As technological advances drive up demand for wireless telecoms services, including television, satellite and mobile data, the growth of these services is constrained by the amount of radio frequency spectrum available. According to the GSM Association (GSMA), mobile internet accounts for 58% of all web traffic in Nigeria, well above the 10% global average, and as a result of low fixed-line penetration, makes up 90% of total broadband usage. This reliance on wireless places tremendous pressure on the government and the Nigerian Communications Commission (NCC).
Spectrum allocation is overseen by the National Frequency Management Council (NFMC), while the NCC is charged with managing and regulating spectrum in the telecoms sector. Spectrum is in high demand from a variety of users, including telecoms operators, broadcasters, the aviation sector and emergency services.
Under the current five-year National Broadband Plan, which runs from 2013 until 2018, the government has set out a number of rounds in which blocks of different spectrum bands are set to be released, with the first slot expected to go out for bid sometime in late 2013.
A related move worth mentioning is the country’s progress in completing its migration from analogue to digital television broadcasting signals. If executed within the set deadline, the changeover should yield additional spectrum in coveted higher 2.5-GHz+ bands that are conducive to effectively delivering next-generation mobile technology standards, such as 3G and long-term evolution (LTE) networks.
TAKING INVENTORY: The National Broadband Plan describes spectrum as a “a critical resource of the wireless ecosystem that where necessary shall be refarmed, reassigned and reallocated to benefit new wireless broadband technologies capable of delivering high-speed broadband networks and a regulatory framework developed that will promote optimal use of spectrum”. Current spectrum assignment dates back to 1998, when small slots in the 800-MHz frequency band were issued to a selection of code division multiple access (CDMA) network operators. The first significant issues of spectrum licences took place in 2001 when MTN, Econet (now Airtel), NiTel (M-TEL) and Globacom each received 15 MHz of spectrum in the 1800-MHz band to enable them to launch their GSM networks. Subsequent to this, one additional slot in each of the 1800-MHz and 900-MHz bands was assigned to multinational telecoms operator Etisalat when it joined the market in 2008 as the fourth private GSM operator.
The next round of spectrum is due before the end of 2013 with 40 MHz of frequency in the 2.3-GHz band, and two additional batches expected to follow. Dependent on the speed of the analogue to digital transition, slots in the 2.5-GHz and 2.6-GHz bands should become available between 2014 and 2015.
Following the 2012 World Radio Communication Conference, Zone 1 – which includes Nigeria – secured a share of additional spectrum allocation on the 700-MHz band from the International Telecommunication Union (ITU), which is the UN’s agency for information and communications technology. According to the NCC, country-specific allocation of this awarded slot is expected to take place in 2015, after which point it will be made available to the private sector.
DIGITAL MIGRATION: In accordance with guidelines established in 2006 by the ITU, of which Nigeria is a member, broadcast stations are expected to make the switch from analogue to digital platforms by June 2015. The move is being undertaken to improve overall audio and visual quality, and is also a means of allowing for more channels and viewing options.
Because digital television uses spectrum far more efficiently than analogue transmissions, the execution of the country’s digital terrestrial TV (DTT) migration strategy is expected to free up excess spectrum that will then be able to be reallocated to telecoms operators – an outcome that is known as a digital dividend.
PAYING DIVIDENDS: If properly executed, it is anticipated that the sale of analogue frequencies no longer used by broadcasters could bring the government over $2bn. Research by the GSMA indicates that through the release of digital dividend spectrum, sub-Saharan Africa stands to increase its annual regional GDP by $82bn by 2025, in the process earning $18bn in incremental tax revenues and creating 27m jobs. While digital dividend spectrum can be viewed as a big ticket item that could ultimately facilitate the broader roll-out of LTE networks, the NCC and its regulatory peer the Nigerian Broadcasting Commission (NBC) are also exploring opportunities for using TV “white spaces”, or the unused frequencies that can be made available at locations where spectrum is not being used for licensed services, to help achieve last-mile connectivity in rural areas.
SINGLE REGULATOR: Currently, regulation of the commercial spectrum is split between the NBC, which is tasked with overseeing the implementation of DTT migration, and the NCC, which is mandated to secure spectrum to expand national broadcast capacity. The NFMC is tasked with ensuring that the remits of these two bodies function in a collaborative manner and with resolving any issues over spectrum allocation. Eugene Juwah, the executive vice-chairman and CEO of the NCC, issued a statement in August 2013 that “it is not a question of fighting for turf but of doing things properly so that people know that we are working well in Nigeria for the good of those who need our services.”
Having two distinct entities for spectrum regulation has traditionally been common, though in recent years a number of markets, including Canada, South Africa, and the UK, have combined their regulatory agencies, as broadcasting, internet, radio and telecommunications technologies services all converge.
SCHEDULE PERMITTING: Musa Maiyaki, the acting director-general of the Nigerian Television Authority, has told local press that the country is on track to fully digitise its broadcast services by June 2014 – a year ahead of the international requirement, with the NBC asserting that conversion to digital signals has already taken place in 32 of 36 states. Completing the conversion will be a big task, given that DTT migration is a complicated endeavour, dependent on a number of factors and the involvement of multiple parties. For example, every household with a television set needs access to set-top boxes and decoders that are digitally compatible – no easy task in any country, let alone one with as large a population as Nigeria.
