2.3GHz auction: Giving broadband penetration a new drive

THE ongoing plans by the Nigerian Communications Commission (NCC) to auction fresh spectrum in the 2.3GHz frequency band is set to lead to broadband explosion that would make high-speed Internet services more accessible to Nigerians businesses, government and individual telecoms consumers.

  Nigeria’s telecoms industry is on the verge of witnessing another revolution that will speed up broadband Internet penetration in the country, a development that will be made possible by the ongoing activities by the Nigerian Communications Commission to auction new spectrum that will be used to deliver high-speed Internet services to Nigerians.

  12 years after liberalising telecommunications sector in Nigeria, the sector has grown in leaps and bounds, but only mobile segment is the most active and fastest and fastest growing segment of the Nigerian telecommunications industry with a subscriber base of 121.3 million and a penetration/teledensity of 86.62 per cent as at the end of the third quarter of 2013.

  As at 2001, telecoms subscriptions in the country stood at around 400, 000 fixed lines while teledensity stood at 0.73 per cent.

  On the other hand, data or Internet services are still relatively underdeveloped despite having grown significantly in the past years. As at 2004, Internet penetration, based on percentage of Internet users per population, was at only three per cent but as at the end of 2011, it was estimated to be about 28 per cent.

  In 2012, percentage of Internet users moved to 32.9 per cent but industry experts said that that might have increased to more than 36 per cent at the end of December, last year, with more than 55 million people connected to the Internet compared to 121.3 million with active telephone subscriptions.

  However, the Minister of Communication Technology, Mrs. Omobola Johnson, has declared that in spite of the steady growth in Internet, broadband penetration was still very low at six per cent.

  This is in spite of the over 10 terabytes of bandwidth capacity available in the country, made possible by the landing of international submarine/ fibre optic cables such as Glo 1, Main One and the West Africa Cable System, but which are still heavily lying in the sea shores.

  For instance, the Chief Executive Officer, Main One, Ms Funke Opeke, has disclosed that only about five per cent of the bandwidth capacity available on Main One undersea cable was used, leaving 95 per cent of the capacity redundant, though available for use.

  Other cables are facing similar under-utilisation challenge as they are facing the problem of last-mile connectivity, especially without available spectrum to deploy the capacity to make broadband service variables and accessible to Nigerians.

  It was this challenge of low broadband penetration that the NCC decided to address through its ongoing activities to license fresh spectrum that will be used in deploying broadband services, which will help businesses and individuals in the area of efficiency and productivity.

Throughout 2013, consultations on the best approach to license the remaining block of the 2.3 GHz spectrum in a way that would produce maximum economic value for government and the telecoms consumers, whose demand for broadband services had refuse to wane in recent years.

  A spectrum auction is a process whereby a government uses an auction system to sell the rights (licences) to transmit signals over specific bands of the electromagnetic spectrum and to assign scarce spectrum resources.

  Depending on the specific auction format used, a spectrum auction can last from a single day to several months from the opening bid to the final winning bid.

  Though, some stakeholders have opposed NCC’s plan of auction to determine the licensee of the spectrum, the Commission has determined that an auction was a “fair, transparent and efficient process of assigning the spectrum.”

  Licensing of the remaining 30MHz of the 2.3GHz spectrum, it was leant, was predicated on demands by operators for additional spectrum to enable the provision of wireless broadband services in line with international trends.

  Though Internet users in Nigeria continue to grow, the Ministry of Communication Technology currently estimates the actual broadband Internet access penetration at about six per cent and for this to grow five-fold by 2017, licensing of the 2.3GHz spectrum has become imperative.

  Already, the NCC had released the timetable on the auction process, which has begun in earnest, even as the licensee of spectrum is expected to merger by March 14, 2014.

  In the meantime, the NCC had placed a minimum offer price of $23 million (about N3.6 billion) on the spectrum band to be auctioned to a sole provider of wholesale broadband services this year.

  According to the NCC-released Information Memorandum, IM, which defines the process for licensing of unpaired spectrum in the 2.3 GHz band by the commission, the auction is in furtherance of the objectives of the federal government, as set out in the Nigerian National ICT Policy 2012 and the National Broadband Plan 2013, towards driving broadband penetration.

  As a necessary prelude to the licensing process, the Commission had conducted series of stakeholder consultations to determine the demand level for spectrum, the approach to licensing and the potential interest of the consumers amongst other objectives.

  As a result, the Executive Vice Chairman of NCC, Dr. Eugene Juwah, said: “Based on the positive outcome of the consultations and the direction of the National Broadband Plan, the Commission has decided to undertake an auction to award a spectrum licence to build and operate networks in this spectrum band to provide Wholesale Wireless Access Services, WWASL in Nigeria.”

  To qualify to bid in the auction process, the Commission said that applicants would not have to be licensed network operators in Nigeria. “However, the successful bidder will be granted a WWASL and specified fee to be paid before the licence will be issued. The tenure for the WWASL licence will be 10 years, subject to renewal.

  It would be recalled that the formal licensing process started with the issuance of Public Notice No. 1/2013 on November 15, 2013 and continued with the release of the Information Memorandum, inviting parties to participate.

  The release of the IM, NCC noted, would be followed by a period for the submission of questions to the Commission relating directly to the licensing process defined in the IM.

  “All additional information including the answers to questions raised during the process will be made available through the Commission’s website and will form part of this IM. The identity of questioners will not be revealed,” NCC says in IM.

  The spectrum is considered to be a valuable national resource for which commercials opportunities exist. The reserve price for a 10-year licence, which is set at $23 million, is the minimum commercial value of the licence.

  According to the timetable of the auction process, the opening bid would be determined by the Commission as a reserve price plus the bid increments for the first round.

  The opening bid shall be the minimum acceptable bid for the licence in the opening round of the auction.

  On completion of the auction, the successful bidder will be deemed to have been awarded a provisional licence.

  The successful bidder will, then, be required to pay the balance of the spectrum licence fee due to the Commission within 14 days from the date of the award of the provisional licence on March 14, 2014.

  Since the deregulation of the telecoms sector, the NCC had chosen auction process as the transparent and fair way to allocate spectrum and not through arbitrary allocation to allocate spectrum to a particular region instead of another.

  In 2001, the Commission licensed three digital mobile operators through an auction process that is widely adjudged to have been highly successful and transparent.   

  The licensing of a second national carrier and the fourth digital mobile operator in 2002 followed this.

  The Nigerian Communications Act was signed into law in 2003 to strengthen the regulatory framework as well as to enhance the independence of the regulator.

  By the end of 2004, there were two national carriers, four digital mobile operators and 24 fixed telephony providers of which six were Fixed Wireless Access operators.

  In 2006, the NCC introduced the Unified Access Service Licensees, UASL, regime, to enable operators to take advantage of convergence in services and technology in order to offer better service.

  In 2007, the Commission awarded a further UASL and spectrum licence to Etisalat, bringing the number of parties with national mobile licensees to five.

  In addition, in 2007, the Commission award licences to Visafone in the 800MHz band, Alheri Engineering Company Limited in the 2100MHz, Celtel Nigeria Limited (now Airtel Nigeria) in the 2100MHz band, Globacom Limited in the 2100MHz band and MTN Nigeria Communications Limited in the 2100MHz band.

  In 2008, the Commission issued International Submarine cable Infrastructure and Landing Stations Services licences to Main One Company Limited and subsequently to MTN in 2010.

  In 2009, the Commission awarded the 2.3GHz spectrum to Spectranet Limited and Mobitel Nigeria Limited.

Source Nigeria Guardian News Website