Breaking
news that a few days stale, folks! I knew of this but I’ve decided to delay in
publishing this article as its super interesting to me personally yet is
occurring so quietly that unless you’ve got my kinda interest in Telecoms, you’d
never know this was going down.
This
as the requirement of US$3 million (JA$304 million) for Telecom Operators to
participate in the 700MHz Spectrum License Auction has been waived and Telecom
Operators, both incumbent and new entrants based on the article “Spectum
drops US$3-m deposit requirement for BroadBand license auction” published
Thursday, September 12, 2013, The
Jamaica Observer. Not only that, but the requirement to present a bank
Guarantee or Bond that indicates that they have the money to hit the ground
running is no longer required.
This
is the same Spectrum Auction process, which had started in March 2013 with the
Minister of Science, Technology, Energy and Mining Phillip Paulwell declaring on Tuesday
March 26th, 2013 in Parliament that they had 700MHz Band of Spectrum
up for auction as stated in my blog article
entitled “Minister
Paulwell in Parliament debut two 700MHz Licenses for 4G LTE for Monday July 15
2013 Auction - 4G LTE Means After Earth Everything is Possible”.
Clearly these are very difficult requirement to fulfill, so
the Minister
of Science, Technology, and Energy has removed the pre-requirement for Bid. After
all, it’s not ever necessary as far as I know anywhere for anyone to have to
put up a bond in order to Bid on a License for Spectrum for which you’ll have
to invest more money in order to bring in equiptment in order to develop.
Stakeholder Consultation Forum
on the 700MHz Spectrum Auction
On
Tuesday September 10th 2013, the SMA
(Spectrum Management Authority) had their Stakeholder Consultation Forum on the
700MHz Spectrum Auction at the Jamaica Conference Room in Caucus Room 2 at the Jamaica Conference Center.
The meeting began at 10am and was chaired by Cecil McCain from the Ministry of
Science, Technology Energy and Mining and a distinguished panel from the SMA that included Mr. Henry Batson.
Minister
Paulwell was a no-show due to prior engagements. But without his presence, the
presenters, all six (6) of them behind their table at the front of the room
were quite a cagey bunch. They stuck faithfully to their Powerpoint slides, of
which I got a copy, and fielded only a few questions from ODPEM (Office of
Disaster Preparedness and Emergency Management), LIME and Digicel and myself,
mainly about future technology backhaul i.e. Licensing of FLORA (Fiberless
Optical Receiver Array) and the use of Solar Panels to power the BTS 9Base
Station Transceivers) and RBS (Radio Base Stations), for which I got no
response.
The 700 MHz Band – What’s being
Auctioned
The
700 MHz Band is basically from channels 52 to channels 69, which corresponds to
698MHz to 806MHz, basically in the UHF (Ultra High Region) region of the NTSC
(National Television Spectrum Committee) Band. According to the SMA, this Band is clean and clear and free of
activity at the time of the auction, hence it’s prime Spectrum real estate for
use to provide 4G LTE (Long Term Evolution) Wireless BroadBand Service.
It
was allocated by the IMT (International Mobile Telecommunications in Region 2
by the ITU (International Telecommunications Union) WRC-07. The Band is
basically 108MHz of virgin Spectrum which is divided into 6MHz Blocks and can
be used fro TDD (Time Division Duplex) and FDD (Frequency Division Duplex).
Of
that 700MHz Band as described above, only 48MHz of it is up for grabs in this
upcoming Spectrum Auction in paired Blocks of 12MHz each. Based on the
requirements of the 3GPP (Third Generation Partnership Project) for the
IMT-Advanced (basically the same thing as 4G LTE), no Block of Spectrum for
Guard Bands are allocated. In other
words, the 6MHz Blocks sit side by side with no IBG (Inter Block Gaps) as is
the case with Analog Spectrum such as NTSC for TV Broadcast.
As
mentioned before in previous articles on My Thoughts on
Technology and Jamaica, the Blocks of Frequency within the 700MHz Band up
for grabs are as follows:
1.
Band 17 made up of two (2) Blocks of 12 MHz
Frequency each from 704 MHz to 716 MHz and 734 MHz to 746MHz
2.
Band 13 made up of two (2) Blocks of 12 MHz
Frequency each from 746 MHz to 758MHz and 776 MHz to 788MHz
The
Bands to be auctioned are as shown in the Diagram below:
Both
Spectrum Licenses for Band 17 and Band 13 are fifteen (15) years License for
successful Bidders and are priced as thus:
1.
