Under Nigeria’s National Broadband Plan (NBP), launched by the Federal Ministry of Communication Technology (FMCT) in 2013, the government plans to increase wireless broadband penetration in the country to 42% by 2018. This represents a major jump on the current rate of 6% over a relatively brief span, but there is precedent for growth of this magnitude in Nigeria’s broadband market. According to FMCT data, by 2014 the country’s overall bandwidth capacity was around 9000 GB per second, up 26 times on 2009, for example.
To support continued rapid expansion in this area, in early 2013 the Nigerian Communications Commission (NCC), the federal telecoms regulator, announced a series of spectrum allocation auctions, with the goal of improving wireless broadband access, particularly in rural areas.
Nigeria’s spectrum is currently underutilised, despite rapidly growing demand from a variety of industries, including telecoms operators, radio and television broadcasters, internet service providers and other ICT firms, emergency services, the nation’s security apparatus and the aviation industry.
Additionally, as the broadcasting sector switches to digital technology in the coming years, a considerable amount of new spectrum is expected to become available. “As we migrate from analogue to digital broadcasting, a significant amount of spectra will become free,” Omobola Johnson, Nigeria’s minister of communication technology, told local media in May 2014. “Spectrum is the life blood of mobile broadband… and mobile broadband is the way that most Nigerians will access the internet.”
The NCC and Nigeria’s National Broadcasting Commission (NBC) have issued hundreds of spectrum licences since the early 1990s, when the country began selling spectrum to private companies. By 2010 Nigeria was home to around 350 licensed broadcast radio and TV stations, and more than 300 licensed private telecoms firms of various types, making it the leader in Africa in terms of spectrum deregulation and licensing. Companies that provide mobile and fixed wireless services – including the major mobile telecoms operators – control a considerable percentage of the country’s digital spectrum, which was first issued in 2001. These firms operate under licences that grant them frequency on the 800-MHz, 900-MHz, 1800-MHz, 2.0-GHz, 2.3-GHz and 3.5-GHz bands, among others.
Boosting spectrum availability and utilisation is a key objective under the NBP. While the NCC does not track spectrum utilisation, according to a study carried out in Abuja and published in the al Journal of Computer Science in early 2013, a “large portion of the allocated spectrum is underutilised”. Under the NBP the NCC has the authority to appropriate spectrum that has gone unused for two years.
Freeing Up Spectrum
Nigeria is currently in the process of implementing the transition from analogue to digital broadcasting, which is expected to clear a considerable amount of spectrum in the valuable 700-MHz and 2.5- and 2.6-GHz bands.
While the NBC and the NCC had originally planned to complete the analogue-to-digital migration process before June 2015 – in line with a global deadline established by the International Telecommunication Union (ITU) in 2006 – this effort appears to have fallen behind schedule, due in large part to an apparent lack of financing.
“The heavens will not fall if Nigeria fails to meet the deadline,” said Emeka Mba, the NBC’s director-general, at a digital migration summit in Lagos in May 2014. “There are implications like signal interfer-ence, missing out on new business opportunities that may spring up due to the digitisation and the country not being able to compete strongly in the global digital arena, but we will still move on.”
In the meantime, in recent years the NCC has carried out a number of spectrum auctions for other frequency bands, in line with plans laid out under the NBP. In February 2014 Bitflux Communications Nigeria won an auction for a 10-year licence for 30 MHz on the 2.3-GHz spectrum with a bid of $23.25m, beating a $23.05m bid from Globacom, the country’s third-largest mobile operator. Bitflux is a consortium consisting of local communications firms VDT, BitCom and Superflex.
Initially, 27 bidders expressed interest in the auction, including local majors like Airtel, MTN, Etisalat, Mobitel, Main One and the Zinox Group, among others. Airtel and a handful of other firms eventually withdrew their bids, with Airtel’s CEO, Segun Ogunsanya, stating that the firm planned instead to bid on frequency in the 700-MHz band, some of which was expected to come up for auction before the end of 2015, with more becoming available after the analogue-to-digital transition was completed.
The auction of the 2.3-GHz frequency went forward despite criticism of the deal. In early 2013 the broadband service providers Mobitel, Spectranet and Direct on PC – all of which already operate on the 2.3-GHz band – announced that they were opposed to the issuance of the new licence on the grounds that additional traffic at 2.3 GHz would cause interference in the band, which would, in turn, have a negative impact on their business. There are currently no guard bands in place separating the various frequency allocations at 2.3 GHz, which has contributed to the interference issues.
The NCC and related entities plan to issue additional licences at other frequencies in the coming years. In April 2014, for example, the NCC announced that it planned to sell licences for 20-25 MHz in the 3.5-GHz band in 27 states and the Federal Capital Territory. In addition, the commission has announced plans to auction off bandwidth in the 700-MHz spectrum in 2015.
Under the NBP the government will eventually issue licences for frequency in the 2.5-GHz and 2. 6-GHZ bands, which are ideal for long-term evolution (LTE) telecoms services. As such, bandwidth at these frequencies is expected to earn high prices at auction, with most of Nigeria’s major telecoms operators planning to participate.
Finally, the 800-MHz band – which is also ideal for LTE services – will eventually also be auctioned off, though the timing for this deal remains unclear due to the fact that the band is largely populated by a handful of CDMA operators. Since the early 2000s the CDMA segment has accounted for a steadily shrinking percentage of the telecoms market as a whole. By early 2014 CDMA operators had less than 2% of total mobile subscribers, for example. Under the NBP the government plans to “re-farm” the band, an expensive operation that involves buying out and decommissioning the current operators and auctioning off their bandwidth to new service providers. This process was under way at time of press.
One major challenge to the rapid deployment of new spectrum is the sheer number of government entities that are involved in the sector. The NCC has a mandate to license new spectrum in an effort to boost national wireless capacity, particularly in rural areas. The NBC, meanwhile, is responsible for implementing the transition to digital broadcasting and, subsequently, handing off the newly cleared frequency to the NCC. These two entities are managed in part by the National Frequency Management Council, an advisory body that is chaired by the minister of communications technology and composed of representatives from various other ministries and government entities.
In 2012, as part of a raft of telecoms and ICT policy recommendations put forward by the FMCT, the government announced that it planned to merge the NCC, the NBC and the Nigerian Postal Service into a single entity. This plan, which in 2013 was approved by Nigeria’s Cabinet, the Federal Executive Council, was widely lauded as a means of streamlining oversight in the telecoms and ICT sectors. Yet in April 2014 the government announced that it would not move forward with the merger. The potential high cost of combining the entities was cited as the primary reason for the decision, though political pressure from various quarters likely also played a part.
If the spectrum sell-off continues as planned, the government stands to earn a substantial amount of money in the coming years. According to media reports, by mid-2013 spectrum auctions had already brought in more than N300bn ($1.83bn) in government revenues, and this figure is expected to grow as the state moves forward with sales of high-demand frequency bands.
In terms of private sector development, the sale of new bandwidth has resulted in the introduction of 4G LTE services, which are spreading rapidly across the country. Perhaps more importantly in the short term, the continued sale of wireless spectrum has the potential to improve wireless broadband access in rural areas, in particular, which has major implications for economic development and job creation.
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