Expert Advocates Friendly Policies for Spectrum Auction

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Emma Okonji

Worried that poor spectrum auction and management could stifle broadband penetration in the country, an information and communications technology (ICT) expert has called for more friendly policies that would determine the auction and management of spectrum licences going forward.

The Chief Executive Officer of VDT Communications, Mr. Biodun Omoniyi, who spoke at a technology form organised by the Association of Telecoms Companies of Nigeria (ATCON) in Lagos recently, said there was need for the industry regulator, the Nigerian Communications Commission (NCC), to come up with policies that will not only encourage operators to participate in spectrum auctions, but will also have the support of NCC in rolling out broadband services on the spectrum licence.

Omoniyi is worried that too much emphasis were laid by NCC on raising money for government through spectrum sale, without considering the financial strength of the operator to roll out services after the operator must have bided and paid so much for spectrum licence.

“NCC should maintain a balance between managing the spectrum as a source of revenue generation for the government and promoting the ultimate growth and development of the sector and the nation as a whole by encouraging efficient and timely spectrum utilisation through subscriber friendly policies,” he said.

He reminded NCC of one of its frequency management objectives, which clearly stated that NCC would from time to time, control and encourage the use of spectrum as an instrument for developing telecommunication, which is an essential infrastructure for stimulating the economic growth and social development of the nation.
According to the VDT boss, huge investment in frequency spectrum acquisition Justifies the necessity for greater government support and enabling environment.

He cited the recent Pyramid Research Report, which stated that out of a total of about $32 billion invested in the Nigerian telecoms industry by the private sector over the last 10 years, about $4 billion or 16 per cent of the money was spent on spectrum and license fees.

“Is spectrum auctioning still the best pricing model for frequency spectrum, considering the current economic situation,” Omoniyi asked, while also explaining that experts believe that auctioning can lead to high cost of services to users and exposes bankers to financial risks.
He also asserted that huge upfront payments can lead to cash flow problems for service providers, while giving no chance to small scale companies.

“May be it’s time NCC explored other pricing models or even mixed models for frequency spectrum sale,” Omoniyi said.
He advised that in managing frequency spectrum for ultimate benefit of the telecoms industry and Nigeria, the regulator must consider ultimate benefit to the industry and the nation at large, which he said, is in the utilisation of the spectrum, not in auctioning the spectrum.

“As such active government support by creating enabling environment to facilitate spectrum utilisation is crucial,” Omoniyi said. He also advised the NCC to consider encouraging indigenous investors through the right policy formulation that supports indigenous investors, since the bulk of revenue generated from spectrum utilisation by an indigenous company, remains in Nigeria.

Omoniyi , who frowned at the incessant calls for frequent spectrum auctioning, said it could weaken investors’ confidence considering the devaluation of the naira and scarcity of forex, especially amidst the prevailing economic down turn.
According to Omoniyi, auctioning of several frequency spectrums close to each other might choke the system. He therefore advised that auctioning should be in phases to avoid choking the struggling financial system of the country.