Spectrum Trading And Prospects For Broadband Services




By Chima Akwaja

As the federal government forges ahead with its National Digital Economy Policy and Strategy (NDEPS), CHIMA AKWAJA looks at the spectrum requirements necessary for the telecommunications regulator, to drive Nigeria’s digital economy realisation.

Spectrum is the licensable electronic magnetic band property, which telecommunication operators need to be able to offer wireless services to subscribers, especially in the area of broadband deployment.

In Nigeria, the scarcity of the resource led to calls by mobile network operators (MNOs) to advocate for a secondary market where they can acquire spectrum to roll out services on their network. For long, several operators especially the tier two players have been withholding spectrum which they acquired without deploying such spectrum for effective service.

The fervent calls led the Nigerian Communications Commission (NCC) to establish the Spectrum Trading policy, a practice that permits transfer of spectrum licence rights and obligations from one party to another in various forms and scope after a commercial transaction duly approved by the Commission.

Introduced in April 12, 2018, after serious of consultations and inputs from stakeholders, it has allowed for assigning spectrum with the capability of unlocking the potential of new technologies and reducing barriers to new entrants in the industry.

In Nigeria, spectrum trading is now seen as a key step to be taken in the reform of spectrum management regulatory practice eliminating the artificial scarcities of spectrum, which increase the prices of spectrum using services and affects the competitiveness of different companies.

Executive vice chairman, Nigerian Communications Commission (NCC), Prof Umar Danbatta who spoke at the stakeholder forum in April 2018 on Spectrum Trading at Sheraton Hotel, Lagos said, “The whole essence of introducing spectrum trading regime in Nigeria now is that, it will legally allow for any player holding a redundant spectrum licence to sell/ transfer such spectrum to an operator that is keenly in need of it with NCC only coming in to regulate their transactions.”

According to NCC, the guidelines on spectrum trading are made pursuant to Sections 4 (j) and 121 (1) of the Nigerian Communications Act 2003, which empower the Commission to manage, administer and regulate the use of Spectrum for the communications sector.

The NCC at all times, deploys its resources to facilitate the optimal use of Spectrum as well as to provide an enabling environment for the growth and development of the telecommunications industry for the benefit of all stakeholders.

The guidelines are, therefore, to enhance the deployment of telecommunications services across the country and to further liberalise the spectrum management policy of the NCC towards efficient and flexible transfer of spectrum to users who value it most, lessening the barriers to market entry by allowing flexible access to spectrum, deepening competition, and promoting innovation by enabling entrepreneurs to acquire spectrum and offer new services.

Justification For Spectrum Trading

The guidelines before finally released, was subjected to robust consultation in accordance with Section 57 of the Nigeria Communications Act 2003. With most services being delivered through wireless means in Nigeria, the need to accelerate release of available spectrum bands to existing and new telecoms players has become indispensable.

Industry players said spectrum trading will help in “Bringing some spectrum licences not being used to provide services into active use by those operators that need those spectra to deploy services as Nigeria champions accelerated mobile broadband penetration in the country.”

According to President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, telecoms companies have been waiting patiently for spectrum trading, arguing it is a good and novel policy introduce by the regulator under Danbatta which would help in re-activating the industry by ensuring that “All inactive spectrum licences are given to those who need them.”

With Nigeria now putting the finishing touches to its new National Broadband Policy 2020-2015, after achieving over 30 per cent penetration success rate in the NBP 2013-2018, the success of the new policy will be dependent on effective utilization of spectrum and one of such framework is the Spectrum Trading Guidelines.

President, National Association of Telecoms Subscribers (NATCOMS), Mr. Deolu Ogunbanjo, also justified the need for more spectrum for operators that need them to offer better services to the growing number of telecoms consumers in the country.

He said to achieve a fully digital economy, the country must ensure proper and effective utilisation spectrum and in this case, dormant or sleeping spectrum licences had to be woken up, through Spectrum Trading Guidelines.

Benefits

Danbatta said spectrum trading is a global practice recognised by the International Telecommunications Union (ITU), the United Nations agency regulating telecoms industry globally, stressing that adopting such initiative has become necessary for Nigeria.

He said: “The Nigerian telecoms environment is rapidly expanding and increasing demand for different data services have put considerable pressure for more spectrum by the operators to deliver services as well as enhance quality of services offered,” he said.

The benefits according to him include: Ensuring effective utilization of limited spectrum resources; Ensuring the spectrum is used by those operators who need it deploy services, do business, generate revenue, be in a position to pay taxes for government, provide services for individuals and corporate organisations and then help to bridge 200 access gaps involving some 35 million Nigerians no having access to telecoms services in the country.

