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COVER SHEET FOR RESPONSE TO NCA PUBLIC CONSULTATION ON THE

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COVER SHEET FOR RESPONSE TO NCA PUBLIC CONSULTATION ON THE ...

    COVER SHEET FOR RESPONSE TO NCA PUBLIC CONSULTATION ON

    THE SELECTION AND AWARD PROCEDURE FOR LICENSES IN

    THE 2.500GHz 2.690GHz BAND BASIC DETAILS

    Name of respondent:

    Eben Albertyn (Chief Technical Officer)

    Representing (self or organisation/s):

    Scancom Limited

    Address:

    Head Office:

    Scancom Limited,

    Plot # 17&19

    Ridge Towers

    10th - 12th Floor

    6th Avenue, Ridge

    P.O. Box 281 Intl. Trade Fair La,

    Accra - Ghana

E-Mail: info@mtn.com.gh

    Tel: 00 233 24 4300 000

    Fax: 00 233 21 231974

Registered Office Address:

    41 A Graphic Road,

    Auto Parts Building

    South Industrial Area

    (Note: All correspondents to be sent to Head Office)

DECLARATION

    I confirm that the correspondence supplied with this cover sheet is a formal consultation response. It

    can be published in full on NCA’s website, and I authorise NCA to make use of the information in this response to meet its legal requirements. If I have sent my response by email, NCA can disregard

    any standard e-mail text about not disclosing email contents and attachments.

Name : Eben Albertyn Signed (if hard copy)

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 2 of 11

MTN Ghana wishes to thank the National Communications Authority (NCA) for the opportunity given to

    express our opinion on the Public consultation document for the licensing of spectrum in the 2.5GHz band.

    MTN strongly believes that with the economy of scale associated with this band, MTN would definitely be

    in a position to cater the Ghanaian population with low cost and efficient Broad Band wireless services in

    future.

    Also, we will like to congratulate NCA for a very good quality and detailed document on the selection and

    award procedure for awarding the licenses.

    Please refer to the paragraphs below for our views on the selection and award procedure outlined in the

    public consultation document.

A. Summary Of Consultations 7: The AUTHORITY intends to issue a total of up to five (5) Spectrum

    Licenses for BWA Services as per the Selection and Award Procedure for Licenses in the 2500MHz

    2690MHz Band.

    MTN Ghana Comment: We would like to appreciate the technology neutral approach adopted but at

    the same point in time would like to express our concern about the limited Bandwidth available for the

    FDD applications which is also not in alignment with major auctions that happened across the world.

    Go-to-market and cost-to-company significantly increases on technology adopted in the TDD

    spectrum as opposed to the FDD spectrum which has got a direct relation to the Broad Band

    Wireless service in terms of coverage and quality that both NCA and MTN would like to bring to the

    Ghanaian mass in a stipulated timeframe as per NCA’s guideline.

B. Selection Process (3.2) The Authority shall employ a multi-stage selection and award process (a

    combination of “beauty contest” and auction) to select prospective applicants for the award of a BWA

    License. This procedure requires that successful applicants meet and satisfy a Three Stage process:

    Stage One: Pre-Qualification (Administrative) Stage Two: Evaluation of Technical-Operational-

    Management Competence; Evaluation of Strategic, Operational & Technical Submissions; Evaluation

    of Business Presentations. Stage Three: Financial (Auction).

    Timetable 3.7: The Process shall take place in accordance with the following timetable (Table as

    presented in the NCA Public Consultation Document):

    MTN Ghana Comment:

    MTN would like to reiterate that due to the current structure of the bidding process (time specified in

    the NCA document), it is practically impossible for interested organisations to meet up with all the

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 3 of 11

requirements by the due time specified (which from our understanding, the deadline is early

    February). The major challenges that pose the threat are:

    ? Time needed to prepare a comprehensive business plan;

    ? Board and management approvals;

    ? Preliminary financing for the project;

    ? Time and processes required for setting up a Joint Venture having 30% Ghanaian ownership; and

    ? Adherence to all NCA legal conditions with regards to all the pre-qualification requirements.

    Therefore we request that the proposal submission process should commence on 1 May 2010, and

    the dates for each activity and submission of each required document should be stated clearly and

    explicitly.

    Clarification is also required whether each activity in the 3 stages is expected to run simultaneously or

    non-concurrent.

