Telecom investments threatened by poor spectrum management

•Hinders telcos from expanding mobile broadband services
Ben Uzor Jr

Nigeria’s telecommunications industry risks losing huge foreign direct investment as a result of poor management of the national frequency spectrum resources, analysts warned at the weekend. The nation’s telecommunications industry ranks among the top 10 in attracting FDI in sub-Saharan Africa and analysts told Business Day that the sector could miss its slot as investors are already taking a second look at the industry.

National frequency spectrum refers to the entire range of electromagnetic communication frequencies available to a particular country, including those used for radio, radar and television. According to the analysts, one of the key drivers for the success recorded in Nigeria’s telecoms landscape was the country’s impressive rating as one of the top ten receivers of FDI in Africa, based on the investment made in the telecoms industry.

Investment in telecommunications sector since 2001 has exceeded $18 billion, out of which about $12 billion is from FDI while the balance is from local investors. Ernest Ndukwe, immediate past executive vice chairman (EVC), Nigerian Communications Commission (NCC) had earlier warned that for Nigeria to attract more foreign investment into the telecoms sector, there was an urgent need to efficiently manage the country’s frequency spectrum resources.

This, he further explained, would include the timely sale of available spectrum bands to support the rollout of new technologies and services. Meanwhile, telecoms operators (telcos) have complained that spectrum unavailability is hindering them from expanding mobile broadband services in Nigeria.

This is even as growth in voice service revenue is expected to stagnate, industry analysts say, thereby putting pressure on operating companies to key into data (internet) offering as a valuable new revenue stream. Wale Goodluck, corporate services executive, MTN Nigeria, who spoke to BusinessDay in a telephone interview at the weekend believes that optimal management of frequency resources will not only boost rollout of new technologies but also improve the quality of broadband services delivered by operators in the country.

“We must look at diverse alternatives to drive broadband capacity. There is a fundamental need to implement a clear spectrum policy that will lead to ubiquitous mobile broadband services. The ‘digital dividend’ must be allowed to bear fruits in Nigeria. Government must speed up the allocation of digital dividend spectrum to mobile services. They must ensure that spectrum is resold thus freeing up a lot of frequency not in use but held by people and institutions without the requisite capacity to deploy services. We must also look critically at spectrum sharing”, he noted.

The digital dividend spectrum located between 200 MHz and 1 GHz offers an excellent balance between transmission capacity and distance coverage, thus enabling efficient network deployment. Due to its good signal propagation characteristics, fewer infrastructures are required to provide wider mobile coverage, allowing communications services to be provided in rural areas at lower costs.

Lanre Ajayi, president, Nigerian Internet Group (NIG) has also emphasised the need for proper management of national frequency resources so as to sustain the remarkable growth recorded in the telecoms sphere. “Yes, I have always talked about this issue; the Federal Government has not managed our national frequency resources properly. In the early stages of Ndukwe’s tenure, management of spectrum was nicely done and it was applauded around the world. This is however not the case today.

There are three spectrums adopted globally for WiMAX deployment and they are the 2.3 GHz, 2.5 GHz and 3.5 GHz spectrum. In Nigeria, all of them are having issues. For instance, the 2.5 GHz spectrum remains ideal for WiMAX and LTE deployments but is still managed by the National Broadcast Corporation (NBC). In the case of the 3.5 GHz spectrum, NIGCOMSAT is holding strongly on to it.

I will not be surprised if investors shy away from investing in the country’s telecoms sector. Naturally, they will want to invest in other countries in Africa where they can get the needed spectrum to roll out the new services”, Ajayi told BusinessDay at the weekend.

Besides, Nigeria faces another dilemma with much of its available 2.3 GHz spectrum lying dormant at the hands of existing WiMAX operators with no imminent plans for deployment of services. Analysts say part of the responsibility of the regulator would be to guarantee that these frequencies are allocated to operators that would use them.

This, they said, was because the allotment of such frequencies to the mobile industry would assist the sector to potentially get ahead of many markets, thus putting Nigeria on the front foot rather than playing catch-up. But more importantly, it could dramatically speed up the rollout of broadband communications and increase coverage.

In 2009, the late Umaru Musa Yar’Adua’s administration cancelled the licensing of the 2.3 GHz spectrum band conducted by the NCC on the grounds that “the letters and spirit of the stipulated rules and guidelines were not adequately complied with.”

The late President thereafter directed the NCC to initiate a fresh process for the award of the 2.3 GHz spectrum band license. Consequently, the telecom regulator disclosed recently that it was urgently looking at feasible ways to provide new licenses for spectrum dependent services on 2.3 GHz, 2.5 GHz, 3.5 GHz and 5.4 GHz spectrum bands.