Band 17 Reserve price is US$45 million for a fifteen
(15) years License
2.
Band 13 Reserve price is US$40 million for a fifteen
(15) years License
The requirements for the Bidders, both the incumbents and the
New entrants into the Jamaican Telecoms market can be seen in my blog article
entitled “Spectrum
Management Authority moves up 700MHz Spectrum License Auction to Wednesday May
22 2013 - Everything is Possible despite 5 year Mission Impossible Ghost
Protocol” are as follows:
Incumbent
1.
50% coverage of the population
in eighteen (18) months
2.
90% coverage of the population forty
eight (48) months
New Entrants
1.
30% coverage of the population twenty
four (24) months
2.
90% coverage of the population sixty
(60) months
In order to make their 4G LTE Rollout a little easier, the SMA has also
become very generous and has allocated the following sweeteners for winning Bids
for either Blocks of Spectrum:
1.
2 5 MHz 18000 MHz or 1900 MHz Bands
for the provision of GSM (Global System Mobile) Voice Services, most likely to
coordinate their staff as well as make money while they get the 4G LTYE Network
up
2.
Spectrum License free Backhaul
for 2 years given achievement of the first coverage targets a listed above.
This is most likely Microwave Frequencies for Microwave RBS (Radio Base
Stations), albeit the option does exist for the New Entrants to use any of the
technology, including FLORA (Fibreless optical Receiver Array) for which
they’ll incur no Spectrum Licenses
3.
Optional Award of a Undersea
Fiber Optic License, most likely to aid in Bandwidth issues that may be
incurred if not sufficiently available from Triple Play Provider FLOW or
Telecom Provider LIME
Licensing and Awards Process
The
Licensing and Awards for the two (2) Bands of 700 MHz Spectrum is as follows:
1.
Stage 1 – Request for Bids
2.
Stage 2 –Auction
3.
Stage 3 -
Post Qualification
4.
Stage 4 – Grant of License
The
Timeline for the Spectrum Auction of the 700 MHz is as follows:
However,
the following were made clear during the Stakeholder Consultation Forum on the
700MHz Spectrum Auction that the Bidders have to meet the following
Requirements
1.
Each Bidder has to provide a sworn declaration
of the day of the auction attesting to being “independent” and not colluding
with other Bidders or partnerships i.e. not getting help from anyone
2.
Provider a Bank Guarantee or Bond in the amount
of 50% of the proposed Bid on the day of the auction
3.
Holder or be eligible to become a holder of a
Carrier or a Service Provider License as per the Part III of the Telecommunications
Act of 2012
4.
Each bidder is required to submit one Bid per Band
i.e. Sealed Bid Single Round
5.
If there are two (2) or more bids of equal merit
as judged by the OUR and SMA, a runoff is held between those two
bidders to determine a winner
6.
If less than 2 bids per Band, the entire process
is aborted
7.
The SMA
reserves the right to abort the Process at any stage
8.
Bidders will be told if their final submission
was successful. An increased bid offer is only possible in order to resolve
tie.
The
Post Qualification Stage is the stage where most of the worrying takes place:
1.
After the Bidder has being successfully chosen,
they must meet these Post-Qualification Criteria in order to be awarded a 700
MHz Band
2.
Failure to complete this process will result in
the Bid being rejected and the License not being granted and the process
restarting afresh
Full
Details of the bidding process for the 700MHz Band are provided in this “ADDENDUM
TO THE INFORMATION MEMORANDUM LICENSING THE 700 MHz BAND (Channels 54 – 69
i.e.698 - 806 MHz)” on pages 3 to 8 of this document dated August 30, 2013
as issued by the SMA, which was emailed to
be from the SMA!
Proposal Requirement and
Assessment to enter Bid for a Band License
Albeit
this is a Spectrum Auction for the Bands mentioned above, the OUR’s also involved, being as they are the
Utilities Regulator in charge of Telecoms. Their role in the Bidding process is
as follows:
1.
Processing the Applications for a Carrier License
for the New Entrants
2.
Processing the Applications for the Fiber Optic License
for the New Entrants
3.
Joint evaluation along with the SMA of the Proposal Bids
The
actual Proposal Document also has to be done in triplicate i.e. three (3)
copies, one (1) original and two (2) copies, one for the SMA and one for the OUR, which implies some very thick and heavy
documents! The Proposal has to be structure as follows with the required
information in order to be successfully entered into the Bidding Process:
1.
