Feb 11, 2020

A Brief Review of NCC Licensing Regulations 2019 – Bisola Scott



INTRODUCTION
The Licensing Regulations 2019[2] (“the Regulation”) was made by the Nigerian Communications Commission (“the Commission”) effective from 11th January 2019 pursuant to the powers conferred upon the Commission in sections 33 and 70 of the Nigerian Communications Act[3] (“the Act”) to publish regulations on licensing processes among others.[4]  Reg.1 of the Regulation stipulates the objective of the Regulation, which is to provide a regulatory framework for effective and efficient licensing processes and procedures in the communications industry for the operation of communications systems, facilities and services in Nigeria.
The Regulation applies to individual licence, class licence, frequency licence and other licence category that may be determined and published by the Commission.[5] According to the Regulation, the Commission may classify or reclassify communication services under the categories of licenses identified above, on terms and conditions that may be deemed necessary in compliance with sections 32, 33, 34, 35 and 36 of the Act.[6] Prior to this Regulation, licensing in the telecom industry was regulated by the Nigerian Communication Act, licensing agreement templates, information on licensing process provided by the NCC, including other related regulations and guidelines on use and deployment of telecom infrastructure. The key provisions of the new Regulation are highlighted below.

REVIEW OF THE REGULATION
1.      Licensing Process and Exemptions
The Regulation stipulates that all communication services provided in Nigeria must be provided after obtaining a licence from the Commission.[7] However, the Commission may exempt communication services or class of persons from holding a licence by issuing an exemption order to the exempted communication services or persons.[8] Prior to the issuance of an exemption order, the Commission must ensure that the service to be provided by the exempted service provider will not interfere or cause harm to other service providers or consumers.[9] Where the communication service will cause harm to other service providers and consumers, the Commission will not issue the exemption order.
The Regulation stipulates that a licence should be granted on non-discriminatory terms.[10] A licence would be said to have been granted on non-discriminatory terms, if the telecommunications providers with similar types of networks or services are treated similarly, the licence does not favour any telecommunications provider or class of telecommunications providers over others, and the issuance of the licence is likely to enhance competition in any market.[11] In consonance with the Communications Act, the Commission is mandated to carry out its functions and duties and exercise its powers in a non-discriminatory manner.[12] The Commission is also required to be guided by the principles of transparency, fairness and non-discrimination in the formulation of licensing procedures, issuance of communications licences and preparation of licence conditions and terms.[13]

The licence issued by the Commission authorizes the holder to own, operate a communication network, or provide a communication service as prescribed in the licences.[14]  Therefore, with a licence issued by Commission, the licensee can own, operate a communication network, or provide a communication service, and cannot exercise such rights until it has obtained a license. The Regulation also prohibits a licensee from operating any service or facility which is not expressly stated in its licence or for which the Commission has provided a separate licence or authorization.[15]

The Regulation provides a different sanction from the one identified in section 31 of the Act by providing that notwithstanding the provision of section 31 of the Act, any person who provides a communication service without a valid license shall be liable to an administrative fine of N5,000,000 for the contravention and N500,000 for each day that the contravention persists after an order to desist has been issued by the Commission.[16] Section 31(2) of the Act provides for fines and or imprisonment as sanctions for operating a communication facility or providing communication services without obtaining a licence.[17] The Regulation further stipulates that any person who continues to provide a telecommunications service after the expiration of a licence term shall be liable to an administrative fine equivalent to the initial fee for the relevant licence and an additional fine of N100, 000 for each day that the contravention persists.[18]

