In order to carry out telecommunications business in Nigeria, steps must be taken to first obtain a license from the NCC.[1]  Such a licence, when issued, is the legal document that grants the licensee (holder of such a licence) the permission to engage in telecommunications business or to provide telecommunications services in Nigeria. Thus, the NCA, 2003 provides:[2]

“No person shall operate a communications system or facility nor provide a communications service in Nigeria unless authorised to do so under a communications licence or exempted under regulations made by the Commission under this Act.”

Also, the above provision has been given further teeth and currency by the Licensing Regulations, 2019[3] (“the Regulation”) made by the NCC[4] pursuant to the powers conferred upon the NCC by Sections 33 and 70 of the NCC to publish regulations on licensing processes, the persons or classes of persons who are eligible, among others. The Regulations stipulate that all (tele)communication services in Nigeria must be provided after obtaining a licence from the NCC.[5]

Aside from the Individual and Class Licences that exist, the Regulation recognizes the Frequency Licence as another category of licence.[6] Under the NCA 2003, the NCC is empowered to licence and regulate to manage and administer the Frequency Spectrum for the telecommunications industry and to grant licences for, and regulate the use of, same.[7] Spectrum means the continuous range of electromagnetic wave frequencies up to and including a frequency of 420 terahertz.[8] It is the radio frequencies allocated to the mobile communications industry and other sectors for communication over airwaves which provides the means through which wireless communication is achieved. Thus, under Section 122 of the NCA, a service provider willing to provide telecommunications services through the use of Frequency Spectrum must obtain licence from the NCC[9] It is an offence to utilize Frequency Spectrum to provide services without obtaining a licence from the NCC.[10] In granting the licence, a service provider acquires the right to use one or more specified frequency bands for any purposes consistent with the assignment conditions or to use radio spectrum to operate a specified network facility of a specified kind at a specified frequency band or bands.[11] The licence, which is issued in accordance with the National Frequency Plan,[12] is granted by auctions, tenders, fixed price determined by the NCC, first-come-first-served basis, lotteries, competitive bidding process, administrative process, automatic assignment or any other method which the Commission at its discretion may adopt.[13]

To apply, an application should be submitted to the NCC in the prescribed application form, accompanied with evidence of payment of the prescribed application fee and any other required documents.[14] Upon receipt of an application for the Frequency Licence, the NCC reviews the application and notifies the applicant of any further information required to process the application, or process the application provided the applicant satisfies the conditions provided under Section 30 of the Regulation. The NCA 2003 also provides that the NCC may issue or renew a Frequency Licence upon such conditions as deemed fit.[15] It is, however, to be noted that the provisions of the Frequency Spectrum (Fees and Pricing, etc) Regulations, 2004[16] shall apply to the grant of any Frequency licence. The NCC shall process the application and convey its decision to the applicant within 90 days of receipt of the application[17] but the Commission reserves the right to extend time within which it shall make a decision on any application for a Frequency licence for an additional period not exceeding 30 days.[18]

A Frequency Licence issued by the NCC is valid for the provision and operation of the services specified in the Special Conditions to the Licence and subsists for one year unless stated otherwise in the Frequency Spectrum (Fees and Pricing, etc.) Regulations or the conditions of the Frequency Licence. By the provision of Section 7(1) of the Frequency Spectrum (Fees and Pricing, etc.) Regulations, 2004, a Frequency Licence may have different durations. They are classified into:

– short-term permit with a tenure of 4 months;

– medium-term permit with a tenure of one year; or

– long-term renewable licences with a tenure of 5, 10 or 15 years. While a Frequency Licence with a one-year tenure is categorized as a Permit, the Frequency Spectrum (Fees and Pricing, etc.) Regulation, 2004 describes a Licence with a tenure of 5, 10 or 15 years as a ‘Licence’.[19]

Note that the NCC may compulsorily acquire spectrum assignments in accordance with a reassignment of spectrum policy consistent with the national frequency plan or in the national interest.[20] A Frequency Licence automatically expires after one year unless the licensee gives the NCC notice of an intention to renew, not later than 3 months prior to the expiration of the licence. Both the NCA and the Regulation place an obligation on a licencee to ensure that the assigned spectrum is not under-utilized.[21] Where a licensee fails to efficiently utilize the spectrum assigned to it, the NCC reserves the right to review the usage of the spectrum assigned to a licensee.[22] Where the spectrum is under-utilized or not utilized, the NCC may refuse to renew the licence at the expiration of term of the Frequency Licence or impose time-bound obligations or sanctions on the licensee[23] and no compensation shall be paid to such a licensee.[24].

Pursuant to the powers conferred on the NCC, the Commission has the sole and exclusive right to grant licences, regulate, manage and administer the frequency spectrum for the telecommunications sector in Nigeria and make regulations on assignment of rights to Spectrum.[25] In furtherance to this, the NCC issued the Spectrum Trading Guidelines, 2008 which is aimed at facilitating the optimal use of Spectrum and provide an enabling environment for the growth and development of the telecommunications sector to optimally benefit all stakeholders.  Therefore, the objective of the 2008 Guidelines is to promote certainty and transparency in the trading of spectrum by outlining the detailed procedure and conditions for Spectrum trading in Nigeria. Under the Guidelines, Spectrum trading specifically refers to Spectrum Lease, Spectrum Transfer, and Spectrum Sharing. Thus, Spectrum Trading is defined as ‘a spectrum management transaction which covers any or all of Spectrum Transfer, Spectrum Leasing and Spectrum Sharing, in which a seller trades all or some of its Spectrum licence (rights and obligations) to a buyer, following a commercial transaction approved by the NCC.’[26] This enables Spectrum assignees enter into transactions for financial gain in relation to underutilized Spectrum, making same available to other service providers for their use in the provision of telecommunications services.

