The National Communications Authority would, between November 18 and 24, auction two spectrum blocks in the 800MHz band suitable for 4G LTE.
It will then name the eventual winners after a fair competitive bid on exactly November 25, 2015, as contained in this earlier story.
This is not the first time the NCA would be issuing 4G spectra. About four years ago, the regulator working on behalf of government, decided to give away three 4G compliant spectra strictly to only wholly-Ghanaian-owned entities to enable them comfortably enter the mainstream telecoms space, which was largely built and controlled by multinationals. The idea was to allow Ghanaians some fair chance into the booming telecom industry in pursuance of the popular local content drive.
The NCA thought it wise that because the other major telecom licenses were already largely or wholly in the hands of multinationals, it was not wise to open tender for the new and superior Broadband Wireless Access (BWA) license in the 2600MHz spectrum band for all players, so it was limited to locals only and the three, Surfline Communications, Blu Telecoms and Goldkey Telecoms eventually got the licenses for a meager $6million each.
The existing multinational telcos were not too happy about the NCA's decision to sideline them on that occasion, because the spectra given out were very good, not only for 4G LTE, but also for the improvement of quality of service and innovation even on 3G networks. And quality of service is critical to the telecoms industry. But the NCA thought it was in the best interest of the country to deny the greater majority of Ghanaian subscribers of the six multinational telcos and give the spectra to three greenhorns to start from scratch.
The terms of the license were clear from the beginning. The main ones were that they were to start operations within 18 months from the time the license was awarded, and do only data services until they are able to cover 60% of all 170 district capitals over a period of five years. But once an operator is able to meet the coverage threshold ahead of the five years, that operator can start voice service immediately. The licenses were also not to be sold to foreigners like the 2G/3G ones have gone. The license conditions stated clearly that even if any of the BWA license holders decide to sell shares in the future, they can only sell up to 30% to foreigners and keep the 70% still in local hands. There was nowhere in the license where government promised to give them forever to invest and recoup their investment and make profits before any other player would be allowed into the space they got exclusively.
Three years on, and the three wholly-Ghanaian-owned BWA (4G LTE) license holders are still struggling to deploy the technology to benefit the greater majority of Ghanaians. So far, Surfline is the only operator who has showed promise in covering a significant part of Accra and is now going into Kumasi (Ashanti Region) and Takoradi (Western Region). Blu is still struggling to be noticed even in Accra and Goldkey is still dormant; they have started absolutely nothing. Indeed a Goldkey official was said to have retorted once that the BWA license document is the most expensive piece of paper the company owns.
In three long years Ghanaians are yet to feel the real impact of a priced national asset given to three Ghanaians for way cheaper than what it was really worth. Each of the three licensees got their license for only US$6million each and in three years they claim to have invested US$200million deploying their networks. Some perspective on this matter would do. The NCA is auctioning the current 800MHz spectra for US$67.5million each. So the floor price for the two comes to US$135million. Meanwhile, at the auction, the highest bidder could be paying way more than the floor price and that is more money for the state. Meanwhile Surfline, Blu and Goldkey together paid only US$18million for the three licenses, which they have had for more than three years without any significant deployment, and they still want more time to keep denying Ghanaians of the benefits of a resource Ghanaians own.
Protectionism and local content
Recently the three BWA licensees have constituted themselves into what they call the ICT Chamber, and have appointed a renown broadcaster and lawyer, Paul Adom Otchere to speak for them and virtually attack the integrity of the 3G players, whose services the BWA license holders and their staff use for voice communication today. They are trying to get government to stop the digital,dividend spectra auction and give all of it to the existing BWA players for only US$83million. Obviously they want to take more of Ghana's most priced assets for cheap again, after taking the first three of that chicken feed.
In pitching their argument, the ICT Chamber played the local content card in a very calculated way to whip up emotions rather than critical reasoning. They posited that the spectra up for grabs are the "most priced assets of the country" and it would be dangerous to put them in the hands of foreign entities, as in the multinational telcos in Ghana now. They also stated that when government gave the BWA licenses to Surfline, Blu and Goldkey, government promised to allow them to make and recoup their investment and make "a handsome return on their investment" before allowing competition into the space. One is yet to see that promise and who made it, but the ICT Chamber is bent on questioning government's integrity for failing on that supposed promise.
Speaking of local content, the opportunity to invest into Ghana's mobile broadband and telecom industry for the benefit of Ghanaians did not come today. It has been here for decades. Indeed the initial licenses were all awarded to Ghanaians and eventually they sold either majority shares or all the shares to the multinationals. It is the multinationals who brought in heavy doses of cash, largely borrowed from abroad, and took all the risks and invested to make the industry what it is today. The multinationals are employing millions of Ghanaians directly and indirectly and they continue to invest millions of dollars every year to improve services. ICT Chamber talks of US$200million investment in three years, but 3G multinationals are investing probably three times that amount in just a year. MTN Ghana alone has earmarked US$120million for investment this year. Even if the each four other GSM players invest half of that a year, that is way more than the US$200million the Chamber is boasting about.
