Spectranet data is cheapest in Nigeria -David Venn

Let me take you up on this, you said that you foresee a situation; maybe in the next two years, people will not be paying for voice calls. But presently, let’s look at data. There is this general complaint that the charge per megabyte is too high. And then there are complaints of poor services, fast depletion of data, low data penetration and all that stuff. What’s your take on that?

It’s a couple of things. One is, the actual cost of data at the moment, is too low. The problem there is that the mobile operators; the GSM operators have been competing on the price for data and they have taken the price way down below the cost of provision. Now, they are complaining that WhatsApp shouldn’t be allowed because it is eating into their voice revenues. That’s because they are charging too low for data. The problem is, when the price for data is too low, no one is going to invest in rolling out more networks for data. Now what we are talking about is affordability; maybe it’s too high for people to be able to afford. That’s different to how much it is costing to deliver it in the first place. Spectranet is probably the lowest cost operator in terms of our cost rate; in terms of actually delivering data to people in their homes and businesses; in terms of what it costs us. We try to reflect that in the pricing as well. The mobile operators have a huge revenue strings on voice. So they can supply data cheap. They can recoup money back. They do that so that they can win voice customers across and make money out on voice revenue. So, what they are doing is, they are charging more for the voice calls. That makes up for the data calls. So my understanding is that the NCC is going to regulate this. They’ve announced to us; the operators that they are going to bring in some regulations on the price of data so that people aren’t unfairly competing. Those operators that can provide a good service at a good price should be allowed and not have to compete with people out of just giving it away. So I think you are going to see some changes in data pricing over the next two months. We are talking about implementing it before the year end. We’ll see how that turns out.

Is there going to be an upward review?

I think for some reasons, we won’t, because our pricing fits where it should be in terms of our costs. We shouldn’t be allowed to sell below costs; that’s under competitive.

The difference between the customers on 3G and the customers on Spectranet is that our customers use a lot more data. If you don’t need much data; all you do is look through your emails, occasional browsing and sort, just use, just use your mobile phone. You can pay for the data you use; you are probably going to use a few hundred megabytes, maybe a gigabyte per month our average customer; 80 percent of our customers use 25 gigabytes a month. That is the average on Spectranet. Our customers use these as opposed to these and this is shared with the whole family. So, your kids are using this, your wife is using it during the day, when you are at work; she’s doing Skype and whatever, and browsing on, your kids are doing gaming in the evening and doing all their Facebook stuff and you are watching TV with it as well. We are a broadband company and our customers tend to be much heavier in uses that your average internet user because it is a group of people. And also if this is in a business; a small travel agent or shop, you might have 20 people using the same Modem. Because it’s got Wi Fi, it’s got a LAN connection; connect your LAN to it and it serves your whole office. So a lot of people would share this. People are using a lot more data than they were even just 2 years ago; they are watching much more entertainment on the internet and they need more and we noticed this; if you track the average usage per customer, it has gone up and up and up. So, we introduced free night time unlimited, on Spectranet early this year; around March or April. Prior to that, our average usage was about 20 gigs per customer. We now have about 20 gigs as our average usage during the day. The night time on average, is 20 gigs more. So, on average on our network now if you include the free night time, it’s 45 gigs. You imagine how much you pay on MTN for 45 gigs on your mobile phone and you won’t get it. You can’t get 45 gigs. It just wouldn’t work.

We see a lot companies like Spectranet, concentrating on the urban areas, so what happens to the rural areas? We know that there is a lot of benefit, taking it to the rural area. But, how do we do that if every company is concentrating on the urban areas?

We’ve had visits from a number of organizations that look into how to help increase the penetration and roll out of broadband across Africa, particularly big markets like Nigeria. These are the big multinational companies like Facebook, YouTube and other people. They focus on the rural area as well. When we look at it, there is a lot of cities that are under served. When you are building a business up, you’ve got to build up revenues and build up momentum for the business because that funds your future growth. Initially, the investors put money in the business to get it started, buy a license to put the first network in. but then, quickly, your revenues have to start generating and paying the business; paying the salaries of staff, paying for the next set of equipment, and the thing starts to get bigger and bigger. The mobile operators have already done that.

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