On October 10, 2014, the Nigerian Communications Commission, NCC, rolled out to the public, the Information Memorandum, IM, on the proposed licensing of the 2.6 gigahertz spectrum signaling that the spectrum would go on sale in the shortest time possible.
Eugene-JuwahThe IM and what it holds, however puts to rest the widespread debate about whether the spectrum should be licensed on national or regional basis. On both sides, there were reasons which bother on how the common Nigerian could get the best of internet services which the spectrum holds key to.
But with the publication of the Memorandum, the commission opted for national license for the spectrum, saying it was in order to ensure that a company with necessary expertise and financial muscle wins the auction to provide services nationwide.
How comfortable stakeholders could be, on this decision, however, can only manifest after the auction and how fast the winners would deploy services across the country.
Auction to boost broadband drive
But the point which seems to have unanimous understanding is that the auction will boost the country’s broadband drive.
Already, major stakeholders in the industry are beginning to indicate that publication of the IM by the NCC already signals an upbeat in the drive for pervasive broadband penetration across Nigeria.
Chief Executive Officer, Teledom Group, Dr Emmanuel Ekuwem, expressed hope that the development would bring nothing but good. “I have no doubt that the NCC is keen on delivering on its mandate of deepening widespread broadband penetration in the country.
So, the 2.3 gigahertz spectrum band, the 5.4 gigahertz and the new 2.6 gigahertz, being planned, will altogether add necessary impetus to our drive as a nation to achieve ubiquitous broadband internet penetration.”
Meanwhile, NCC admitted that the process for the licensing of the new spectrum is predicated on demands by operators for additional spectrum to avail them of the opportunity of providing advanced wireless broadband services for the country.
Executive Vice Chairman of the commission, Dr. Eugene Juwah said that the demand was in line with international trends and provisions of the National Broadband Plan 2013-2014, which proposes a 30 per cent broadband penetration target for Nigeria by 2018.
According to Juwah,”the target to achieve 30 per cent broadband penetration by 2018 is a tall order for us at NCC. So we are doing everything possible to ensure that we make available new spectrum bands to ensure that wireless broadband services are provided to Nigerians”
Over N35.8bn windfall expected
According to the IM, for 2.6 gigahertz spectrum licensing, the spectrum offers 14 lots of 2 X 5 megahertz FDD paired spectrum in the 2.6 gigahertz, ranging from 2500 – 2570 megahertz and 2620 to 2690 megahertz (totaling 2 X 70 megahertz) for auction.
A generic reserve price (GRP) of $16 million has, therefore, been fixed on each of the 14 lots. The GRP is the minimum price at which a lot shall be sold, which is the Reserved 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 1 eligibility point. An applicant that pays the IBD for 6 lots will have a total of 6 eligibility points.”
On a rough estimate, with $16 million minimum GRP tagged on each of the 14 lots, it is estimated that the NCC will generate a minimum of $224 million, approximately N35.8 billion by the time the licensing round is over.
If this is added to the over N300 billion said to have been generated from spectrum licensing in the last 13 years of telecoms liberalization, the NCC will have added well over N350 billion to the Nigerian economy just on license fees alone.
Qualification criteria
Although the NCC opted for national license method, it is not just that anybody can walk in and cut the pie. There are certain eligibility criteria for participants to the auction. The IM stated that applicants in the spectrum allocation process will not be required as a pre-qualification criterion to hold any telecommunications operational license in Nigeria.
However, to be qualified, the applicants must be a company registered in Nigeria with the Corporate Affairs Commission (CAC) and also independent from all other applicants under the allocation process.
Applicants must also transfer an Intention-to-Bid Deposit (IBD) into the designated account in cleared funds by the Commission.
NCC said the deposit will bind the applicant to take up a license, 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 that operators participating in the process must fulfill all existing obligations to the commission including payments of Annual Operating Levy (AOL), Spectrum and National Numbering Plan fees prior to prequalification, among others.
Auction transparency
Like previous auctions, NCC has also promised that this one would also be fair to all. On the assignment process, the commission said this will comprise an auction billed to take place during the first week of December, 2014 in Abuja through the application of Ascending Clock Auction system.
Recall that prior to the publication of the memorandum; the commission had gathered stakeholders in Lagos to seek input on how to have a successful and transparent 2.6 GHz spectrum license.
The debate that arose from the forum divided participants and major stakeholders of the industry into two camps. While one part favoured regional based licensing for the spectrum, the other saw national licensing as the trend.
While those who prefer national license for the spectrum argued for a single large operator who could operate alone nationwide, the others argued that regional spectrum sale would 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 standing.
Kick starting the argument was President of the Association of Telecoms Companies of Nigeria, ATCON, Engr. Lanre Ajayi. He argued that it would be an outright disservice to smaller operators, if NCC settles for national licensing method, without considering regional auction where smaller operators would comfortably participate.
Ajayi, however advised NCC to split the slots into regional and national levels, to enable both small and big operators participate in the auction in the interest of fair play.
Corroborating his argument, President of the Nigeria Internet Group, Mr. Bayo Banjo also cautioned that “a spectrum license issued to one operator to provide service in all parts of Nigeria may be inefficiently managed, particularly if it turns out that the operator happens to leave any part of the country from enjoying service after a long while.
He argued that since experience had shown that it is usually very difficult to withdraw the license or penalise the licensee for failing to roll out services in certain areas, splitting the license would make more sense.
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