Company Data
2.
Legal and Regulatory Requirements
3.
Technical Data
4.
Business and Financial Data
As
this is really a general guide to doing proposals for GOJ Contracts, I’ve
decided to include a hyperlink to the relevant document on the Proposal
Requirements. Full Details of the Proposal Requirements for the 700MHz Band are
provided in this “ADDENDUM
TO THE INFORMATION MEMORANDUM LICENSING THE 700 MHz BAND (Channels 54 – 69
i.e.698 - 806 MHz)” and are located on pages 9-11 of this document dated August
30, 2013 as issued by the SMA, which was
emailed to be from the SMA!
Problem with the Bidding
Process – Only Incumbents need Apply
Aside
from the onerous document requirements of the Bid process being hosted by the SMA and the OUR,
everything is very thorough and precise. The requirement of 50% of the value of
your Project upfront is understandable, as you want Bidders that is cash-rich
and rearing to go come 2014, not coming to take advantages of the financial
resources that already exist in the island. They must, in reality, be cash rich
and packing a lot of Cash ready to spend and in good standing with the
Government of Jamaica!
The
requirement of there being no partnerships are troubling, however, as this is
far from reality for any business. These as not even FDA (Foreign Direct
Investors) have that kind of Cash up front to start spending. The most they may
have is the Bid Bond. But to finance an adventure over a five (5) year period
would require substantive VC (Venture Capital) Funding either via Direct Investment
by a VC Fund Manager or a US Denominated Bond to raise Capital on the FOREX
(Foreign Exchange) Markets in both the US of A and the EU (European Union)!
It
somewhat suggests that the incumbents i.e. Telecom Provider Digicel and Telecom
Provider LIME would be the ONLY Bidders involved in the process. The current
low rates in the Voice Market isn’t particularly profitable and the Data Market
isn’t mature enough to attract New investors, as not many Jamaicans use the
Internet extensively enough to make it financially worthwhile for any investor
to come to Jamaica to build such a Network!
I’d
done an article on the process put forward by the SMA for the 700MHz Spectrum, which up till
about that meeting hadn’t reached anywhere, mainly due to concerns expressed by
some Telecom Providers over the cost as argued in my blog article
entitled “No
Bidders thus far for the 700MHz Spectrum Auction for 4G LTE - CAPEX concerns as
Serious Man of Steel Investors are needed to assist Jamaica to become a more
Connected Society”.
After
all, it really very difficult for a Telecom Provider to invest in Jamaican when
we show very little interest in the utilization of Broadband Internet for
anything other than Facebook and Twitter as argued in my Geezam blog article entitled “Jamaica’s
Low Net Penetration – BroadBand Internet A Universal Right”.
Granted,
the usage of smartphones is on the rise, but it’ll take more than smartphones
and Tablets. It’ll require a mindset change in terms of our view of the
importance of the Internet, such as helping Jamaicans to make money from the
Internet as stated in my blog article entitled “How
Jamaicans can set up a Payment Gateway in order to process Credit Card
purchases - E-Commerce the main Catalyst for Increasing Jamaica's Internet
Penetration”.
Thus
it’s my assertion that this Bid process will end up being cancelled, as when I
was at the Stakeholder Consultation Forum on the 700MHz Spectrum Auction, the
representative from Telecom Provider LIME was asking if they could source the
50% in installments, suggesting that Telecom Provider LIME may be seeking to fund
their Proposed 4G LTE Project using a US Denominated International Bond to
raise capital on the FOREX (Foreign Exchange) Markets!
First
off the bat, I’m a Bidder as well, and I’m somewhat independent, leveraging my
experience from my years working at CLARO Jamaica as a RF Technician (2008 to
2009) and at C&W (2001 to 2004). That’s how I got all this information thus
far! I have sufficient knowledge about 3G and 4G LTE to design the physical
infrastructure of the 4G LTE Network, including basic maps from CLARO!
I’ve
even asked questions of the SMA (Spectrum Management
Authority) after having visited them at 13-19 Harbour Street that I was given
the email Spectrumauction@sma.gov.jm
as well as I was told to check their Website SMA
as well as their Twitter handle @JaSpectrum for updates. I mainly, however, received my updates via a
Miss Ida-Gay Warburton (iwarburton@sma.gov.jm) at the SMA!
