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.
Related insights
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.
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