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Spectrum constraints limiting internet penetration

By Adeyemi Adepetun, Head, Communications and Technology
07 October 2018   |   3:19 am
The demand for wireless broadband has soared due to technological innovations such as 3G and 4G mobile services, and the rapid expansion of wireless Internet services. As a result of this, many new and emerging radio services and technologies are competing to have access to the spectrum. The Electromagnetic Spectrum is a unique natural resource…

Telecom mast

The demand for wireless broadband has soared due to technological innovations such as 3G and 4G mobile services, and the rapid expansion of wireless Internet services.

As a result of this, many new and emerging radio services and technologies are competing to have access to the spectrum.

The Electromagnetic Spectrum is a unique natural resource shared by various types of services, which is free from depletion, but subject to congestion through use.

If left unplanned, spectrum congestion can lead to harmful interferences and hinder users from getting the best these services have to offer.

Spectrum management is the process of regulating the use of radio frequencies to promote efficient use and gain a net social benefit.

The term radio spectrum typically refers to the full frequency range from 3KHz to 300GHz that may be used for wireless communication.

Increasing demand for services such as mobile telephones and many others has required changes in the philosophy of spectrum management.

Frequency Spectrum is, and would remain a major telecommunications market resource licensed to operators to roll out their various telecommunications and other value-added services, as communication systems require a certain amount of electromagnetic bandwidth to operate.

Though not seen, but it has been described as the “life blood” of the telecommunications industry.

A former Executive Vice Chairman of the Nigerian Communications Commission (NCC), Dr. Ernest Ndukwe, described Spectrum as “oxygen that sustains the wireless ecosystem.”

In different parts of the world, organisations allot part of the electromagnetic Spectrum to different users, even as international agreements are often required so that communications systems in neighbouring countries do not interfere with each other.

In Nigeria though, the powers to manage frequency spectrum allocation lies with the National Frequency Management Commission (NFMC), which is usually chaired by the Minister of Communication, while the assignment of parts of the available national spectrum band to telecommunications is handled by the NCC, which regulates the nation’s telecommunications sector.

Global System for Mobile (GSM) communications operators such as MTN, Globacom, Airtel and 9Mobile are currently operating on the 900/1800/1200MHz spectrum, with other spectrum bands allotted to other segments in the telecoms sector such as the Code Division Multiple Access and fixed line networks, to broadcasters and other business concerns.

Spectrum allocation is also key to ensuring smooth wireless communication among agencies, most especially, security operatives, as the regulator agency may deem fit.

Apart from serving as a source of income to the government, having contributed several billions of naira to its coffers over the years, experts contend that the current shift from fixed to wireless communications services, as it is predominantly the case in Nigeria, demands that efficient allocation of frequency spectrum is strengthened by the regulator.

The NCC Director of Spectrum Administration, Austine Nwaulune, who assured that the commission has been doing everything regulatory to manage spectrum in the country told The Guardian that in the last one and half decade, the NCC has earned over N400b from spectrum sales, funds, which have been subsequently transferred to government coffers.

According to experts, as the world becomes increasingly wireless (with cordless phones, cell phones, wireless Internet, GPS devices, among others), allocation of the available spectrum to each technology becomes increasingly contentious, as each user community (usually manufacturers of the wireless equipment) wants more bandwidth in order to be able to sell and service more units.

Impact Of Liberalisation On Spectrum Allocation

The liberalisation of the country’s telecommunications sector in 1992 via Decree 75, and the 2001 digital mobile licence auction may have actually brought attention to spectrum allocation.

This is going by the GSM auction, which ushered in operators, including Econet Wireless, which after so many branding and rebranding became Airtel.

The period also brought in MTN Nigeria, with over 45 per cent market share and about 60 million subscribers. Both MTN and Econet paid $285m each for the GSM licenses.

In 2003, Globacom, was licensed, and so was Etisalat in 2008, which now trades as 9Mobile.

Indeed, between 2001 and now, the NCC has done several auctions. In February 2014, BitFlux Communications beat Globacom to the 2.3GHz spectrum license.

Also, in 2016, in the 2.6GHz spectrum auction, due to perceived high cost, MTN, because of its financial war chest was the only operator, which bided and got six out of 14 available slots.

NCC had set a reserve price of $16m (N3.2b) for a slot of the frequency spectrum.

One lot or slot of the frequency is made up of two portions of 5MHz. MTN as the qualified bidder, paid a total $96m (N19.2b) for the licence – a cumulative 30MHz in the 2.6GHz Frequency.

Nwaulune told The Guardian that the commission is not planning any auction again for this year, “apart from the 2.6 GHz spectrum, there is no other spectrum available this year for auctioning.”

Spectrum And Mobile Broadband Internet Services

AS a result of the revolution in the telecommunications sector, occasioned by the allocation of spectrum frequencies and the ingenuity of operators, today, Nigeria’s teledensity has hit over 115 per cent with 239 million connected mobile lines, out of which 161 million are active.

There are 103 million Internet subscribers, mostly on mobile broadband Internet.

Mobile broadband is changing the way that people live and work by enabling access anywhere, and at any time.