2.      Individual Licence
An individual license may be granted through an auction, tender, fixed price, competitive bid process and any other method which the Commission may consider as appropriate.[19] The Commission shall process the application within the time and in the manner stipulated in section 41 of the Act, (which is within 90 days of receiving an application) and subject to the other terms in section 41 of the Act. The Commission shall issue an offer letter to the applicant if satisfied with the application, and the applicant shall pay the licence fee within 30 days of receipt of the offer letter.[20] An individual license will not be issued to an applicant where it holds a controlling interest in another licence, where the Commission is satisfied that anti-competitive issues may likely arise if such licence is granted, or where the applicant failed to meet its obligations under the conditions of another licence.[21] An issued licence will terminate at the expiration of its duration unless the licensee gives the Commission a notice of its intention to renew the licence not later than six months before the expiration of the license term.[22] Therefore, it may still subsist after the expiration of its duration, if the licensee had given a notice of its intention to renew the licence not later than six months prior to its expiration. Where the licensee did not give any notice of intention to renew, the licence will terminate automatically and licensee will be removed from the register and will only be re-listed when the licence is renewed.[23]

The Regulation also itemizes the communication services which are categorized as individual licences as including: central equipment Identity registry, electronic directory information services, fixed wireless access, global mobile personal communications by system, infrastructure sharing and collocation services, interconnect exchange national carrier,  national long distance licence, non-commercial closed user services, open access fibre infrastructure  Network (Infraco), private network links (Regional/National), sales & installations of terminal equipment, unified access service licence among others. [24]

3.      Class Licence
An application for a class licence shall be submitted to the Commission with evidence of payment of the requisite fee and relevant documents and the Commission will decide whether it would accept or refuse the application within 30-days of receiving the application. The period for review can be extended by the Commission by an additional period which should not exceed 30-days.[25] The Regulation also itemizes the telecom services which are categorized as class licences.[26] The services include payphone, cybercafé, telecenter, sales and installation of terminal equipment, repairs and maintenance of telecommunications facilities, cabling, and any other undertaking that the Commission may determine as a class licence.

4.      Frequency Licence
The Regulation identifies frequency licence as a category of licence.[27] According to the Regulation, the Commission may issue a frequency licence by auction, tender, fixed price, competitive bidding process, administrative process, or any other method which the Commission at its discretion may adopt.[28] In order to apply for a frequency licence, the Regulation provides that an application should be submitted to the Commission in the prescribed application form and accompanied with evidence of payment of the prescribed application fee and any other required documents.[29] Upon receipt of the application, the Commission will review the application and inform the applicant of any further information required to process the application, or process the application based on the conditions itemized in section 30 of the Regulation and convey its decision to the applicant within 90 days of receipt of the application.[30]  The Regulation allows the Commission to extend the time within which the Commission shall make a decision on an application, for an additional period not exceeding 30 days.[31] A frequency licence issued by the Commission subsists for one year unless stated otherwise in the Frequency Spectrum (Fees and Pricing; etc.) Regulations[32] or the conditions of the frequency licence.[33] After one year, the license shall expire automatically unless the licensee gives the Commission notice of its intention to renew same not later than 3 months prior to the expiration of the licence.[34] The Regulation also provides that a licensee shall ensure that the spectrum assigned to it by the Commission is efficiently utilised as the Commission reserves the right to review the usage of the spectrum assigned to a licensee.[35] Where the spectrum is under-utilized or not utilized, the Commission may refuse to renew the licence at the expiration of term of the frequency licence or impose time-bound obligations or sanctions on the licensee.[36]

5.      Procedure for Transfer of Licence and Shares
According to the Regulation, a licensee is required to obtain an approval from the Commission in order to transfer a license. Where a licence is transferred without notifying and obtaining the requisite approval from the Commission, the transfer shall be null and void, and the commission shall impose appropriate sanctions as provided for in the Enforcement Regulations.[37] The sanction imposed by the Nigerian Communications (Enforcement Processes, etc.) Regulations 2019[38] are N10,000,000.00 and a further N500,000.00 per day calculated from the effective date of the transfer or assignment as determined by the Commission and payable for as long as the contravention persists. The Enforcement Regulations also provides that for any licensee with a turnover less than N1,000,000.000.00 (One Billion Naira) the commission may impose a lump sum fine not exceeding N2,000,000.00.[39]

