Implications of 2.6GHz spectrum on Nigeria’s broadband target

NIGERIA’s telecommunications story is one of huge success. With highly competitive voice tariffs and ubiquitous mobile network availability on GSM, teledensity in Nigeria had grown phenomenally in the last one decade of its existence and this had significant impact on the growth of the economy.

Today, going by the Nigerian Communications Commission’s (NCC) statistics, the country’s teledensity has crossed the 100 per cent mark.

All stakeholders – operators, network equipment players, handset players, Value Added Service players and certainly the government contributed to this. The country is now entering the next phase of mobile revolution, this time in mobile broadband. The country can have a similar data growth story if the right spectrum is available to address the capacity and coverage need.

Data explosion

According to estimate, data is growing exponentially at the rate of almost doubling every year globally and also in Nigeria. With the current pace of growth, the country may need as much as 10 times more spectrum in the next 10 years to cater to this capacity explosion.

Many initiatives are underway in various global standardization bodies like International Telecommunications Union (ITU) to identify possibility of using additional spectrum and alternate methods of making more spectrum available for use for mobility.

For the Nigerian market, 900 MHz and 1800 MHz remain the main spectrum to support existing GSM subscriber base. Migration of existing GSM subscibers from 900 MHz to 1800 MHz, if required, poses its own challenges in quality and reach and is capex intensive.

Talking of mobile broadband, the world refers to 3G and 4G technologies. The current capacity and coverage is good to provide voice services but for data, the country need much more. Last year, 3G as a technology has shown significant uptake and growth in the Nigerian landscape. 2100 MHz is one of the most important bands for 3G uptake in Nigeria. Additionally, wherever an operator has additional spectrum in 900 MHz on top of existing GSM spectrum, the same can be deployed to leverage the coverage benefits of 3G in 900 MHz especially to address challenges related to indoor 3G coverage.

Significant amount of additional 3G spectrum is possible to be made available and this should be the priority of the government in line with enabling the broadband growth.

Resumption of 2.6GHz spectrum auction

As such, last week, the NCC, released a new Information Memorandum (IM) for the 2.6GHz spectrum band auction, which the commission had, last November, suspended, claiming ‘administrative challenges.’

The 2.6GHz is expected to enhance high-speed Internet penetration in the country. The licensing is not limited to industry players—the telecommunications operators alone, new entrants with duely registered certificate with the Corporate Affairs Commission (CAC) is now welcomed.

While announcing the resumption of the spectrum auction rounds, the Executive Vice Chairman of the NCC, Dr. Eugene Juwah, particularly urged interested bidders to look up the Information Memorandum (IM) on the Commission’s website and be guided accordingly.

The IM defines the process that the Commission has decided to adopt for the licensing of 2×70 Megahertz (MHz) paired spectrum available in the 2.6GHz band.

The IM also provides information on the Nigerian telecommunications market, details of the spectrum to be made available, pre-qualification process, the auction process and indicative timetable among others.

Also, throwing more light on the auction during a presentation in Lagos, Director, Spectrum Administration (DSA) at NCC, Austin Nwaulune, said that the 2.6GHz Spectrum had been influenced by the need to open up the space for the delivery of present and future generations of broadband services to subscribers in consonance with the Nigerian National Broadband Plan (NBP) of 2013-2018.

The NBP, approved by the Federal Government in 2013, is a policy direction targeted at increasing broadband penetration to 30 per cent in the next four years.

The new IM showed that the auction will take place during the week commencing May 4, but effectively hold from May 5-8, 2015, with the process taking the Ascending Clock Auction model. In addition, the final result of the winners of the spectrum auctions shall be announced on June 2, 2015.

Noting that the spectrum band is key for both new entrants and incumbent operators, the Nwaulune noted that the Commission arrived at this after wide consultations with relevant industry stakeholders to determine the best way to issue the spectrum.
Critical issues in the IM

“Based on these and observations of developments in the international licensing trends, the Commission has decided to license the available 2×70 MHz slot in slots of 5MHz to be aggregated by applicants through the spectrum auction process,” he said.

The spectrum, it was learnt, will be offered on technology neutral basis but for rollout basis, the Commission will follow the International Telecommunications Union (ITU) recommendation, setting aside Spectrum in the 2.6GHz band for the provision of Advanced Wireless Broadband Services.

According to IM, while the reserved price has been pegged at $16 million for a lot of 2×5 megahertz (MHz), at the end of the auction, each winning licensee will be issued a National Spectrum Licence for 10 years and will also qualify for a Unified Access Service Licence (UASL).

“On completion of the Auction Process, the commission will issue each winner a 10- year National Spectrum licence on a state by state basis and the Federal Capital Territory. Each winner who does not currently hold a Unified Access Service License (UASL), which is the operational licence, will be issued one at an additional fee of N374.6 million,” the IM clearly states.

According to the IM, to pre-qualify, an applicant does not necessarily have to hold any telecoms operational licence but must “must be independent from all other applicants under this allocation process; transfer an intention to Bid Deposit (IBD) being ten percent of the reserved bid price; while licensed 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 pre-qualification.”

Meanwhile, explaining why the Commission opted for the auction exercise for most of its spectrum sales, Nwaulune said that auction exercise is an efficient way to assign scarce spectrum resources.

“Using auction provides better approach to manage competition; a fair and transparent allocation process while it also allows the regulator to allocate to those most likely to deploy resources valuably and to meet the market circumstances, among others,” he said, adding that the NCC was determined to put in place measures to improve broadband penetration in the country.
Going forward

Currently, broadband penetration, which stood at six per cent in 2013, has further increased to eight per cent, according to the Minister of Communication Technology, Dr. Omobola Johnson, who argued that, after having achieved a significant growth in the voice market, achieving ubiquitous broadband is the next growth frontier in the nation’s telecoms industry.

But explaining why Nigeria needs broadband spectrum such as 2.6Ghz to achive is targeted 30 per cent broadband penetration, Director of Public Affairs at NCC, Dr. Tony Ojobo, said: “data traffic on mobile broadband networks in Nigeria is growing exponentially; consumers and business users turned to smartphones, connected laptops, tablet computers; while several other devices to access the Internet, email, business applications and social networking services are also on the rise.”

According to him, broadband spectrum will provide broadband services to the many communities beyond the reach of the limited fixed-line infrastructure; enables operators deliver real broadband and help to realise the National Broadband Plan objective.

He said he spectrum band also provides an opportunity to meet rapidly rising demand for capacity to deliver mobile broadband services on a widespread, common basis across the world.

But Nwaulune posited that the 2.6GHz radio Spectrum band is a ‘capacity band’; well suited for the next generation of broadband technologies and needed by all players in the industry both incumbents and new entrants.