In fact, the growth and proliferation of mobile broadband services is increasingly an important part of overall economic growth.

Access to additional radio spectrum is the oxygen of mobile networks, and failure to adequately make provision for expansion demands for mobile broadband data usage threatens to limit development, innovation and competition in this service.

Despite growth in Nigeria’s teledensity, there are still some 190 access gaps in the country, which is home to about 40 million Nigerians who are without access to basic telephony services.

It is believed that improved business climate and spectrum availability would open those access gaps to services, as alluded to by the NCC.

Indeed, informed observers expect significant spectrum constraints to become apparent within the next five years or so due to massive increase in data traffic in mobile broadband networks.

The process of allocating and assigning spectrum for mobile service is a time-consuming process in most countries and efforts to harmonise spectrum at the international level takes considerable long term planning (between 10 and 12 years).

Because of this multi-year process often required for allocating and assigning new spectrum resources to operators, the Internet Society (IS) is of the view that governments and regulators should ensure that sufficient spectrum is available to support the increasing demands following current and expected data traffic trends.

Going forward, the society said broadcasting and mobile broadband services will need to coexist, because no matter how much spectrum is allocated for mobile broadband, there are limits to the services offered over it, such as popular video content like sporting or entertainment events, which may not be economically or practically carried on the Internet when a high volume of viewers are simultaneously accessing a particular programme.

It stressed that moreover, broadcasting plays a critical role in emergency situations, in that it reaches the largest number of people in the most efficient way.

Broadband Internet Stimulates Economic Development

IT is interesting that the country, through the National Broadband Plan (NBP 2013 -2018) is aiming at enthroning a 30 per cent broadband regime by the end of this year, since there is now a general recognition that the use of broadband Internet has the potential to stimulate economic and social development in low income countries.

For example the UN‘s Broadband Commission for Digital Development has set out a global broadband challenge, which calls on world leaders to ensure that at least half the developing world’s population and 40 per cent of households in developing countries are using broadband Internet by as far back as 2015.

The UN wanted consumers in all countries to have access to affordable broadband Internet services, including in developing countries.

The prominence given to these objectives reflects the commission’s view that broadband infrastructure and services contribute to economic growth and job creation and should therefore be a policy priority.

The UN noted that beyond the already considerable benefits that mobile voice and SMS services have already provided in the region, it can generally impact on businesses; create specific impacts on agriculture, education, research, and healthcare.

It could also impacts on the delivery of government services and impact at the level of individuals and households.

According to the body, with available spectrum, rising take up of access to the broadband Internet over the next 10-15 years will have impact across the whole economy, as use of broadband pervades all business and government activities and becomes an important platform for social interaction and entertainment.

Consumers Still Bear The Consequences Of High Spectrum Costs In Nigeria, Ghana

DESPITE calls for ubiquitous broadband enabled by more spectrum allocations, telecommunications consumers in Africa are said to be the ones bearing the brunt of high spectrum fees in the region, as untold cost are passed to them.

According to the Global System for mobile Telecommunications Association (GSMA), better spectrum pricing policies are needed in developing countries to improve the economic and social welfare of the billions of people that remain unconnected to mobile broadband services.

GSMA in a new report titled: “Spectrum Pricing in Developing Countries,” released by the Association, in Kigali, Rwanda, at the GSMA Mobile 360 – Africa Conference, revealed that spectrum prices in developing countries are, on average, more than three times higher than in developed countries, when income is taken into account.

GSMA stressed that this high spectrum pricing is a major roadblock to increasing mobile penetration.

Authored by GSMA Intelligence, the study also found that governments are playing active roles in increasing spectrum prices to maximise states’ revenues from spectrum licensing.

The report further links high spectrum prices to countries with high levels of sovereign debt, and alarmingly average reserve prices in spectrum auctions are more than five times higher in developing countries than in developed, once income is accounted for.

It also identified a link between high spectrum prices and poorer coverage, as well as, more expensive and lower quality mobile broadband services, all of which hinder the take-up of services by consumers.

Head of Spectrum, GSMA, Brett Tarnutzer said: “Connecting everyone becomes impossible without better policy decisions on spectrum.

“For far too long, the success of spectrum auctions has been judged on how much revenue can be raised rather than the economic and social benefits of connecting people. Spectrum policies that inflate prices and focus on short-term gains are incompatible with our shared goals of delivering better and more affordable mobile broadband services.

These pricing policies will only limit the growth of the digital economy and make it harder to eradicate poverty, deliver better healthcare and education, and achieve financial inclusion and gender equality.”

The GSMA study assessed over 1, 000 spectrum assignments across 102 countries (including 60 developing and 42 developed countries) from 2010 through 2017, making it the largest-ever analysis into spectrum pricing in developing countries, as well as, the drivers and their potential impacts of spectrum pricing on consumers.

GSMA informed that setting high final prices administratively, or setting high auction starting prices (e.g. reserve prices) artificially limits the amount of licensed spectrum available.

It noted that not sharing a clear spectrum roadmap and setting poor auction rules are some of the policy decisions that are also driving high spectrum prices in developing countries.

