allocated and MTN is provisioning its network in
readiness for LTE.</p>
<p>Local access is still mainly through wireless: on 3G (which is much
better than it was bit still not great) and Wi-Fi (which is again better
but not really yet delivering You Tube streaming levels everywhere).
You can get seamless You Tube streaming on parts of Victoria Island (VI)
but not really elsewhere. And as Nigerians will be the first to tell
you, VI is not Nigeria.</p>
<p>Able to stream video on VI but less well elsewhere. Afam Edozie,
FiCres Capital, an investor in WiMAX provider Swift said: “The
bottleneck is the last mile. Rolling out infrastructure (at this level)
is challenging”.</p>
<p>Someone who attended a meeting with mobile operators in January this
year says that with one exception, they all failed to spot the coming
importance of data. There’s a mindset issue. In one of our
conversations, the interviewee was at pains to point out that there were
literacy problems that constrained data use. But it emerged that 70-80%
of its subscribers used SMS.</p>
<p>Despite a steady trickle of stories in local paper Business saying
that generating capacity was going up and service delivery getting
better in Lagos, I met few people who few people who found that this had
happened either in their business or at home. Getting regular energy is
a key issue for an economy as large as this and the potential savings
are enormous. One interviewee said he paid US$200 a month to the
electricity company and US$1,000 in generator costs at home and US$2,000
a month on generator costs in his home.</p>
<p>Despite these difficulties, a much larger “critical mass” of Internet
use is beginning to take hold and new content and services start-ups
are beginning to take advantage of this new-found audience.</p>
<p>Jobberman begins to change how the jobs market </p>
<p>Jobs site Jobberman started in 2009 when the founders were still in
College. As Ayodeji Adewunmi tells it:“It didn’t require much capital
and we knew we had the technical skills to develop it. We knew the
unemployment situation in Nigeria was particularly high amongst young
people aged 25-45. We wanted a better user experience and to help people
better their chances.”</p>
<p>People use the site not only to get new jobs but those in work use it
to benchmark their salaries and take the opportunity to see whether
they can get jobs outside their immediate experience.</p>
<p>And the business model? It makes money from the employer side as they
pay a fee to post a job usually for 30 days and it is free for the job
seeker. There are 1,800 jobs on the site at any one time that are live
across all sectors and specialisations, both entry level and mid-career
plus a couple of C level jobs. They don’t yet do blue collar jobs.
Applicants can put their CVs on the site and when they apply, the
company in question gets your CV. It can also do some basic filtering to
cut down on unsuitable applicants.</p>
<p>There are currently 50,000 unique views a day, both from inside and
outside but with 95% coming from inside the country. It is currently
number 18 in the Alexa.com ratings.</p>
<p>And competitors? According to Adewunmi:” There are some newspapers
and a couple of other job sites like Careers Nigeria who also do
recruitment. We don’t do recruitment.” In our view, it will take
advertising revenues from print media and the biggest of these is
Tuesday’s copy of local paper, The Guardian. Its current print
circulation is 50,000. Number of readers per copy? Unknown. However, 2-3
million people get news online in Nigeria so it probably has the
platform to fight back.</p>
<p>Jobberman also has a mobile site which gets 60-65% of the views
total. The more entry level job seekers use a mobile phone more than
those already with jobs who browse using a PC in the office.</p>
<p>What was the attitude to online when it started:”When we started, it
was hell but now a lot of employees now advertise both in a paper and
Jobberman.” It is not yet breaking even but believes that it will do so
in the not too distant future.</p>
<p>Spinlet – an iTunes for Africa?</p>
<p>Spinlet can best be described as an “i-tunes” for Africa optimized
for the large base of mobile users on the continent. Nigerian investment
company Verrod Capital met the Finnish developers of the technology
Spinlet and bought into the company. Music distribution doesn’t really
exist in Nigeria except through the pirate sellers.</p>
<p>(Waiting in the departure lounge for a flight to Abuja, one of the
stall-holders was putting piles of pirated VCDs in front of people,
trying to encourage them to buy. A well-dressed European business man
declined politely pointing out they were all pirated and that he was in
the business of protecting IP. There were no shortage of Nigerian
buyers.)</p>
<p>In terms of handset manufacturers Spinlet has started with Nokia so
it has had to get the platform to work on Windows. Also it has an office
in San Francisco doing Blackberry and Android platforms. The platform
can also work with basic Java phones.</p>
<p>It wants to sell Nigerian music to the rest of Africa and African
music from every country across their home borders. You will be able to
buy per song for something like US33-35 cents and by album for which
they don’t want to go above US$5. They are doing deals with labels right
now and want to have a million songs to sell. Music rights are general
sold for South Africa and the rest of Sub-Saharan Africa.</p>
<p>Marketing will be the key to whether it is successful and it has
ambitious plans. It is doing a concert on 19 November where it will
bring out a Jamaican artist popular in Africa called Gyptian who will do
a collaboration with a local Nigerian artist Ice Prince. It will be
popular because there is an audience for reggae/dancehall in many
African countries. It will go out on Channel O, MTV Base and Trace with
product tie-ins on Spinlet. There will be 12 of these musical
