What is Spectrum Licensing?

A radio spectrum is typically the primary subject of spectrum licensing, and as such, it does help to have a background knowledge of what a radio spectrum is. In simple terms, a radio spectrum is a collective term for all electromagnetic wave frequencies that are useful for wireless communication.

Radio waves are invisible and undetectable to human senses, but lie at the heart of modern communications technology. Radio transmission technology involves electromagnetic waves radiating outwards from one radio equipment to another radio equipment, through the air, and travels as a wave of varying frequency, measured in hertz (Hz).

Electromagnetic waves, traveling through the air, are transmitted at different frequencies depending on the electrical signal applied to the transmitting equipment. Generally, frequency and power determine transmission range, such that the lower the frequency and the higher the power, the larger the transmission range. Although high frequencies have smaller transmission ranges and are more easily disrupted by physical obstacles, like high-rise buildings, high frequencies can carry larger amounts of data than lower frequencies.

On the policy side, the goal of spectrum policy is to maximize the productivity of assigned spectrum and the economic output that an assigned spectrum enables, to the degree that the use to which a radio frequency is put creates significant economic value and output for the general public.

On the business side, the primary business of telecoms companies is to commercialize radio spectrums, which are licensed by the NCC, by way of allocation and assignment. Allocation generally involves, on the part of a regulator, deciding what to use a spectrum for, taking account of any international agreements. On the other hand, an assignment involves deciding which users should have the right to use the spectrum within that agreed allocation. In this context, spectrum licensing is the formal process by which the NCC allocates and assigns radio spectrums to qualifying bidders.

As a general rule, spectrum licensing is typically done by way of an auction process, and spectrum licenses are awarded to companies prepared to pay the most for spectrum packages. The NCC will typically publish a notice specifying any spectrum it intends to auction together with the auction rules, the award procedure, and license terms. The NCC generally regulates all aspects of telecoms business in Nigeria, including the licensing of radio communications equipment.

This legal update is not intended to be taken as legal advice. Please seek professional legal advice specific to your situation. For more information, legal opinions, company formations, tax, bidding, or spectrum licensing inquiries, please reach out to your usual Balogun Harold or contact our team via support@balogunharold.com