Of 2.6GHz Spectrum and Broadband Penetration

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Emma Okonji writes that the renewed plan by the Nigerian Communications Commission to auction the nation’s 2.6GHz spectrum will facilitate broadband penetration across the country

Telecoms regulators all over the world understand that rapidly growing wireless traffic will require increase in spectrum over time. This obvious reason must have compelled the Nigerian Communications Commission (NCC) to auction the 2.3GHz spectrum in February 2014. The regulator is now considering auctioning the 2.6GHz spectrum in May this year so as to create enough spectrum licences for rapid rollout of broadband services across the country.

In February this year, NCC released an Information Memorandum (IM) for the auction of 14 lots in the nation’s 2×70 MHz block of the 2.6 GHz spectrum band, scheduled to take place in Abuja on May 16, 2016.
Last week in Lagos, the commission reiterated the importance of the spectrum for broadband penetration and clearly spelt out the criteria for eligibility of applicants that may wish to apply for the spectrum. The licence is expected to be awarded on a national basis, to boost national broadband deployment across the country.

According to NCC, the 2.6GHz spectrum has been designed to facilitate national broadband rollout as against regional rollout that was initially clamoured for by smaller operators.

Although NCC had twice postponed the auction of the 2.6GHz spectrum, it explained that arrangements have been finalised for a fair, transparent and efficient auction of the spectrum this time around.

Importance of 2.6GHz spectrum
The NCC restated the importance of the 2.6GHz spectrum frequency, insisting that it will enhance the availability of spectrum for speedy deployment of broadband services across the country.

The commission said the spectrum would also create opportunity for the deployment of advanced wireless 4G Long Term Evolution (LTE) technology services, as well as standardisation and harmonisation of telecoms operations.

Director, Spectrum Administration at NCC, Mr. Austin Nwaulune, who made the disclosure during an interactive session with the journalists, said the importance of the 2.6 GHz spectrum to broadband development and penetration, compelled NCC to release an Information Memorandum on the auction of the spectrum.

The 2.6 GHz band, which spans from 2.5 GHz band to 2.7 GHz band, is generally considered to cover the frequency range between 2500-2690 MHz, although there are some minor national variations among countries in the use of the frequency band.

The frequency band was designated for mobile terrestrial services and other applications of the frequencies in this band include satellite services – fixed, mobile, and broadcast – as well as terrestrial video broadcasting. In certain countries, frequencies in this band are still occupied by non-commercial entities, such as the military.

The 2.6 GHz band is often referred to as the ―IMT-2000 expansion band II and is sometimes called the 3G expansion band.

Criteria for eligibility

Stating the pre-qualification process to participate for the 2.6GHz bid process, Nwaulune said applicants would not have to be licensed network operators in Nigeria, provided such applicant must be registered with the Corporate Affairs Commission (CAC).

The applicant must transfer an Intention-to-Bid Deposit (IBD), which is 10 per cent of the total amount for the number of lots the bidder intends to acquire from among the available 14 lots that the NCC is auctioning. For instance, the reserve price for each lot of the 2.6GHz spectrum is $16 million and if an operator indicates to acquire six lots, such operator will pay 10 per cent of the total $96 million for the six lots, which is $9.6 million, as part of the pre-qualification process.

The bidders must not have any relationship among themselves and a relationship is established when a bidder has directly or indirectly ownership stake of 10 per cent or more in another bidder. The spectrum will be offered on a technology neutral basis and shall be used for national rollout.

Time lag for rollout for those that will emerge winners, is put at one year and any operator that fails to rollout within the one year time frame, will automatically lose the licence.

According to Nwaulune, the licence is for 10 yeasr and the auction will be carried out in an ascending clock auction.

The auction process commenced with the publication of the resumption of the 2.6GHz frequency spectrum auction notice on February 25, 2016, which is followed by a period for the submission of questions to the commission, relating directly to the licensing process defined in the information memorandum, and the period elapses by April 16. By April 29, the application closes, to give room for the auction committee to scrutinise the applications and inform those that will qualify for the bidding exercise. By June 10, 2016, spectrum winners must have made full payment for the licence won, and by June 13, 2016, the NCC will announce the winners.
The spectrum is considered to be a valuable national resource for which commercial opportunities exist.

Stakeholders’ view

One major issue raised by industry stakeholders is on the licence distribution of the 2.6GHz spectrum. Some were of the view that NCC should auction the 2.6GHz spectrum licence on a regional basis that would allow smaller operators to participate in the auction exercise and also operate the spectrum licence in different regions and states of the federation. On the other hand, some of the stakeholders, especially the bigger operators, are of the view that the licence should be auctioned at a national level, where a single large operator could buy it and operate it alone nationwide.

Even though the big operators want the licence auctioned at national level, the smaller operators kept pushing that the licence should be sold in regions for equitable participation of small and big operators.

They are of the view that regional spectrum sale will open opportunities for smaller operators to also play in the country’s telecoms space, rather than allowing only the bigger operators to take over the entire operations in the industry because of their huge financial might.

President of the Association of Telecoms Companies of Nigeria (ATCON), Mr. Lanre Ajayi, said it would be an outright disservice to smaller operators if NCC settles for national spectrum auction, without considering regional auction where smaller operators would comfortably participate.

According to Ajayi, NCC should split the 14 lots into regional and national levels to enable both small and big operators participate in the auction in the interest of fair play.

“Smaller operators should be given the opportunity to buy spectrum licence and operate at the regional level,” Ajayi said.

Former President of the Nigeria Internet Group (NIG), Mr. Bayo Banjo, said the idea of issuing national licences for spectrum must the viewed with caution.

He suggested that NCC should rather issue 37 regional licences to cover each state of the federation and the federal capital territory so that should any operator renege in executing a licence in any part of the country in good time, such allocation may be conditionally withdrawn.

2.6 GHz spectrum in other countries

Licenses on 2.6GHz have been issued in several countries to date, notably Norway, Sweden, Finland, Singapore, Hong Kong, the United States, United Kingdom, Ghana and more 2.6 GHz auctions are anticipated over the next one to two years in multiple national markets.

Research has shown that 108 networks globally have launched the 2.6GHz, at national and regional levels, depending on country’s needs and rollout criteria.

More auctions are expected in Europe as well as in major emerging markets such as Brazil and South Africa.

Nigeria, no doubt, will soon join other countries that have licensed the 2.6GHz frequency spectrum to enable her citizens enjoy the many benefits of the spectrum if the planned auction is successful by May 16, 2016.