Gray handsets’ll continue to plague telecoms market – Report

The problem of gray-market handset will continue to be a big challenge not only in Nigeria, but in the whole of Africa and the Middle East regions up until 2015.

Gray-market handsets are cell phones that are not recognised or licensed by government regulators. Makers of these products generally do not pay value-added taxes and, therefore, profit illegally from their participation in the market.

A new report by Pyramid Research found that sale of substandard handsets would remain steady in telecoms markets in the regions in the next three years.

However, the sharp increase in legitimate handset sales during that period, according to the report, will reduce the percentage of gray-market handset units sold to 13 per cent in Africa.

Pyramid analyst, who authored the report, Mr. Kerem Arsal, said, “Pyramid believes that shrinking gray-markets in Africa depends on manufacturers and operators providing the right incentives for end users to buy authentic handsets, rather than solely branding gray-markets as illegitimate.

“This requires handset manufacturers to work with network operators to develop affordable handsets, while government agencies should implement policies to encourage the sale and domestic distribution of legitimate handsets.”

Many African end users, according to Arsal, can afford only the cheapest of handsets.

He argued that in cases where income was not an immediate obstacle, limited mobile network capabilities in most markets suggested that phones that were rich in features were not urgently needed.

“In response to the gray-market handsets, handset manufacturers are aiming for clever combinations to appeal to end users by providing affordable and simple phones, while staying more in touch with the usage realities of the African markets when coming up with relevant features,” he added.

“In African markets, where mobile operators have a degree of subscriber loyalty, they should be employed as the primary channel for handset distribution. Where mobile operators achieve some degree of loyalty, then handset manufacturers are better off using network operators’ channels at the expense of sharing some revenue,” Arsal noted.

“In fact, any loss of revenue due to selling indirectly can easily be counteracted by the scale and certainty provided by powerful mobile operators, as well as by recovering the loss of market share to gray-markets,” Arsal said.

The gray-market phenomenon has posed one of the greatest problems to mobile devices in Nigeria. The country has become one of the biggest destinations for fake phone shipments from China.

The vast telecoms market, huge demand for handsets and abysmally low financial capacity of an average Nigerian are believed to have fuelled the growth of the fake handset industry.

The impact, according to experts, is manifold and curbing the menace is essential.

The Executive Vice-Chairman, Nigerian Communications Commission, Dr. Eugene Juwah, had recently said the use of counterfeit mobile devices was affecting the quality of services in the country’s telecoms sector.

Represented by the Head, Media and Public Relations, NCC, Mr. Reuben Muoka, at a recent forum on phone counterfeiting, Juwah said the task force on quality of services established by the commission found out that most of the phones in use in the country were counterfeited and were having serious negative effects on the networks.

Juwah said the commission would encourage manufacturers of telecoms accessories to establish plants in the country as a way of checking counterfeiters, stressing that if the products were manufactured locally, they would be cheaper, easy to control and the market better managed.

A number of phone manufacturers have also made effort to curb the influx of gray handsets into Nigeria.

One of them, Nokia, had said the struggle against counterfeit phones was a fight against intellectual property theft, economic sabotage and for consumer protection.

According to the Head, Care, Nokia West Africa, Mr. Silvin Sinan, as long as the fake handset business thrives, government loses revenue in the form of taxes, the economy loses potential employment opportunities and investors are discouraged.

He said, “As long as we allow the illicit trade in counterfeit mobile devices to thrive, we discourage creativity and innovation because the very existence of cloned counterfeit phones is an infringement on intellectual property.”

The Group Head, Electrical/Electronics, Standards Organisation of Nigeria, Mr. Adewunmi Richards, urged Nigerians to stop patronising counterfeit products, adding that it was important for the original equipment manufacturers to establish their factories in the country as a way of checking the incidence of counterfeiting and fake products.

Source : Thisday