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Opinion

First Ever Spectrum Auction in the History of Afghanistan

By: Jalal Shams

One of the greatest achievements Afghanistan experienced during the last two decades were the establishment of fast telecommunication networks connecting Afghans with the rest of the world through the provision of seamless telecommunications services that Afghans have never witnessed before. Technology and telecommunication once regarded as mythical has now become a reality for common Afghans with the proliferation of telecommunication networks in Afghanistan.
Introducing the Spectrum and the mechanisms for auctioning it
Devices such as cell phones and wireline telephones uses digital or analogue signals to connect and communicate from one end to the other. These signals are carried through airwaves that must be propagated through designated frequencies to avoid interferences from similar signals which ultimately ensures quality of service. The government owns all the publicly available assets within the geographical boundaries of the country; including the airspace and airwaves. With the increase in use of cell phones, wireline telephone and internet users, the need to provide more space is more apparent than ever.
Telecommunication companies willing to set up the required infrastructure to transport these waves from one end to another are required to obtain the rights to specific electromagnetic spectrum frequency ranges to propagate signals, the government auctions these airwaves from time to time. These airwaves are bundled into frequencies ranges called the electromagnetic spectrum that includes the longest wavelengths to the shortest; gamma-rays to radio waves. All these ranges are sold for a certain period of time, after which their validity lapses.
At the start of the cell phone industry, spectrum licenses were allocated on the basis of ‘comparative hearings’ where government granted the licenses based on its evaluation of applications from interested users – often referred to as ‘Beauty Contests’. As the industry grew and the profitability of such licenses attracted new entrants, the comparative review became contentious and unworkable. Comparative review was replaced by lotteries. Multiple applicants submitted expressions of interest and the award was made randomly. For the first time in 1993, the Federal Communications Commission of USA developed a system by which spectrum licenses were to be awarded through auctions.
From the start of the spectrum auction, most of the countries have generated revenues. India is practicing this type of auction since 1994. Recently, on 1st March 2021, India auctioned with a total of 2308.80 MHz spectrum. Three bidders participated in the auction. Which ended with a total of (US$11 billion) revenue generated from the auction. Pakistan held its ever first auction in 2004. From 2014 to 2017, the government of Pakistan earned USD 1.8 Billion through auctioning the electromagnetic spectrum.
In Afghanistan, the following spectrum transitions have taken place in the past:
· In 2003, GSM license were awarded to AWCC and Roshan for US$5 million each, including 2´6.8MHz in the 900MHz band and 2´10MHz in the 1800MHz band for a period of 15 years.
· In 2005, 15-year GSM licenses were awarded to Areeba turned MTN and Etisalat for US$ 40 Million each, including the same amount of spectrum as in the licenses awarded to AWCC and Roshan in 2003.
· In 2006, Wasel was awarded a geographically limited CDMA license in 22 districts within three provinces in northern Afghanistan for 15 years, paying AFN 50,000 per district. The license included a spectrum assignment of 2´3.69 MHz in the 850 MHz band.
· In 2012, all GSM licenses paid US$25 million for an additional spectrum assignment of 2´10 MHz in the 2100 MHz band for 15 years, including an upgrade of the license to be technology neutral and allow the construction of backbone network.
· In 2014, Wasel paid US$ 1million to convert its geographically limited CDMA license into a nationwide license for 10 years.
· In 2008, AWCC and Roshan paid US$ 1.5 million each (negotiated down from US$60 million that had initially been suggested) to renew their expiring 2003 licenses and 900/1800 MHz spectrum assignments for another 10 years.
Unfortunately, none of the above previous spectrum assignments were awarded through auctions. Therefore, Afghanistan Telecom Regulatory Authority decided to award frequency spectrum in the 1800, 2100, and 2600 MHz bands to mobile network operators (MNO) in the country through a competitive process called “auction”.
ATRA is honored for holding spectrum auction to Mobile Service providers for the first time ever in the history of the country. This Auction was conducted on June 30 2021 coinciding with 9 Saratan 1400 and as a result Afghan Telecom Company was announced as winner of 2×5 MHz frequency in 1800 MHz Band for 17,200,000 (Seventeen million and two hundred thousand) USD.
The aim of this Auction was to provide Telecom Service Providers with the opportunity for efficient use of limited natural resources and high quality of service provision through the advanced mobile broadband/4G services. Through this auction, three frequency bands that included 1800 MHz, 2100 MHz and 2600 MHz were auctioned for the first time. This process was conducted in the highlight of ATRA frequency allocation policy approved by the High Economic Council of Islamic Republic of Afghanistan.
The first auction was launched as per international reliable and standard approaches and was supported by international regulatory experts. This auction was not only successfully conducted but also resulted in coordination and consultation process between relevant sector and the government since it fosters competition for telecom sector and sets new useful rules to the telecom service providers for expanding advanced mobile broadband/4G services as per the authority commitments.
The auction facilitated open participation for all bidders as first national experience based on relevant policy and the auction results were evaluated and affirmed by an independent international organization responsible for running this process where the results were assessed through a transparent manner, using complex auction software and methods for conducting and transparency of the process.
The Afghanistan Telecom Regulatory Authority is committed to developing the telecom ICT sector for providing universal access and advanced telecommunication in the country.
About the Author: Jalal Shams is the current Chief of Staff for the Afghanistan Telecom Regulatory Authority (ATRA).

 

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