The Critical Importance Of Access To Spectrum

It is widely recognised that access to Information and Communications Technology (ICT) creates social and economic benefits.

This is reflected in the United Nations Sustainable Development Goals, which includes “significantly increase(ing) access to ([ICT) and striv(ing) to provide universal and affordable access to the Internet in least developed countries by 2020.”

According to IS, ICT provides the basis for opportunity and success in today’s global economy, and enable critical social benefits as well.

From e-commerce to e-health, from emerging industries and technologies to distance learning, from social and political engagement to public safety, ICTs provide the backbone of modern-day societies.

Access to affordable and available spectrum is a foundational principle for ensuring access to ICTs and future network development.

For every community to reap the social and economic benefits of ICTs, IS advised that policy makers must ensure that adequate spectrum is available for community networks, citizens, and other entities seeking to develop networks and provide access to ICTs.

According to it, ensuring adequate spectrum will be the difference between new ICT applications flourishing or languishing, and will be the difference between community networks providing much needed access to under-served communities, “without spectrum, these communities and citizens will not benefit from modern-day developments,’’ it stated.

Challenges confront processes

The Internet Society further added that ensuring access to spectrum is a significant challenge to connecting unconnected areas, especially through community networks, pointing out that the scarcity or perceived scarcity of spectrum threatens the networks’ ability to operate and deliver services.

It added: “Too often, the notion of scarcity has been an argument that stalls competition and delays all manner of network deployment.’’

IS, which stressed that ensuring that adequate spectrum is available for expansion of services is a key policy principle for expanding Internet access, however, said there were several challenges that inhibit the ability of community networks to gain adequate access to spectrum.

These challenges, according to it, include the view that spectrum is scarce. Spectrum is a finite, public resource.

Many believe that rather than focusing on scarcity, we should consider spectrum to be a common resource to be managed efficiently and effectively.

Another challenge highlighted is the fact that traditional regulations have led to inefficient use of spectrum.

This explains why the body pointed out that regulators often favour exclusive and broad licenses, which can result in lack of coverage in some areas and fewer options for multiple and innovative service provisions and spectrum usage.

Also, there is the issue of exclusivity. According to IS, traditional licensing favours exclusive use, as opposed to shared use processes.

Exclusive use licenses provide one licensee unfettered use of a particular swath of spectrum.

This can result to large portions of spectrum being unused or underutilised.

This is happening in the country.

There is also the challenge of broad licenses. Many licenses cover large geographic areas, however, the incumbent service providers that have the rights to these broad licenses may not have the economic incentives to build out their networks to utilise fully, all of the spectrum licensed to them.

This also can result in large portions of spectrum being unused or underutilised.

Spectrum is also seen as expensive, and the Internet Society seems to acknowledge that when it noted that spectrum rights come at high costs.

For example, many regulators auction spectrum rights to the highest bidder, and many charge high regulatory fees for spectrum.

Often, community networks do not have the funding or financial ability to pay for spectrum rights.

What is more, because incumbent service providers have made sizeable investments in obtaining spectrum rights, they often have an expectation of exclusive use of that spectrum that is difficult to combat.

Going Forward On Spectrum Administration

A telecoms expert, Kehinde Aluko, is of the view that that the cost of spectrum rollout is also expensive in the country and must be factored in when the NCC wants operators to bid for any spectrum.

This, he said would enable operators to recover fast enough and ensure unserved and underserved communities are adequately reached.

Aluko said the NCC should consider the revenue sharing arrangement for allocation of spectrum, instead of just focusing on the auction exercise alone, stressing that this would encourage operators to bid.

According to him, the auction process remains the best option, if properly handled to accommodate all players, both the big and the small players.

To the President, Association of Telecoms Companies of Nigeria (ATCON), Olusola Teniola, with such a scarce resource the management of spectrum is critical to the deployment of both communication and broadcast services and the NFMC chaired by the Minister of Communications is the custodian of allocating the usage along ITU-R recommendations.

The crucial challenge is that the frequencies allocated to broadcast applications are managed under a different ministry from those allocated for communication applications even though technology is now converged, this he said could pose a little challenge if not adequately resolve.

In terms of judicious management of spectrum, Teniola reminded that there are certain frequencies in the TV whitespace, sub-90GHz and other spectra where a decision is awaited by industry as to how and who can utilise the spectra under the IMT Roadmap.

According to him, the NCC is looking to address this in line with stakeholder consultation.

He noted that in addition to the normal NCC auction process, there is the secondary spectrum market, where trading is provided for and also the commission has allowed limited national roaming to be trialled upon request.

Speaking on operators holding on to spectrum without utilising them, Teniola said there now exists an opportunity for any owner of unused or dormant radio spectrum to trade it on the secondary market subject to satisfying a number of NCC laid down rules and criteria.

The ATCON president submitted that the availability of high bandwidth is an alternative option to deploying FTTx optic fibre for Internet growth, adding that due to associated costs of fibre and the availability of last mile wireless technology to cover vast parts of the country and population, spectrum availability is strongly tied the growth of Internet access, WiFi or otherwise and hence spectrum is key to the increased broadband penetration over the next 10 years.