In this interview, Usman Gumi, Managing Director of G-Cell Wireless, a CDMA Network Operator in Nigeria, addresses the operating environment for telecoms companies in the country, imperatives of as well as what he believes to be the untapped advantages of the CDMA technology over GSM.
Operators tend to shy away from the CDMA. Does it mean it is not a worthy venture?
It is true that commercial telecommunication operators and investors tend to shy away from the CDMA. This is basically due to short-term view on investments in the country. Most operators tend to go where they will recoup their money in no time. They have this belief that their investment will not justify the expenses.
But I must tell you that the CDMA is cost-effective. The GSM operators tend to believe that they are locking out their funds by investing in the CDMA. But we have been surviving and have worked in areas where hitherto they think could not be accessed.
You have been talking about the data advantage of CDMA. With broadband access becoming imminent, what is the future of CDMA?
The future of the whole of the mobile technology is tending towards LTE which is Long Term Evolution. The evolution has already started. All the telecoms companies will in the future migrate to LTE, which gives you higher speed and lower latency.
With LTE you can get a speed of up to 37.5MB per second on your devices as against the 3.1 that you achieve now with 3G network. So, nobody would want to be left behind.
The industry will soon change to LTE and voice will almost be free because when you have 37.5MB on your device you wouldn’t have to pay a dime for voice.
Many telecoms operators abroad prefer the CDMA to the GSM technology. Why is it the preferred network in some countries and not Nigeria?
In plain language, the CDMA technology is superior without any contradiction. I will tell you the CDMA technology is superior to GSM. The only problem the CDMA had from inception is that it has a patent monopoly meaning that every development in that field was to be provided by one company.
For the GSM, it is an open system among the European countries, which came together and developed that technology and made it open.
So, it’s not about the superiority of the GSM that gave it an edge but the versatility and wide usage by many countries gave it that edge.
So when Nigeria wanted to develop their own, they looked at what is mostly available worldwide and adopted the GSM not because the GSM is superior.
In terms of voice quality and higher data rate, you can’t compare GSM to CDMA.
Why do you think so?
Well because per base station, you can have up to 2500 concurrent users on a CDMA base station as against the 600 concurrent users on a GSM base station. The difference is clear.
Have there been challenges so far over interconnectivity payment charges between CDMA and the GSM operators?
I think the idea of licensing interconnect clearing houses has been a very successful idea and I commend NCC for this innovation that has eliminated all the issues of non-payments and over-billing by various telecoms operators. So it has made the operations very smooth and seamless.
GSM operators have been smiling to the banks with huge turnover. What is the position of CDMA operators?
Currently, we can say we are just breaking even. Thank God where others have failed and so many have gone down, we are still breaking even and operating.
We have been able to keep our head above water for the future to come. We will definitely fly.
Telecoms operators, CDMA and GSM alike, have been complaining so much about the issue of powering their base stations and other operations at a heavy cost as they rely heavily of diesel and not public power supply. Are there plans for more co-location to cut cost?
For any operator to survive, they have to strategise and find ways of cutting down their running cost, which mostly is for powering the cell sites.
On our own, we have been partnering Vanu Africa. They have developed a very cost-effective solution that runs completely on solar and has a range of 5 to 8km and generates 2 to 3 miles of GSM in a rural area and fully-powered by solar.
So we are working with them. We have signed an MOU and we will soon do a pilot project with them covering some parts of Bauchi State to showcase the effectiveness of the solution. Once that is successful, we intend to go national. This service will not only be limited to GSM and CDMA, but will also be available to other operators to ride on the backbone and then work out a revenue-sharing formula.
I think this is very innovative and timely. It is coming at a time when Nigeria is showing positive signs for growth as the largest economy in Africa after the rebasing of the economy. This will further boost the economy and jumpstart development in our sector.
What is your penetration strategy, especially going into underserved areas?
Our strategy is to go and cover those areas where others have shied away. So we are not into competition but we are complementing the GSM technology operators since every individual has a right to communicate, which is the essence of telecommunications.
Our strategy is using CDMA 450, which gives us wider coverage with fewer infrastructure and targeting the communities where there is population density. We have gone to those areas and since then we have been very successful, and we intend to replicate the same success story all over Nigeria.
In terms of employment, do you think that this new technology being introduced by Vanu Africa in collaboration with G-Cell will impact on employment?
One, it reduces the cost of operations. You will have more resources to employ more hands to deliver the service and our intentions with this solution is to create a job opportunity for about 1800 workers all over Nigeria and that will help in a long way to reduce unemployment.
How many of this solar sites will Vanu deploy to Bauchi alone?
For the pilot project, we will start with 500 sites located in remote areas of Bauchi State. We will run them for six months and see the efficiency and after that we will be able to roll out nationally.
How did Gumi get into telecoms business? Are you a telecom expert by training or experience?
From my background, I read Physics from Ahmadu Bello University, Zaria. That gave me little edge to understand the telecoms industry and early on I ventured into satellite communication, starting with Thuraya satellite as their first African service provider in Nigeria.