I
had initially sent a series of questions as listed in “Questions
for the SMA - 25-07-2013 LHDEER” for which I got the following responses in
“700MHz
Auction - Response To ATI Request (August 2013)” from a Miss Ida-Gay Warburton
(iwarburton@sma.gov.jm) at the SMA! It’s
from these Questions that I was drawn into the entire process of the Bid for
the Spectrum License for the 700 MHz Band and thus through subsequent
communications via email I received the “ADDENDUM
TO THE INFORMATION MEMORANDUM LICENSING THE 700 MHz BAND (Channels 54 – 69
i.e.698 - 806 MHz)”
On
Monday September 16th 2013, I had received my RFP (Request for
Proposal) in the file “RFB
- 700 MHz Auction - (Issued 20130916)” from the SMA via email. Thus I’m in the process of
putting together a proposal in order to Bid for the Spectrum.
However,
what I lack is capital and a ready army of employees along with Technical
Resources! My plan therefore involves forming a consortium of companies and
thus I’m not independent.
My
proposal for my Network Idea, which I’ve called Audia_Gypsy_Danger (sorry no hyperlinlks!!), involves getting a
partner to fund the Project while I provided the proposal as to how to build
the Network.
I’m
still seeking that partner(s) which has to have a Carrier License or must have
the ability to gain such a Carrier License as explained above, as I don’t have
one, despite this being illegal according to section 11(6) of the Telecommunications
Act. Add to the fact I am not a holding company as per the Companies Act,
making me even more disqualified. In fact, my Plan involves the following:
1.
Sagicor – They’d be in charge of Property
Services and Insurance for my company
2.
FLOW- They’d provide the Technical Engineering
know-how and manpower to build the Network
3.
ACCENT Marketing – They’d provide the Call
Center Services and possibly staff for the Company during the initial Start up
stages. They’d also provide training and assessment for Staff
Aside
from the price of the Band, this amount of money no one in Jamaica has
upfront for my Project, which is approximately US$5.6 billion! I’d have to
raise that amount of money via the flotation of a US denominated Bond instrument or
find a Partner that the OUR’ll accept that’s
cash rich and who’ll be willing to partner with me and satisfies these basic
criteria.
Stakeholder Consultation Forum
on the 700MHz Spectrum Auction – Open but not Publicized
Thus
far the process has been fair and open, albeit I’ve made it known that the
Public (as in the General Public) were missing from the Stakeholder
Consultation Forum on the 700MHz Spectrum Auction which was billed as a Open
Public Consultation for which there was no cost to attend.
Good
to note too that I walked to the meeting – as did the Digicel Representative,
being as the Jamaica Conference Center is only a few Blocks away from Telecom
Provider Digicel’s Solar powered Headquarters as described in my Geezam blog article entitled “Digicel
Jamaica’s Alternative Energy Future – Increased Electricity Bills and Energy
Sector Opportunities collide”. So pretty much anyone with an interest
could’ve taken the day off and participated, had it been more publicly
advertised, despite the cagey-ness of the SMA
bigwigs!
Even
the lack of Media coverage is obvious, as so far no discussions on Television
on the 700MHz Spectrum License Auction, no Public Awareness Campaign and aside
from the SMA, no videos or even
photography’s explaining the entire process to the Jamaican Public.
The
date to hand in the Proposals was on Monday September 16th 2013 and
the date of the Auction is on Friday October 11th 2013 with the winner of the Spectrum
License being announced on Wednesday December 18th 2013. In short, the
700MHz Spectrum License Auction will be wound up just in time for Christmas and
for the winner to begin construction in the New Year 2014.
Here’s
a link to the entire set document’s I’ve collected thus far in my investigation
of the Bidding process for the 700 MHz Spectrum:
- ADDENDUM TO THE INFORMATION MEMORANDUM LICENSING THE 700 MHz BAND (Channels 54 – 69 i.e.698 - 806 MHz)
- Questions for the SMA - 25-07-2013 LHDEER
- 700MHz Auction - Response To ATI Request (August 2013)
- RFB - 700 MHz Auction - (Issued 20130916)
For
more information about the Spectrum Auction for the 700 MHz Bands, you can
contact the SMA at the following address:
The
Auction Manager
C/O
Spectrum Management Authority
13-19 Harbour Street
Kingston
Email:
spectrumauction@sma.gov.jm
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