He also said it widens service options for Nigerians; contribute to socio-economic development/growth of Nigeria; Will help accelerate the current efforts of the FG for digital economic agenda within the context of the National Digital Economy Policy and Strategy unveiled by President Muhammadu Buhari in November, 2019 and it is a testament to proactive regulatory regime of the NCC since 2015.

One of the major beneficiaries of the spectrum trading policy is Airtel Nigeria which recently completed the acquisition of 10MHz of spectrum in the 900MHz band from InterC Network (formerly Intercellular) for a total consideration of $94 million.

The Nigerian Communications Commission (NCC) has approved the transaction which began in November 2019. Airtel said the additional spectrum will be used to increase the capacity of its existing network, support the further rollout of 4G, and expand its fixed-wireless broadband offering.

It will also allow it to efficiently manage its capital expenditure spend for 4G networks, as Airtel operates a single RAN network and the majority of its sites already support the activation of the additional spectrum. The acquisition will also provide more opportunities for data, digital and home broadband services, improve both voice call quality and data experience, and boost Airtel’s competitiveness in the Nigerian market.

Impact On Nigeria’s Digital Economy

In its ‘Mobile Economy West Africa 2019’ report published recently by the GSM Association (GSMA), half of the 62 million new subscribers which be added to the economy of West Africa by 2024 will come from Nigeria driven mainly by additional spectrum utilisation which will lead to mobile data usage growing seven-fold.

The report said connecting everyone and closing the digital divide is a key policy objective for most governments in West Africa. Radio spectrum is the first building block. However, if mobile operators do not have affordable and predictable access to sufficient spectrum, it will not be possible to achieve universal access, particularly in countries with a high proportion of the population residing in rural and remote areas.

“Given the importance of spectrum to mobile broadband, it is essential for governments and regulators to make the right spectrum decisions individually and collectively. This includes ensuring operators have access to sufficient spectrum in a timely and affordable manner; providing support for new network investments; and avoiding costly restrictions on spectrum use,” the report said.

Driven mainly by productivity gains, the economic contribution of mobile in West Africa which Nigeria controls half of the market, will also increase to almost $70 billion in 2023. “With spectrum allocation and licencing crucial to the delivery of Nigeria’s digital future, the GSMA has identified support for and release of harmonised spectrum and a modernised licensing framework as fundamental building blocks for growth,” the report said.

GSMA added that, “To this end, the harmonisation of 1427–1518 MHz and 3.3–3.6 GHz is critical for mobile operators seeking to offer new mobile services to consumers and businesses in the country. Making these bands available for assignment to mobile operators will be a core component in reinforcing Nigeria’s position as Africa’s leading mobile market.”

GSMA notes that access to mobile is having a profound impact on society, redefining the way individuals and businesses function and interact. “Mobile connectivity brings a range of social and economic benefits by helping to promote digital inclusion and supporting the delivery of essential services and key public policy objectives.

“Poverty eradication, healthcare, education, financial services and gender equality are all impacted. It is vital for governments and policymakers to implement policies that can drive growth and foster innovation in the mobile industry, GSMA stated further in the report.

For the chairman, Association of Licenced Telecommunications Operators of Nigeria (ALTON), Engr. Gbenga Adebayo, his members are already making lots of capital investments necessary to improve Nigeria’s broadband penetration. MTN Nigeria has announced $600 million investment plan over the next three years.

He said currently, Nigeria plans to invest N265 billion ($732 million) to obtain an additional 30,000 kilometres of fibre that will be spread across the 774 local governments in the country. Bridging the gaps is needed to ensure an inclusive digital transformation so that the opportunities are harnessed by all, he said.

“The reality is that telecommunications services and infrastructure underpins just about everything we do – from making payments on our phones to using the internet to learn, running online businesses, using google maps to navigate from place to place, calling our loved ones and business partners, contacting hospitals etc.

“Without broadband connectivity for our computers, phones, and other devices, work, communication, leisure would be harder, more uncomfortable and more difficult. There would be no Skype, no Zoom to connect us to our loved ones or international business associates. We would still be tethered to cable companies, DVDs, CDs and physical data storage — There would be no youtube, no IrokoTv, no streaming network TV. The experience of online shopping with Jumia and Konga would be a myth,” he said.

The ALTON chairman concluded that with a lot of talks about migration to a digital economy and improving the financial inclusion drive in Nigeria, ensuring adequate access to communication infrastructures for all citizens is essential for the realisation of the opportunities of digital transformation.(Leadership).

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