Spectrum allocation a concern for Uganda telcos and ISPs

Players in Uganda's Internet arena have expressed concern about both the way the industry regulator has allocated WiMax broadband spectrum and possible looming increases in the costs of spectrum licenses.

Today, the UCC (Uganda Communications Commission) charges US$7,500 per year for 1 megahertz (MHz) and has allocated 30 MHz each to MTN Uganda, Uganda Telecom and Infocom Limited -- the three firms that offer WiMax broadband to their users. But it has also allocated spectrum to other parties that are not offering services.

Top officials from two out of the three players that have deployed WiMax broadband told IDG News Service that the UCC must devise a practical and equitable distribution of WiMax spectrum. They also expressed concerns about a revised fee structure that is said to be under consideration.

"With the increasing number of operators in the data communication sector including mobile WiMax, the challenge now is it requires a very accurate and proportioned allocation of frequency spectrum to avoid interferences," Hans Haerdtle, the managing director Infocom Limited, said.

"Who has spectrum and what are they using it for? Is there any unused WiMax spectrum?" asked Badru Ntege, a keen watcher of the sector. "The official line is it has been reserved. But who is it reserved for?"

Ntege explained that it is similar to someone booking a table at a restaurant and not saying what time they intend to use the table. "In the end, the restaurant loses business when the customer who booked that table does not turn up," he said.

Eric van Veen, the chief commercial officer of MTN Uganda, said the deregulation of the telecommunications sector in 2006 and the proliferation of licenses that followed has led to crowding of the market to the point that there are entities that have been allocated spectrum but are not using it or are actually not active in the sector. "As a big operator we are concerned. There has got to be a practical and equitable way of distributing spectrum such that spectrum is given to those players who need it and are ready to offer the service," van Veen said.

According to Haerdtle, the frequency band was not properly allocated and needs to be reviewed. He said that right now there are different technologies competing, and that if there is not enough space between the frequencies, "there is interference and that means the service is negatively affected on both sides." He said that Infocom is operating within the available spectrum that UCC has allocated to it, but with more players in the sector expected to introduce WiMax, it might not be possible in the future unless UCC reviews the allocations.

"At the moment, we can operate within that spectrum," Haerdtle said.

Another major concern to ISPs (Internet service providers) is that UCC is set to increase licensing fees. While not yet confirmed, word is that a new fee structure that will be announced when the ongoing telecom review is complete will raise operators' costs. Haerdtle said if approved, the new fee structure will negatively affect end-users.

"The proposed fees structure cannot be absorbed without operators increasing user fees, and that means the customer will bear that cost," he said. The markets can only accommodate a certain number of players, he added, and if left unregulated, the business will cease to be viable. Out of the 23 licensed infrastructure and service providers, 10 have the capacity to deploy WiMax.

UCC declined to comment for this story. Fred Otunnu, corporate and customer relations manager, said UCC would comment when the ongoing review of the spectrum pricing and allocation criterion is completed.

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Copyright © 2008 IDG Communications, Inc.

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