Furthermore, it is necessary that consumers understand the value to be gained in switching over, which makes it critical that content providers make available free-to-air channels for basic subscribers and improve the variety and quality of programming options for pay-to-view customers. It took the UK, for example, nearly seven years to successfully switch over, even with a population of roughly one-third that of Nigeria.
BIDS: While the industry awaits the release of the freed-up broadcast spectrum, or digital dividend spectrum, in 2014 and 2015, the NCC has announced it will issue three batches of new spectrum in 2013, with the first consisting of 40 MHz on the 2.3-GHz frequency band. The NCC’s intention is to auction off 30 MHz to a new operator via a public auction, with the remaining 10 MHz to be allotted as a guard against interference among the three current internet service providers (ISPs) – Mobitel, Spectranet and Direct on PC – which are now already on the band. The firms, each of which was licensed 20 MHz in 2009, voiced their disapproval of the NCC’s plan during a stakeholder forum in Lagos in March 2013, indicating their preference that they be allowed to bid for chunks up to 10 MHz each of the 30 MHz. They did agree, however, that it makes sense to retain 10 MHz as a guard band against interference, which they argue is preventing them from providing better-quality and more-efficient broadband services.
At the hearing, the three ISPs stated that the lack of a guard band had been leading to heavy inter-operator and inter-system interference, resulting in poor-quality service and end-user experience – something that, according to the ISPs, would only be compounded further by adding a fourth operator onto the band. They also argue that a new provider, by being given extra spectrum capacity (30 MHz rather than 20 MHz), would hold an unfair competitive advantage.
Being afforded additional spectrum, the ISPs also contend, would allow them to offer data services “beyond the mundane” and migrate from WiMAX, a technology which is being phased out globally. They referenced Hong Kong, China, Russia and New Zealand as examples of “global best practices” to be followed, whereby existing operators were each given 30 MHz total to operate with on the 2.3-GHz frequency.
OPTIMAL APPROACH: The debate currently taking place is not unique to Nigeria, given that regulators in all countries have to contend with maximising potential revenues, end-user experiences, market efficiency as well as coverage quality. To date, according to figures cited by the National Mirror, a local publication, spectrum auctioning is estimated to have contributed over N300bn ($1.89bn) to Nigeria’s coffers.
Still, some analysts consider the current costing structure for spectrum to be too high, limiting broader growth later on. “Spectrum is a national asset that governments should treat as an enabler rather than an income generator,” Mark Simpson, CEO of Mauritius-based pan-African information and communications technology enabler SEACOM, told OBG. “Other markets are moving forward in allocating spectrum, and those that do not do something soon will face significant and lasting economic damage.”
With the larger cities far outpacing rural areas in terms of broadband connectivity and infrastructure, there are also calls by some to have spectrum allocated on a geographic basis. Bayo Banjo, president of local industry advocacy organisation the Nigerian Internet Group, told the local press in July 2013, “The time has come for the NCC to begin to allocate spectrum based on a regional or zonal basis, based on need and the vision to expand services to the whole country.”
UNDERUTILISATION: On top of decisions on new spectrum allotment, the NCC is also tasked with deciding which approach to adopt in addressing spectrum underutilisation. According to analysts, not all of the companies that have been assigned frequency spectrum have effectively rolled out services. Other firms are underperforming in terms of capacity and coverage, although they are technically providing services.
According to the National Broadband Plan, the NCC has the authority to confiscate the spectrum according to a “use it or lose it” provision that can be applied to licensed spectrum that has gone unused for two years. As of October 2013, however, there has not yet a case whereby the NCC confiscated spectrum from a company deemed to be underutilising it. In fact, many companies provide reasons for their low usage and request an extension beyond the standard two-year term.
NEXT GENERATION: Spectrum will also play a key role in encouraging the roll-out of 4G and LTE networks. Some operators have already begun work on 4G-compliant networks, although without available spectrum they will be unable to roll out commercial operations. However, given that in many markets in Europe, North America and Asia, 4G roll-out was spurred by congestion on 3G networks which struggled to cope with data traffic volume – a factor not wholly relevant in Nigeria – the immediacy of ensuring 4G connectivity is less crucial. Nigeria currently utilises only around 30% of its 3G capacity and is continuing to develop 2G capabilities.
Another constraint is that 4G-compatible handsets. are not yet widely used. Srinivasa KV, the CEO of largest CDMA operator Visafone, said, “It is a bit early for exploiting the full benefits of 4G technology until there are many companies and services to facilitate demand for streaming and other features that can be offered only with 4G.” Spectrum in the 2600-GHz range is expected to be available to mobile operators by 2015, at which point 4G LTE services should be available.
“Nigerians are very tech-savvy and want the latest technology. That is why it is surprising that data penetration growth has been slow,” Bekele Tadesse, the managing director of wireless backhaul provider Ceragon Networks, told OBG. As the custodian of spectrum, the NCC has a daunting task ahead – that of ensuring that scarce and valuable spectrum is put to optimal use.
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