    For example, (1) do the “Prequalification documents” and the “Submission of Application & Proposal”

    run concurrently? (2) will the “Review of Public Comment” which has 15 days, run in parallel with “Submission of Application & Proposals to NCA” which has 40 days? We advice that NCA matches the activity dates with each of the 3 stages in the selection process.

    Also, the dates for each activity and submission of each required document should be stated clearly

    and explicitly.

    C. Spectrum Blocks (7). The Authority intends to issue a total of up to five (5) Spectrum Licenses for

    BWA Services as per the Selection and Award Procedure for Licenses in the 2500MHz 2690MHz Band; to be awarded as follows

    a. Three (3) slots of 30MHz blocks nationwide for operators using technologies that require unpaired

    spectrum for a 10-year period.

    b. Two (2) slots of 2x15 MHz blocks nationwide for operators using technologies that require paired

    spectrum for a 10-year period.

    c. There shall be an extra paired 2x5MHz and an extra contiguous unpaired 15 MHz available to

    winners of the spectrum blocks in i. and ii. above through negotiations with the Authority.

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 4 of 11

MTN Ghana Comment: MTN wishes to state that with the proposed Band Plan, it is unfair on the

    industry taking the FDD evolution path technologically having only 2 slots of the 2x15 MHz (60 MHz in

    total) as opposed to the 105 MHz on the TDD block. With a global approach to the spectrum

    harmonization of the 2600 MHz band and for economies of scale MTN firmly believes that the 2x70

    MHz FDD block should be maintained.

    It has been observed that majority of the auctions around the world has followed the CEPT strategy of

    having the 2x70 MHz block in the 2600 MHz band for FDD.

    An example of a country with a commercial LTE network launched in a large scale is Sweden with the

    following allocations:

    Bidder BW awarded Telia Sonera Mobile Networks AB 2x20 MHz (FDD) Tele2 Sverige AB 2x20 MHz (FDD) HI3G Access AB 2x10 MHz (FDD) Telenor Sverige AB 2x20 MHz (FDD) Intel Capital corporation 50 MHz (TDD)

    Similar observation was made with spectrum allocations in Asia in the same band.

    Also MTN would like to re-iterate the fact that since the 2300 MHz band is a TDD exclusive band, this

    should be included in the Auction for the industry more inclined towards TDD applications and at the

    same time will help the additional spectrum allocation to the FDD block on the proposed band Plan.

    This will not only help achieve harmonization across the band but will also be a very future proof plan

    for the industry as a whole.

    D. Spectrum Band Plan (2.5)

MTN Ghana Comment: MTN wishes to state that taking into account the extremely aggressive

    rollout plan laid down by the NCA, it would be more cost-effective for FDD deployment rather that

    TDD deployment by virtue of the technology itself which will then also be aligned with our mission

    statement Low cost Broad Band services.

    Deployment costs are significantly higher in terms of specific geographic coverage as the cell radius

    of FDD system is more than that of a TDD system and hence fewer BS are required in a FDD system

    as compared to a TDD system to achieve the same objective. This has got an enormous impact on

    the CAPEX, revenue and at the end affects the mission statement “Low Cost Broad Band Services”.

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 5 of 11

    In TDD, tight synchronization within a frame is required, i.e. in TDD mode an operator must ?

    transmit within tightly synchronized timeslots to prevent interference within the cell and to other

    cells. This is because in TDD systems a single frequency band is used for both transmit and

    receive. Given this, it is possible that, without tight synchronization, a single transmitter could jam

    the receivers when the frame is to be in receive mode.

    Because there will always be a finite time to switch from Tx and Rx and vice versa, and because

    of time variations in incoming signals (due, for example, to reflections, different paths to all the

    receivers within a system, the finite time of travel amongst terminals and base station within a cell)

    a guard time is required. As such TDD systems require additional guard times and a TDD system

    must be synchronized, whereas synchronization is not a requirement for an FDD system (albeit

    that synchronization is still beneficial).

    ? In contrast, an FDD network uses one set of frequencies for uplink and another for downlink

    removing the need for additional guard periods, and tight synchronization. The FDD systems tend

    to have a better link budget, which translates into larger cell sizes, fewer base stations, and

    higher data rates.

    ? As the TDD network operates within tightly defined timeslots, distance between the terminal and

    the base station becomes a critical factor. The farther the two are apart, the more likely that the

    time slot sequence will be inadequately aligned. Matters of synchronization are further

    complicated because a TDD network must introduce a switchover period between transmit and

    receive and this switchover point must be synchronized to the timeslots.

