The Nigerian 3500 MHz Spectrum Auction
A review of the NCC’s 3500 MHz spectrum auction and the learning for other regulators seeking to award spectrum to support the development of mobile broadband and 5G.
The history of mobile spectrum allocation in Africa has been fraught with challenges, notably in the execution of regulator-led auctions. However, recent instances have earned industry acclaim. Notably, the Tanzanian Communications Regulatory Authority’s (TCRA) 2018 allocation of 700 MHz spectrum and the Nigerian Communication Commission’s (NCC) successful auction of 3500 MHz spectrum have garnered positive attention for their transparency, simplicity, and professional execution.
This paper presents a detailed review of the Nigerian auction. It highlights its commendable aspects while addressing key concerns and future challenges. Reserve price selection emerges as a critical factor in this analysis, shaping the success of such endeavours in the African context. Coleago, involved with a winning bidder in the Nigerian auction, offers valuable insights into these processes, aiming to aid regulators in devising effective spectrum award methodologies.
Highlighted Positive Aspects
- Clear and straightforward pre-qualification criteria encouraged wider participation
- Recognition that overly high auction prices conflict with demanding coverage obligations, although a balance is sought between economic welfare and obligations
- Appropriately designed auction structure, with some reservations about its sequential nature
- Well-articulated and comprehensive information memorandum (IM)
- Timelines, though tight, were manageable, albeit a slightly extended period would have been preferable
- Efficient execution facilitated by an electronic platform
Key Concerns and Challenges
- The sequential nature of the award process led to substitution and exposure risks, complicating bidding strategies
- The pivotal concern revolves around setting the reserve price in the subsequent auction based on the first auction’s achieved price, potentially influencing its success significantly
Critical Analysis
While acknowledging the auction’s notable strengths, particularly in design and execution, substantial concerns about its sequential nature and reserve price strategies emerge as significant challenges for future spectrum auctions.
Recommendations
- Consider revising the sequential nature of auctions to mitigate bidding strategy complexities
- Reevaluate reserve price strategies to ensure broader participation and improve the likelihood of success in subsequent auctions
Conclusion
The Nigerian 3.5 GHz auction displayed admirable qualities yet faces significant hurdles, primarily tied to its sequential design and reserve price determination. Addressing these concerns could be pivotal in enhancing the efficacy of future spectrum auctions in Africa.
This summary encapsulates the salient aspects, merits, concerns, and recommendations derived from the Nigerian 3.5 GHz spectrum auction, aiming to provide regulators and stakeholders with comprehensive insights for future spectrum allocation processes.
Other insights
The End of Telecoms History? Not Really
In his book The End of Telecoms History, William Webb uses extrapolation of mobile data usage growth curves to claim that mobile data user requirements are nearly met
and that we have all we need
. He predicts mobile data usage to plateau at around 15-20 Gbytes/user/month
. Webb claims that no further investment in 5G capacity is needed and that the only remaining problem is ubiquity, notably in-building coverage. This article provides evidence that, while the author makes some good points, his analysis with regards to mobile data usage is flawed and hence the conclusions he draws are quite wrong.
Mobile Network, Spectrum, and Public Policy Outlook to 2030
The report is based on the Coleago report ‘Mobile Services, Spectrum and Network Evolution to 2025’ (March 2021), updated to align with the latest developments as well as with market projections to 2030. It provides a review for telecoms regulators and mobile operators of key global developments, insights, trends, and best international practices, to inform future spectrum policy and management as well as operator strategies.
Kazakhstan 3.6 GHz Spectrum Auction
The Ministry of Digital Development, Innovations and Aerospace Industry of the Republic of Kazakhstan recently announced the results of their spectrum auction for two 100 MHz lots of 3.6 GHz spectrum. The spectrum was acquired by a consortium formed by mobile operators Kcell and Mobile Telecom Service (Tele2-Altel), both part of the Kazakhtelecom Group.
Future Utilisation of the 470-694 MHz Band in the UK
In this report, written for the UK Spectrum Policy Forum ahead of WRC-23, Coleago explores the future use of the 470-694 MHz UHF band in the United Kingdom post 2030. The band is sought after and used by a wide range of services, including digital terrestrial television (DTT), programme-making and special events (PMSE) and mobile services amongst others.
Vision 2030: Low Band Spectrum for 5G
In this report, written for the GSMA, Coleago explores why low band spectrum is the cornerstone of digital equality and affordable connectivity to ensure that mobile’s economic and social benefits can be felt in all communities.
The South African Spectrum Auction: An Insider View
A review of the recent South African spectrum auction and the learning for other regulators seeking to award spectrum to support the development of mobile broadband and 5G.