The Guidelines prescribe the criteria for selling and leasing of Spectrums, requirements and procedures for Spectrum trading as well as renewal of traded Spectrums and provide that only a party with an individual operating licence issued by the NCC can participate in Spectrum Trading. Where a party does not have the requisite operating Licence that permits the deployment of access Spectrum, it must take steps to obtain one before it can acquire the Spectrum.[27] Trading may be permitted in either the entire licensed area or a part/parts of it and the existing rights and obligations of the seller before a Spectrum is traded will apply to the buyer in varying proportions after the Spectrum trade.[28] The seller must have held the spectrum for a minimum of two years and must have achieved at least twenty five per cent (25%) of the roll-out obligations specified in the spectrum license. To be traded, the spectrum license must have at least one (1) year validity period.[29] The tenure of the original licence will not be altered, the board of Directors of the seller and buyer must consent to the transaction and the seller must have held the spectrum for a minimum of two (2) years.[30]  Both the seller and buyer must be in good regulatory and financial standing with the NCC[31] and a licensee will not be allowed to trade Spectrum in respect of which a notice of forfeiture has been issued by the NCC[32] or where it is established that the licensee has breached the terms and conditions of the licence.[33] Where a buyer has sought and obtained approval from the NCC, it will be able to exploit the acquired spectrum by deploying any technology through the Spectrum[34] but the traded Spectrum must be used without causing harmful interference to the parties or other users. In the event of any harmful interference, the affected parties will be required to take steps to resolve the interference. However, where the parties are unable to resolve, the matter should be referred to the NCC.[35]

Furthermore, in approving an application, the NCC will take cognizance of a number of factors including competition rules. Therefore, both the buyer and seller will need to consider whether the Spectrum acquisition by a particular buyer is likely to lead to concentration of a frequency in the hands of a particular service provider. Thus, if, in the opinion of the NCC, a transaction will negatively impact on competition and other regulatory considerations, the NCC may conduct a Public or Private Inquiry in respect of an application for Spectrum Trading.[36]

FOOTNOTES:

[1] The Licensing & Authorization Department is the NCC unit responsible for the processing and issuance and issuance of operating licences to all telecommunications service operators and service providers in Nigeria as provided under Section of 31(1) of the NCA 2003. The Department is sub-structured into three units: Pre-Licensing Unit, Post Licensing Unit and Licensing Research Unit.

[2] Section 31(1), ibid.

[3] Federal Republic of Nigeria Official Gazette, S.I. No 15 of 2019.

[4] The Regulation became effective from 11th day of January, 2019. Regulation 1 provides that the objective of the Regulation is to provide a regulatory framework for effective and efficient licensing processes and procedures in the (tele)communications industry for the operation of (tele)communications systems, facilities and services in Nigeria.

[5] Regulation 5(1), ibid.

[6] Regulation 2(c), Licensing Regulations, 2019. However, Frequency Licence is not categorized as a licence in the NCA, 2003.

[7] Section 121(1), NCA 2003

[8] Section 157, NCA 2003

[9] See also Section 6 of the Wireless Telegraphy Act, Cap 469, Laws of the Federation of Nigeria, 1990

[10] Section 122(2), NCA 2003

[11] Section 125(1) a to b, NCA 2003

[12] Section 125(2)a, NCA 2003

[13] See also Regulation 29(1), Licensing Regulations, 2019; See also Section 123(1), NCA 2003

[14] Regulation 31(2), Licensing Regulations, 2019

[15] See Section 125(1), NCA 2003

[16] Federal Republic of Nigeria Official Gazette, S.I. No 23, pg. B317 – 325.

[17] Regulation 31(3)(a)-(b), Licensing Regulations, 2019

[18] Regulation 31(4), ibid.

[19] See Section 7(2), Frequency Spectrum (Fees and Pricing, etc.) Regulation, 2004

[20] Section 126(1) a and b, NCA 2003

[21] Section 127(1), NCA 2003

[22] Regulation 40(1) and (2), Licensing Regulations, 2019

[23] Regulation 40(3)(a)-(b), Licensing Regulations, 2019

[24] Section 127(2), NCA 2003

[25] See Sections 4(j), 70(1)b and 121(1), NCA 2003;

[26] Regulation 14xi, Spectrum Trading Guidelines, 2008

[27) Para. 4.4(i), ibid.

[28] Para. 4.2, ibid.

[29] Para. 4.4. (iv) and (v), ibid.

[30] Para. 4.4(iii), ibid.

[31] Para.4.4(vi), ibid.

[32] Para. 4.5, ibid.

[33] Para. 4.6, ibid.

[34] Regulation 11.1, ibid

[35] Regulation 12.1, ibid

[36] Para. 5.5, ibid.

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