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Deepening Broadband Penetration With 2.6GHz Spectrum [analysis](AllAfrica Via Acquire Media NewsEdge) Emma Okonji writes on the economic benefits of the planned auction of the country's 2.6GHz spectrum by the Nigerian Communications Commission. Following the announcement in August this year by the industry regulator, the NCC, to auction the two available slots of 70MHz in the 2.6GHz spectrum band, the commission, penultimate week, released the auction modalities for the exercise. NCC promised that the auction, which will hold before end of the year, would be carried out in a transparent manner, as was the case with the 2.3GHz spectrum that was sold last February. Pleased with the determination of NCC to transparently sell the spectrum to the most qualified bidder, telecoms analysts are of the view that successful auction of the spectrum would further deepen broadband penetration in Nigeria and enhance the country's march towards achieving pervasive broadband penetration, especially in the rural areas. The auction modalities, also known as the Information Memorandum (IM) on the proposed licensing of the 2.6GHz spectrum, defines the process that the NCC has adopted for the licensing of the paired 70MHz spectrum available in the 2.6GHz band. It also provides information on the Nigerian telecommunications market, details of the spectrum to be made available, the pre-qualification process, the auction process and indicative timetable. According to the release, the process for the licensing of the new spectrum is predicated on demands by operators for additional spectrum to avail them the opportunity of providing advanced wireless broadband services for the country. This is in line with international trends and provisions of the National Broadband Plan 2013-2018, which proposes a 30 per cent broadband penetration target for Nigeria by 2018. Giving reasons why the commission has to embark on another spectrum sale, after the successful sale of 2.3GHz spectrum, the Executive Vice Chairman of NCC, Dr. Eugene Juwah said: "The target to achieve 30 per cent broadband penetration by 2018 is a tall order for us at NCC and we are doing everything possible to ensure that we make available new spectrum bands to ensure that wireless broadband services are provided to Nigerians." Features of 2.6GHz spectrum The 2.6GHz spectrum is a frequency band, which is in the migration plan for mobile service delivery that will be used for 4G service rollout. The service will lead to faster broadband delivery, which means that it will allow for speedy downloads at higher frequency. NCC's target for the planned 2.6GHz band is to have abundant broadband delivered to subscribers at 1.5MB/second in line with the country's National Broadband Plan. According to the IM for the 2.6GHz spectrum licensing, the spectrum offers 14 lots of 2 X 5 megahertz FDD paired spectrum in the 2.6GHz, ranging from 2500 - 2570 megahertz and 2620 to 2690 megahertz (totaling 2 X 70 megahertz) for auction. Pricing The IM indicates that a generic reserve price (GRP) of $16 million has been fixed on each of the 14 lots of 2 X 5 megahertz FDD paired spectrum in the 2.6GHz. NCC further stated in the memorandum that the GRP is the minimum price at which a lot shall be sold, which is the reserve price for one lot of 2 X 5 megahertz, and as such, each has a value of $16 million. This means each lot of 2 X 5 megahertz represents only one eligibility point. An applicant that pays the Intention-to-Bid Deposit (IBD) for six lots will have a total of six eligibility points. Consequently, with $16 million minimum GRP tagged on each of the 14 lots, it is estimated that the NCC will generate minimum of $224 million (N35.8 billion) into the government coffer, in addition to the over N300 billion it said it had generated from spectrum licensing in the last 13 years of telecoms liberalisation. Eligibility The eligibility criteria to participate in the auction as sated in the memorandum, is that applicants in the spectrum allocation process will not be required as a pre-qualification criterion to hold any telecommunications operational license in Nigeria. To be qualified, NCC said applicants must fulfil a number of pre-qualification criteria, which require applicants to be a company registered in Nigeria with the Corporate Affairs Commission (CAC) and also be an independent operator from all other applicants under the allocation process. Applicants must also transfer an Intention-to-Bid Deposit cost into the designated account in cleared funds by the Commission. NCC said the deposit would bind the applicant to take up a licence, should it be a successful bidder, at the reserve price or any higher bid value submitted during the process. As part of the qualification criteria also, the NCC said operators participating in the process must fulfil all existing obligations to the commission including payments of Annual Operating Levy (AOL), Spectrum and National