Nigeria’s Internet market is more consolidated than competitive and startups bear the brunt

by | Oct 24, 2019

Internet affordability and accessibility are some of the valid reasons why startups relocate in Nigeria; location plays a significant role in Internet availability, and in turn, the price consumers pay for access.

Imagine an entrepreneur with an idea potential investors are interested in hitting a brick wall because the startup is located in an environment that isn’t Internet-friendly.

According to the Web Affordability Report 2019, the global Internet market is classified into two categories: consolidated and competitive.

By definition, a market with only one Internet service provider (ISP) is consolidated, and users have to pay more for access because there is no range of choices in such a market. On the other hand, it is competitive when it has more than one ISP.

Advertisement

Over 50 Internet Service Providers (ISPs), including telcos, operate in Nigeria. This statistic is not strange as Digital 2019 reports that Nigeria has 98.39 million Internet users, a 3.8% growth from 2018.

Additionally, Nigeria enjoys an average Internet speed of 11.70 Mbps, which is fast in comparison with speeds in other West African nations like Ghana (8.75 Mbps).

With such comparisons, the Nigeria Internet Market can be termed competitive.

Since market competition is one of the most influential factors for the price of mobile data, a ‘healthy’ competitive market should lead to more affordable Internet access and give consumers the choice of lower prices.

However, it is not certain if this holds true across major Nigerian cities.

Peculiarities with sampled locations

Though Lagos boasts of having a mix of Internet providers — an average of 20 ISPs — the same cannot be said of other cities.

A Lagos-based mobility startup founder confirms that Lagos has more advantages on its side; from visibility to numbers and Internet accessibility. He has access to great Internet service at a very reasonable price both at home and at work. Strangely, this is not the situation throughout Lagos.

“Sometimes, potential customers are discouraged by the amount ISPs levy them in order to install the cables close to their houses,” Ifeoluwa, a freelance writer managing a shared workspace in Lagos, complains.

Advertisement

On the part of the ISPs, the argument is usually based on the cost incurred on the last mile and remote locations.


Suggested Read: Bureaucracy remains a major hurdle for broadband penetration in Nigeria


NCC has a list of flexible guidelines that controls ISP’s tariffs, installation of copper cables, masts, and other infrastructure to support Internet service delivery. Despite this, the current reach cannot serve Nigeria’s Internet users which is half of the total population.

Usman*, a startup founder who works from a co-working space in Kaduna, does not think he enjoys the luxury of network choices startups in Lagos supposedly have.

“Unlike Lagos which has a variety of network providers, we only have all the telcos and probably only one ISP which does not really give us what we need.”

Despite this, he would rather remain in the state, paying more for better connectivity service if available, because of the favourable economic conditions there.

As is the case with Usman, some founders might prefer to stay put than move irrespective of the nature of the available Internet service.

Some founders are gaming the system

For Francesca*, an agripreneur in Abuja, though available network services are good,  she has to situate her office close to an already installed cable line, thereby overcoming Internet constraints. According to her, Abuja is the best fit for her startup due to customer proximity.

For startups that serve their customers remotely, and don’t have to deal with the adverse effects of relocation on their operations, it’s not certain how green the grass on the other side has been.

In what looked like a search for decent Internet connection, Fourth Canvas, a digital design agency relocated from Akure to Ibadan. The founder said the decision was necessitated by the unfriendly network in Akure, which is not the situation with the present city.


Suggested ReadAkure’s position as a promising haven for tech innovation in Nigeria might be under threat


Ironically, the founder of an Ibadan-based multimedia startup who has tried three different networks — a telco, and two prominent ISPs — is not satisfied with the quality of service gotten even while on 4G.

Clearly, understanding the local terrain can play a significant role in selecting a suitable location.

“I grew up in Port Harcourt and I know where the best network reception is, and that’s exactly where our office is. And by the way, we had a number of options,” Paul*, a startup founder says.

Apparently, enjoying substantial network connectivity is a function of the quality of all the available networks in a particular area and at what cost the preferred one can be gotten.

As it is, only a few cities have stood truly competitive in the overall Internet market in Nigeria. And this may have led to the saturation of startups in locations with superior offerings.

Perhaps if the cost associated with installation and maintenance of supporting infrastructure is not high, ISPs and telcos will cover most locations in the country, thus giving startups a variety of options from which to choose. Until then, the overall Nigerian Internet market may not be established as truly competitive.

* Real names changed at the request of the people interviewed

Human enthusiast | Writer | Senior reporter | Podcaster


Techpoint Build 2021 is here! Be part of the largest gathering of innovators, startup founders, thinkers, programmers, policymakers, and investors in West Africa. Register free now.

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

Recent News

5 ways to support Techpoint Africa

5 ways to support Techpoint Africa

If you value the work we do at Techpoint Africa and would like to help ensure that the core of our journalism remains free and independent, please consider these 5 ways to support us

Subscribe to Techpoint Digest!

A daily 5-minute roundup of happenings in African and global tech, sent directly to your email inbox, between 5 a.m. and 7 a.m (WAT) every week day!

Please check your email to confirm your subscription.

Subscribe to Crypto Explorer

A monthly series featuring in-depth analysis on the cryptocurrency sector in Africa

Please check your email to confirm your subscription.

Subscribe to The Experts

A bi-weekly where tech career specialists take us on their journey from newbie to expert, and how they became successful in the industry.

Please check your email to confirm your subscription.

Subscribe to Founder's Table

A monthly series, where we catch up with founders in the startup ecosystem, learn about their failures, successes and a few tricks of the trade

Please check your email to confirm your subscription.

Copy link
Powered by Social Snap