Besides, the telcos investments have led to the creation of several value added service providers (VASPs) and several other innovations in other sectors. Their investments have opened the eyes of Ghanaians to the benefits of mobile technology services and now Ghanaian investors can see the need to also look at telecoms. Local investors who took the easy way and avoided the risk in investing in telecoms, have now seen the need to come into telecoms and they want everyone to be shortchanged in their favor as they come.
There is a popular Akan adage which says "Okomfo bone-a watena oyarifo ho ama Okomfopa abetow no, yen yi no emma" to wit "the bad traditional priest who sustained the infirm for the good traditional priest to come meet the infirm alive should not be thrown to the dogs." In other words, no matter how bad you think a person is, once he kept a dying man alive for the doctors to come meet him alive, he deserves praise rather than condemnation. But the ICH Chamber is starting its campaign by telling the public how the 3G guys have failed to deploy their existing resource and yet they want new spectra.
Interesting argument, because just three years ago, the members of the ICT Chamber were also given some of Ghana's most priced assets. As we speak one is working, the other is pretending and the last one is just dormant. So what have they also done with the resource put in their hands for cheap to warrant more of the same for cheap? Meanwhile, how long must Ghanaians wait to start enjoying their resource affordably and on a wide scale?
Why would the ICT Chamber members come into a competitive market and seek protection from the people who have invested heavily to make it juicy and attractive? As we speak, MTN is about the only telco in Ghana making real profit after tax. The rest are not but they keep investing heavily to improve network quality with the hope of getting some returns over time. Who is giving them protection while tour struggle to make "handsome returns on their investments"?
There is no telling how important this new spectra would be to the telcos' effort at improving service quality for Ghanaians and also open the door for more innovations like mobile health, mobile education, mobile agriculture and many more. So 4G LTE is not the only benefit to be derived from the spectra going on auction; better data speeds, voice quality and many more are assured on 3G as well, so what is the ICT Chamber saying?
Again, speaking of local content, Ghana's agricultural sector needs more sophisticated local content than the competitive telecom industry. One wonders why the few rich Ghanaians whose interests in this big business has been tagged local content, are not going into agriculture if they really want to help this country. Telecoms is not for the faint hearted. It is not for small boys. After all, all the other telecom licenses, apart from Glo's were given to Ghanaians, but today, where are they – if it was that easy for Ghanaians to make the required investment, why did they sell them? Even government sold majority of its shares in Ghana Telecoms to Vodafone. Let no one come seeking protection just to deny the greater majority of Ghanaians for their selfish interest now, only to turn around and sell to a spaghetti of foreign companies tomorrow.
One other issue of interest is the fact that the BWA licensees think three years was not enough for them to have achieved a lot. MTN acquired Areeba in 2006 when there were only 2.5million customers. In three years MTN grew sub base to more than 8million. Three years is a long time in the life of a telecoms operator. What have the BWA license holders been doing in three years? Together they can't even boast of 40,000 customers, the last time one checked. Abysmal, and they want more spectra for less and at the expense of everybody else.
I have read the ICT Chamber CEO's analogy about how Multimedia and some local banks were helped to grow when all the odds were against them. But honestly, at the time Multimedia was entering the market, had any one made any heavy investment to grow the media landscape only for multimedia to get in and start seeking protection against some big players? The answer is a big NO. Was Multimedia protected against the entry of others into the media landscape, the answer is No. So if Multimedia took loan, let the BWA licensees also go for loans; if Multimedia was not protected why should the BWA folks be protected? Even if local banks got some protection, was it at the expense of all Ghanaians – was it such that the greater majority of Ghanaians were denied the benefits of a growing banking sector? That is a big issue here.
It is interesting how the ICT Chamber is fighting against 4G spectra getting into the hands of the existing 3G multinationals. On the flip side though, some of the BWA licensees have seen the sense in striking partnership deals with the 3G players because they know the latter have the subscriber base and the widely spread infrastructure. This writer can confirm that some of the BWA licensees are busily negotiating partnership deals with some 3G players for the benefit of the greater majority of Ghanaians. So what is the Chamber fighting? In fact it raises questions as to who the ICT Chamber is really fighting for.
Is the Chamber saying that Ghanaians should continue to put up with what it called "poor 3G services" until its members are able to recoup their investments and make handsome profits? Maybe the Chamber should tell Ghanaians how long that would be, because the pace at which they are moving, it does not look like that day will come anytime soon. What they could rather be fighting for is the opportunity to do voice immediately, if they believe they can compete, or do partnerships with the existing telcos as some of them are trying to do.
Again, in their response to the NCA they raised questions about the licensing requirement to provide coverage in 60 per cent of all district capitals. They did point out the rate at which the political class keep creating districts is a drain on their investment. That is a fair point and the NCA has promised to look at it, in conjunction with other stakeholders.
But this desperate attempt to deny Ghanaians of the benefits of a superior spectrum just to protect a few local investors who chose to invest their moneys in oil and real estates and other things, only to come seeking protection from multinationals who created a boom in the telecom industry is not cool at all.
Ghanaians are looking forward to the auction between November 18 and 24, and the announcement of the winners on November 25 this year.
Already, the telecoms market leader, MTN has announced its readiness not only to use the spectra to improve 3G services, but also deploy a 4G network and also innovate around the superior technology and offer it at an affordable rate to Ghanaians. That should be the ultimate goal of everyone going into this telecom space.