When the GSM revolution came in, we were edged out completely because of cost. The cost of satellite phone is quite high compared to GSM. So for us to continue in telecoms, we decided to go on another step and then we founded the G-Cell Wireless and got a Unified Access Service License (UASL) and that is where we are today.
And our focus right from our satellite days was to cover those areas that are not covered by the GSM. In effect, we choose the underserved areas as our business model.
Are the technical partners going to provide the funds for the project wholly? If not, how are you accessing funding for this project?
In fact, the beauty of their solution is coming with its own funding. They are deploying the sites at no cost to the operators and the government. The solution they have adopted is to share revenue that is accrued from the usage of these facilities with the operators.
One of the innovations of the solution is the solar charging point system. We found out that even if you provide services to the rural areas at times, they find it difficult to get places where they can charge their phones. So the service will be there but they don’t have the power on their phones to utilise it. They developed this solution where it has a system that can charge up to 20 phones at a time: a fully solar-powered base. And I think that one will increase access to the communication and the penetration of service.
How many base stations do you run currently?
We have 180 base stations in 11 states of Nigeria. We are in Adamawa, Bornu, Kwara, Kano, Katsina, Yobe, Cross River, Bauchi, Gombe and Plateau States.
What is your customer base?
We are serving 20,000 subscribers presently, mostly in the North Eastern part of the country. And our limitation to that 20,000 was not because of the demand, but because of the challenges that we have to provide tailor-made handsets on the CDMA 450 to be able to provide the service. So we import the handsets, which are fully sold out. We are waiting for the new supply to come.
Do you have handsets that can compete favourably with those of GSM technology?
We have. The basic feature of a handset is phone and a camera, with some having FM radio.
Our handsets have all the functionalities a typical GSM phone has including text messages, Internet access and multimedia solution.
What are your experiences with the present security challenges in the North East? Is it in anyway affecting your activities?
The crisis has definitely affected our operations there. The economy of the place has declined considerably and has affected the usage of telecommunication services in the area.
Apart from that, during the emergency that was placed on those places, we were asked to shut down for a while. But now we are up and back and running.
In terms of training and retraining what plans do you have for your staff to meet the growing demand and trends in the industry?
In every company, the biggest and most valuable assets are staff and employees. So we give a lot of importance to training to keep them abreast with latest developments in technology and service delivery.
So, in collaboration with our technical partners, we have been organising training sessions for them to keep them abreast. We intend to continue with that.
Technology globally is no longer making use of very big equipment. Are you in tune?
Yes. In fact, the new base stations we are using are very small. You can even mount it on electric poles. The new equipment uses not more than 120watts and can cover up to 10km radius. So, this is what we have adopted and we believe it will go a long way to effectively cover not even the rural areas but even the urban areas where the services are needed. They are very cost-effective. You know the normal price of running a traditional base station is about $3,800 per month as against $280 per month, which we are currently implementing. The difference is very clear. We just did the pilot of the two. But with the new solution which we are going to deploy with Vanu, there will be at least minimum of 500 sites in operation within the next couple of weeks.
What are the teething problems you have been experiencing as a Nigerian company in telecoms unlike the bigger entities with more funds?
Well, the biggest problem first is the tag associated with any company that is Nigerian. You know the financial institutions find it very difficult to grant you credit for long term investments, which the other big operators easily get on a platter of gold.
Secondly, the foreign investors are always scared of coming into Nigeria. It is a difficult task convincing them to invest in this market. But usually when they take the first leap and enter, they always never regret doing that.
The challenge is being able to convince them in the first place to invest in this country. So this is one of the major challenges as a Nigerian. So we are being discriminated both locally and abroad.
Vanu, your technical partners are now in Nigeria. What are their experience so far?
Well, they are very excited about the market. They have seen the potential and they have seen that this is a place to be. If you want to be in Africa, you have to first be in Nigeria. If you get it right in Nigeria, you will get it right in any other place. They are all excited and I’m also excited in working with them. They just brought the right solution at the right time. We have been looking for the solution which they are providing and so we believe that the future is very bright.
Have you been approached by any company for a possible merger talk?
Yes, we have been approached and we will always be very positive and receptive to any company coming to join us because we believe that you cannot lift the roof alone. You need different hands to do it. We have been talking and we are still talking to so many companies on different solutions. And at the end of the day we will be able to come to an agreement.
To me, it’s a big challenge being in this industry competing with the big operators that have financial muscles to do what they want to do while on our side we have to be scratching to achieve every step that we have taken.
But you still thank God for every forward step you achieve. It is a source of joy to you and we believe that since the company has survived these past six years, the tough time has ended. So we are just looking forward to a brighter future.
Where do you see your company in the next five years?
Our plan is not just only to cover Nigeria but the whole of Africa because we see Africa as the future globally because the demand is there. People are yearning to bridge the gap between the digital divide, so our focus is not only Nigeria but Africa as a whole starting with Nigeria and extending to West Africa and eventually covering the African market.
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