    E. 2.7.4 In addition to the requirements herein, the Authority shall consider any other factors that may

    enhance the ICT industry of Ghana in particular and the economy of the country as a whole.

MTN Ghana Comment: It will be in the interest of all the bidders and interested parties to be aware

    of any other factors that will be considered as part of NCA’s requirement. Kindly provide further

    information on the elements to be taken into account by the NCA.

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 6 of 11

    F. Roll-out Conditions Annex 6 (As detailed in the NCA document)

MTN Ghana Comment: The “Rollout Conditions” seem to be very aggressive and MTN would like to

    request NCA to kindly review the same on a more practical note. This is because of the prevailing

    challenges for rollout in Ghana such as time required to arrange for financing requirements, huge

    CAPEX involved in the deployment in such a large scale network within the prescribed highly

    aggressive schedule which will practically be impossible for the industry to achieve.

    The most significant part of the process will be to deploy a Backhaul network to support the same

    which requires extremely high capacities. Building a backhaul network to support the traffic generated

    will not only be a significant Cost factor eating up major part of the CAPEX but will also be an

    extremely time consuming deployment and the biggest challenge for the industry.

MTN henceforth would like to propose the following rollout plan:

    % Coverage of the Specific Areas

    Accra

    Metropolitan 50% 70% 100% - - Kumasi

    Metropolitan 50% 70% 100% - - Greater Accra 30% 60 % 100% - - Regional Capitals 30% 60% 100% - -

    Coverage of Other Remaining District Areas per NCA Zonal Structure

     Zone A 3 districts 7 districts 9 districts

     Zone B 7 districts 18 districts 26 districts

     Zone C 8 districts 6 districts 30 districts

     Zone D 9 districts 18 districts 36 districts

     Zone E 14 districts 21 districts 56 districts

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 7 of 11

    G. Applicable Fees as contained in Summary of Conditions -14 & 16: The minimum reserve price for the

    auction shall be Five Million United States Dollars (US$5,000,000)

MTN Ghana Comment: Given that some of the bidding companies are Ghanaian corporate citizens

    who earn their revenues and pay taxes in Ghana Cedis, and the fact that queries have been raised by

    national treasury in respect of dollar payments as experienced during the 3G licensing initiative, we

    suggest that the required reserve price be denominated in Ghana Cedis.

    H. Spectrum Plan For The 2500 2690 MHZ Band Annex 7: RC is restricted channel. A Block Edge

    Mask which could allow limited deployment (e.g. low power femto cells) would be put in place in order

    not to completely prohibit any use of the band. Operators can bid/negotiate on these blocks (much

    lower fee) if they wish to utilize them.

    MTN Ghana Comment: We advice NCA to specify the minimum price of the RC’s for low power applications.

    I. 3.1.2. There shall be a minimum of 30% private Ghanaian ownership in the applying Entity; be it a

    company, a joint venture or consortium. The said minimum Ghanaian ownership shall be maintained

    throughout the duration of the Licence.

MTN Ghana Comment: Kindly clarify the following in respect of the above requirement:

    ? Maintenance of minimum Ghanaian ownership throughout the duration of the Licence: Kindly

    confirm if this statement allows for a change in the respective Ghanaian shareholding of such

    entity having 30% equity stake.

    ? We request clarification on shareholding criteria given the requirement that 30% be owned by a

    Ghanaian company.

    ? Can MTN bid based on a legally binding commitment that we will set up the 30% Ghanaian

    ownership structure after submission of the bid document or must the Ghanaian ownership

    structure be in place when submitting the final bid document?

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 8 of 11

    J. 3.1.3. The Entity must be registered under the laws of Ghana, and duly certified to operate in Ghana,

    prior to Stage Two (Evaluation of Technical and Management Competence) of the process.

MTN Ghana Comment: 40 business days stipulated for the submission and of application and

    proposals to NCA may not be adequate considering that registration of a bidding company with the

    Registrar General’s, GIPC and other relevant regulatory bodies may take longer than estimated.

    K. 4.1.3 Certificates. Certificates issued by the relevant governmental authorities, and other competent

    authorities of the jurisdiction where the Applicant is incorporated, evidencing that the Applicant is a

    corporation duly organized, validly existing and in good standing in such jurisdiction. All certificates

    must be in English. Certificates translated into English must be certified and notarized.