Numbering Plan fees, prior to prequalification, among others. On the assignment process, the commission said this would comprise an auction billed to take place during the first week of December, 2014 in Abuja through the application of Ascending Clock Auction system. Economic benefits Industry experts said the planned auction of the 2.6GHz spectrum band would come with some economic benefits for the country. According to them, it would further deepen broadband penetration across the country, a situation that would lead to easy internet access for every Nigerian, thereby driving business growth in the country. They are of the views that the spectrum will also enhance last-mile infrastructure connectivity that will complement faster delivery of broadband services to homes and offices. Though divergent views have previously been expressed by the stakeholders on whether the spectrum should be auctioned as a national or a regional licence among multiple operators, the NCC has indicated preference for a national licence for the spectrum in order to ensure that a company with necessary expertise and financial muscle wins the auction to provide services nationwide. President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Lanre Ajayi, said: "Nigeria is a country with most of the telecoms services being provided through wireless means, and it is structured in such a way that the operators need additional spectrum, so as to be able to deploy services nationwide." A telecoms lawyer, Mr. Adewale Jones, said: "With solid broadband plan in place in Nigeria, the ongoing collaborations between the NCC and telecoms operators to see how more spectrum bands can be made available are steps in the right direction." Chief Executive Officer, Swift Networks, Mr. Charles Anudu, noted that having more spectrum available would translate into the provisioning of more innovative and value added services by the operators to the consumers, whose demand for data, he observed, has been on the rise. "Global mobile data traffic grew 81 per cent in 2013. Video traffic accounts for 53 per cent of the global internet traffic. This is growing even faster in Nigeria, which is still an emerging market and fastest-growing telecoms market in the world. Indeed, telecoms firms are really trying in Nigeria but the growth in demand for data services, most especially, is outstripping the networks, putting more pressure on the operators," he said. He added that the increase in the number of web-based applications, being developed daily, is another factor for the high demand for increased broadband access. NCC's assurance Assuring Nigerians on the need for additional spectrum licences, the Chairman of NCC, Mr. Peter Igho said: "Nigeria no doubt need additional spectrum licences to carter for the shortfall in broadband access. The 2.6GHz auction could be done before the end of the year to complement NCC's plan to license Infrastructure Companies (InfraCos) on regional bases." According to him, "You are all aware that the commission has commenced the processes for the selection of Infrastructure Companies for Lagos and North Central Region in line with the Open Access Model that was launched this year. In due course, qualified companies will be selected in that process to give impetus to our drive to achieve robust deployment and service provisioning for broadband services across the country." Other areas to be considered in line with the planed auction of the 2.6GHz band, according to Igho, would include spectrum caps, licensing options, tenures, rollout obligations and some key issues that the commission's auction committee may deem necessary for consideration. Sale of 2.3GHz The NCC had last February licensed the 2.3GHz spectrum to a national operator, BitFlux, to provide wholesale services to other telecoms companies, as part of the drive to deepen broadband penetration in the country. Five months after, the commission also announced plan to auction the available spectrum in the 5.4GHz frequency band, all in an effort to drive broadband development as next revolution in the nation's telecoms sector. Assessing the trend, the Chief Executive Officer, Teledom Group, Dr. Emmanuel Ekuwem, said, "I have no doubt that the NCC is keen on delivering on its mandate of deepening widespread broadband penetration in the country. So, the 2.3GHz spectrum band, the 5.4GHz spectrum and the new 2.6GHz spectrum being planned, will altogether add necessary impetus to our drive as a nation to achieve ubiquitous broadband internet penetration." Since the NCC is fully out to give Nigerians sufficient broadband for business transactions and academic researches, it is expedient that the commission maintains its stand on transparency in the planned sales of the 2.6GHz spectrum, like it had always done with previous spectrum sales, owing to the importance of the 2.6GHz band in deepening broadband penetration further. Copyright This Day. Distributed by AllAfrica Global Media (allAfrica.com). |