Johnson and Juwah
| credits: File copy
| credits: File copy
Information
and Communications Technology stakeholders are optimistic that the
successful auction of the 2.3GHz spectrum will boost the Federal
Government’s broadband programme, STANLEY OPARA writes
After months of suspense over the bidding
process for the 2.3GHz spectrum, the controversy that has engulfed the
country’s ICT industry last week was brought to an end as an unexpected
bidder, Bitflux Limited, emerged the winner of the spectrum.
Hopes were therefore raised that the development will have a great impact on Nigeria’s broadband roadmap.
A spectrum auction is a process whereby a
government uses an auction system to sell the rights (licences) to
transmit signals over specific bands of the electromagnetic spectrum and
to assign its scarce spectrum resources. Depending on the specific
auction format used, a spectrum auction can last from a single day to
several months from the opening bid to the final winning bid.
With a well-designed auction, resources
are allocated efficiently to the parties that value them the most, while
revenue accrues to the government in the process.
In the past decade, telecommunications
has turned into a highly competitive industry where companies compete to
buy valuable spectrum. This competition has been triggered by
technological advancements, privatisation, and liberalisation.
The transparent process, through which
the winner emerged, appeared to be unquestionable to all. This notion
was also consolidated by the firm which lost out in the bid – Globacom
Limited; as it (Globacom) admitted that its decisions with respect to
its offer price for the licence was in line with a stipulated business
model.
This, however, puts an end to possible
clamour or protest by Globacom in the short, medium or long run as the
company had taken the outcome of the bid in good faith. This, according
to industry watchers, represents one great progress for the ICT
industry.
Bitflux, now, is expected to concentrate
on meeting its financial obligations to the government on the deal; and
all things being equal, start operations in the shortest possible time.
The firm has 14 business days to pay
$23,251,000 (which is the amount it offered for the spectrum) starting
from February 19, 2014.
“Failure to do this, the offer to pay
goes to Glo,” the Executive Vice Chairman, Nigerian Communications
Commission, Dr. Eugene Juwah, said while announcing the winner of the
bid.
The NCC boss also stressed that even if
Bitflux complied in paying in 14 days, it would be given another 30 days
to pay N155m for the licence because it does not have a Unified Access
Service Licence, which allows it to deploy services on the band.
It is after all these financial obligations have been met that the NCC will issue the licence to Bitflux, according to Juwah.
Bitflux and Globacom qualified at the
pre-qualification stage from 19 operators that initially indicated
interest to bid for the spectrum licence.
The bidding started with a mock auction a
day before the actual auction. The actual bid was witnessed by
government officials, industry operators and regulators, as well as the
media.
The Director, Spectrum Administration,
NCC, Mr. Austin Nwaulune, had said the Commission was operating an
ascending clock auction model, where the bidders were expected to
continue increasing their bid prices until a winner emerged. The entire
process, however, was computer-based.
With a reserve spectrum price of $23m and
mark-up of 15 per cent, the bid process started from $26.4m. At this
level, none of the bidders indicated interest probably because of the
high price.
This, therefore, resulted in the NCC
calling for a second bid, which must be above the reserve price of $23m
owing to the fact that the ceiling price – $26.4m – was considered
rather high.
Bitflux is a consortium of three
companies including VDT, BitCom and Superflex, while Globacom is the
country’s second national telecommunications operator.
In a bid to ensure transparency, the NCC
had said it made sure that the pre-qualification criteria did not make
it necessarily mandatory for applicants to have any telecommunications
operational licence in Nigeria.
However, applicants must be companies
registered with the Corporate Affairs Commission and must transfer an
intention-to-bid deposit of $2.3m into a designated bank account.
The NCC said the deposit would bind the
applicant to take up a licence, should it be a successful bidder, at the
reserve price or any higher bid value submitted during the process.
The regulator also stressed that applicants must be independent from all other applicants under the allocation process.
The licensed operators that participated
in the process had to fulfil all existing obligations to the commission,
including the payment of the annual operational levy and Spectrum and
National Numbering Plan fees prior to pre-qualification.
All things being equal, Bitflux will be
granted a Wholesale Wireless Access Service Licence; and the tenure for
the WWASL licence will be 10 years, subject to renewal.
The NCC EVC had said that the licensing
of the spectrum would engender a deeper broadband penetration in the
country. Available data indicates that the country currently has a six
per cent broadband penetration but hope to achieve about 30 per cent of
the same by 2017.
Such penetration, he added, would further
spur a huge potential for the nation’s economic development even as ICT
is now contributing about eight per cent to the nation’s Gross Domestic
Product.
The Ministry of Communication Technology
had already started a sensitisation programme under the National
Broadband Roadmap, which is aimed at mobilising the industry, the
governments and the general public to become aware and be receptive to
the various broadband initiatives in the broadband roadmap.
The Minister of Communication Technology,
Mrs. Omobola Johnson, said, “You are aware that the broadband council
is already tracking the implementation of this roadmap. We have also
established very critical collaborations and even signed some agreements
at the various levels between governments at all levels and the
telecoms operators.
“The emergence of a wholesale wireless
broadband service provider today, will key into that aspiration of the
Federal Government, the Ministry of Communication Technology and indeed
the industry, to accelerate and optimise broadband potentials for our
socio-economic development.”
Johnson said the Federal Government was
encouraged by empirical statistics that broadband could transform lives
and the nation as a whole as it is already doing in countries where they
are optimally deployed.
She said, “We will continue to make
reference to the often quoted statistics of a 10 per cent increase in
broadband penetration delivering a 1.3 per cent increase in GDP.
“That in simple explanation means that
broadband can increase business productivity, can lead to the creation
of new businesses and jobs, can save lives, can deliver much needed
skills in a developing nation, can provide security, can improve social
engagement, and enrich governance.
“The fact that the ICT sector contributes
over eight per cent to GDP means that broadband will accelerate the
contribution to GDP in many folds.”
According to Johnson, what is more
encouraging is that the country’s telecoms growth rate at about 30 per
cent per annum indicates a quick return on investments.
That, she said, meant in the long run, that investments could be sustained and further growth achieved.
“As I have always said, if we can achieve
our targets of a fivefold increase in broadband penetration by 2017
from six per cent to 30 per cent, we will deliver through broadband, a
phenomenal three per cent increase in GDP,” she added.
The President, Association of Telecoms
Companies of Nigeria, Mr. Lanre Ajayi, pointed out that the conduct of
the spectrum auction was of global standard, and would go a long way in
instilling confidence in the system; thereby attracting potential
investors to the country.
A Director at Bitflux, Mr. Tokunbo
Talabi, while expressing hope of increased broadband access in the
country courtesy of the 2.3GHz band, said the decision by the firm to
bid for the licence and the result of the bid process, were in tune with
the business plan of Bitflux.
He, therefore, said the
firm now had only one option, which was to consolidate on its mandate
and give Nigerians value as far as broadband access was concerned.
Source PUNCH.