MTN Ghana Comment: Considering that the applicant must be a Ghanaian incorporated body, kindly

    clarify whether this requirement is in relation to the non-Ghanaian shareholder or owner of the

    applicant company.

    L. 3.4.4. Applicants who attain the minimum threshold average point score of Seventy-Five (75%)

    Percent shall be invited to participate in the Stage Three; Financial Auction part, of the Selection and

    Award Process.

MTN Ghana Comment: Kindly shed more light about the grading system as follows:

    ? Kindly specify how the score will be awarded and the various points associated with each

    achievement.

    ? We suggest that a certain top number of applicants be shortlisted for the final stage, to avoid the

    risk of any bidder not achieving the stipulated 75% score point.

    M. 4.1.6 Sworn Declaration. A Sworn Declaration of the Applicant signed by its duly authorized

    representative, (in accordance with Section 4.1.5 hereof), with the following information: (v)

    Statement that, since the date of the Applicant’s last audited reports and financial statements

    submitted pursuant to Section 4.1.7, there has not been any material adverse changes thereto.

MTN Ghana Comment: Please elucidate on what constitutes “material adverse changes” as

    indicated in the paragraph above.

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 9 of 11

N. 4.1.7 Audited Reports and Financial Statements: The audited reports and financial statements

    corresponding to the last three fiscal years of the Applicant and (if applicable) the consolidated group

    to which the Applicant belongs.

MTN Ghana Comment: We suggest that there should be exceptions to this requirement as some of

    the bidding entities may be entirely new companies. Such newly formed companies and JVs may not

    have historical financial records.

O. Annex (3): No. 7 (e) Certification from Bank

MTN Ghana Comment: Kindly clarify the nature of the certification that is required from the Bank.

P. Annex 4:No. 1(e) Evidence of Tax Payment

MTN Ghana Comment: Kindly clarify whether this requirement relates only to the applicant bidding

    company or it applies to its shareholders or owners

In conclusion, MTN Ghana would also like to comment on the pros and cons of the FDD (LTE) and

    the TDD (Wi-Max 802.16e) technology as stated below:

LTE (FDD) is capable of providing much higher data rates beyond 150 Mbps in a 2x20 MHz BW due

    to less overhead.

    Scancom Limited (MTN Ghana)

    Comments and Views on NCA’s Selection & Award Procedure

    January 2010

    Page 10 of 11

    Spectral Efficiency

? LTE is expected to provide higher spectral efficiency than and WiMax. Using the method

    proposed by the NGMN and comparable MIMO 2x2 configurations and 5 MHz spectrum, the

    average user throughput and normalized spectrum efficiencies are 1.73, 0.97, 0.63, and 0.76

    bps/Hz/user, respectively for LTE-FDD, LTE-TDD, mobile WiMAX (TDD), and HSPA (FDD).

    Clearly, FDD is more spectrally efficient.

? Increased bits/Hz help us in two ways :

    1. Increased bits/Hz leads to greater data speeds to a single end user (Throughput improvement)

    2. Increased bits/Hz also leads to similar guaranteed data speeds to each user as the number of

    users increases (Capacity Improvement)

? By using a larger bandwidth, there is a lesser need to design narrow-band filters and increased

    Time/Frequency Multiplexing. This results in better spectral and power efficiencies leading to

    capacity and throughput improvements.

? Wi-Max is assumed to be deployed in recommended re-use of 1/3 while HSPA is deployed in real

    re-use 1. LTE on the other hand is superior since it utilizes fractional tight reuse due to

    coordinated interference reduction. Due to "superior" transmission and reception techniques in

    LTE, LTE can use a 1/1 Frequency Re-use. The way LTE works is that as OFDM is used on the

    DL and SC-FDMA is used on the UL. The reason why 1/3 is used in WiMax is to prevent

    interference to a user, not just from other users but also from the same data coming to a user

    from a different Node. LTE handles the scheduling of user data (and thus interference of a user)

    differently from WiMax. Each sector on the e-Node B will schedule a particular users data

    on different portions of the total spectrum allocated (e.g. if 1 MHz out of 20MHz is being used for

    a user and the first sector of Node-B is using 1 out of 20, the next sector will use 2 out of 20 for

    the same user, and the third sector could use 3 out of 20 etc.). The scheduling in LTE is also very

    fast in that a user’s data is scheduled in 1ms. This use of "adjacent" portions of spectrum and fast

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