collaborations, with the main ones in Nigeria, South Africa, Kenya and
Ghana. Music tracks exclusive to Spinlet will come from these
collaborations.</p>
<p>According to Eric Idiahi of Verrod Capital Management:“We want to
develop the music industry and create wealth for our artists. Our
software has a DRM that can help curb piracy.” Their software will also
allow musicians to upload their CDs on to the platform. Artists already
with a strong fan base on Facebook or Twitter can push them over to
Spinlet to buy their music directly.</p>
<p>‘We believe there are 8 million smartphone users (in Nigeria) using
VAS services and would like to get 10% of that,” says Idiahi. It wWill
break even with the hundreds of thousands. Because it will be primarily
used on a mobile phone rather than an iTunes browser on PC or laptop,
the service will keep you updated with new tracks to buy. Its soft
launch in Nigeria is on 19 November and this will be followed by a later
launch in South Africa.</p>
<p>The transition from SMS to online</p>
<p>As content transitions from SMS on mobile to online, the more
thoughtful SMS aggregators are looking at what’s next. Starfish Mobile
will launch an app-based mobile TV solution to stream content over 3G,
which connects to central server over proprietary connection. It is a
live streaming and TV on demand. Solution provided by an Indian company
Apalya. It will start with Airtel and charge somewhere between
US$9.40-12.57 a month, depending on whether data is included. There are
plentiful opportunities for broadcasters, particularly Free-To-Air
broadcasters.</p>
<p>It is also building an internet content portfolio where you send an
SMS to get online on its portal. Banky Ojutalayo, Executive Director,
Starfish Mobile:“Payment will still be there and we’ll be fusing the SMS
and Internet”. Other aggregators were more skeptical claiming that SMS
would remain the platform of choice. The truth ids probably that the two
will operate alongside each other as the handset devices change and
habits change with them.</p>
<p>Besides these developments there are a slew of sites attracting
significant traffic including: Wakanow.com (a travel site offering air
tickets and hotel offers like Expedia); Bella Naija (with pictures of
Genevieve Nnaji and Africa’s Richest Man); directory sites like VConnect
and Mocality and classified sites like Dealfish. In terms of everyday
life, there is a company providing online vehicle registration in 19
states and 70-80% of vehicle registrations are now online.</p>
<p>Nollywood Love/Iroko Partners has only 35,000 users in Nigeria but
millions elsewhere in the world. But it has huge numbers of search
enquiries from mobile users not able to access their material
effectively. </p>
<p>Payment services being put in place but no critical mass yet</p>
<p>One of the keys to successful online service use is payment and
whilst things are beginning to gear up, they have not ye reached
critical mass. Mitchell Elegbe, CEO, Interswitch says that there are
three times as many payments online as through POS (Point of Sale) but
this is to compare two relatively little used payment methods. That
said, Interswitch wants to add 40,000 POS a year. It will soon also be
able to offer a payment code to the unbanked so that they can take cash
out of ATMs.</p>
<p>Local airline Aero Contractors apparently makes 60-70% of all its
ticket sales online: anyone who has stood in a Nigerian queue waiting
for service will know why.</p>
<p>The Central Bank of Nigeria has a cashless society initiative,
insisting that banks have record of all transactions and that they
charge for cash collections from companies to reflect the real costs.
There are high levels of SMS from banks where customers are getting
informed of transactions made (2-4 million daily through one operator)
and this will increase. </p>
<p>In terms of m-payment, Nigeria has chosen to licence companies
working with banks and not proprietary operator systems. One of these
m-payment companies is Paga which has partnered with 6 banks. It has a
range of channels including: SMS, online, agents, mobile apps, IVR and
USSD. It wants to have 30,000 agents nationwide by 2015 and believes
that 40% of mobile subscribers will be using m-payments by this date. It
has signed an exclusive deal with DStv to take payment from its
subscribers. </p>
<p>All of the above might seem faintly crazy in a week in which
Naspers-owned MIH closed down its Kalahari e-commerce sites in Kenya and
Nigeria. But the logic of where the market is going in Nigeria is clear
and it remains a case of when not if.</p>
<hr>
<p><strong>On the Balancing Act You Tube Channel this week:</strong></p>
<p><a href="http://youtu.be/4i7RYJrCw20" target="_blank">Nic Rudnick, CEO, Liquid Telecom</a> on its Southern African Fibre Network</p>
<p><a href="http://youtu.be/YlERrulKGZo" target="_blank">Future mobile content? Lippe Oosterhof, CEO, Livestation </a>on live streaming for African news broadcasters and its mobile platform</p>
<p><a href="http://www.youtube.com/watch?v=6d_77734YdE" target="_blank">Henk Kleynhans, Chair of WAPA</a> on TV White Spaces proposals in South Africa<br><a href="http://www.youtube.com/watch?v=9S9_HMXcPeU" target="_blank"><br>
Steve Song, CEO, Village Telco </a>on the TV White Spaces Workshop</p>
<p><a href="http://www.youtube.com/watch?v=AvKlj0tDkRM" target="_blank">Richard Bell, CEO, Wananchi Group </a>in Kenya on international fibre connectivity, local TV content for its Zuku bouquet and financing its vision: </p>
<p><a href="http://www.youtube.com/watch?v=bVkCCCGoC80" target="_blank">Riyaz Bachani, CTO, Wananchi</a> on its Wazi hot-spots partnership with Google</p>
<p>Want up-to-the-minute breaking news? Balancing Act's Twitter feed
provides a combination of breaking news for telecoms, Internet and
broadcast in Africa, direct tweets from countries visited and access to
the occasional rumours circulating. You can follow us on:<br>@BalancingActAfr</p>