The Commission monitors matters that relates to the performance of all licensed telecoms service providers and publish annual reports at the end of each financial year. [40]The reports contain compliance monitoring and enforcement actions carried out by the commission. According to the commission’s Compliance Monitoring and Enforcement Report 2019 Q2,[41] an enforcement action was carried out against Auto Tracker Nig.Ltd in Lagos on May 16, 2019 for providing communication services without licence andhe suspect was arrested and handed over to the Nigeria Security and Civil Defence Corps for interrogation. The company was directed to immediately regularize and notify the Commission failing which all numbers in its data base will be deactivated by MTN.
A licensee is required to apply to the commission in writing where it intends to transfer ownership or control of its shares in an amount exceeding ten percent of the total share capital of the licensee, at least 90 days prior to the proposed date of transfer, or such other period stated in the licence conditions or as may be determined by the Commission.[42] The Commission will decide either to refuse or grant an approval for the transfer of the shares upon such conditions as the Commission may determine.[43] However, the Commission will refuse the transfer if the acquisition of ownership or control of the licensee is likely to lead to anti-competition issues in that segment of the telecommunications market, and where the licensee still proceeds with the transfer without prior authorization from the Commission, the Commission shall direct the licensee to reverse the transfer and impose appropriate sanctions as provided in the Enforcement Regulations.[44]

The Regulation prohibits the licensee from using its interests in a licence as security, or to encumber or pledge its interest in a licence without the prior written approval of the Commission.[45] Where a licensee fails to obtain the approval of the Commission, the Commission may at its discretion revoke the licence of the licensee or impose a fine not exceeding N10,000,000.[46]

6.      Sanctions
The Commission may suspend or revoke a licence where there has been a breach of the terms and conditions of the licence, provisions of the Act or provisions of any Regulations issued by the Commission.[47] Furthermore, where the Commission intends to suspend or revoke a licence under the circumstances listed in section 45 of the Act, the Commission is required to notify the licensee of the reasons for the intended suspension or revocation, date on which the intended suspension or revocation will take effect and period within which representations on the intention may be made.[48]  Also, where the intention to suspend or revoke is as a result of the breach of terms and conditions, provision, or limitation in a license, the Regulation requires that the notice given to the licensee should stipulate that the intention will be withdrawn or modified if the breach is remedied within 60 days.[49] The Commission shall within the period of 30 days following the 60 days period confirm, modify or withdraw the intention to suspend or revoke the licence.[50] If licensee fails to remedy the breach after the issuance of the notice, the Regulation provides that the Commission shall suspend the license for a period not exceeding three months not later than 7 days after the last day for the licensee and where the licensee fails to remedy the breach during the suspension period, the Commission shall revoke the licence in accordance with the Act.[51]

CONCLUSION
The Regulation is an offshoot of the provisions on licensing in the Act and contains further provisions on the processes and requirements for applying for licences including the terms and conditions of their use. It also itemizes communication services which fall under individual and class license and sanctions for breach of the terms in the Regulation. It clearly identifies frequency licence as a separate category of licence.[52] The Regulation is essential for licensees and applicants who require new or additional licences and serves as a guideline to obtain, use and transfer licences for communication services in Nigeria. The specific terms and conditions of use for each type of licence are itemized in the draft model licences which are available on the Commission’s website.

_______________________________________________________________
For further information on this article and area of law,
please contact Bisola Scott at S. P. A. Ajibade & Co., Lagos by
Telephone (+234.1.270.3009; +234.1.460.5091) Fax (+234 1 4605092)
Mobile (+234.811.389.8102, +234.817.939.0319)

[1]      Bisola Scott, Associate Intellectual Property and Technology Law, SPA Ajibade & Co., Lagos, NIGERIA.
[2]       Federal Republic of Nigeria Official Gazette, S.I. No 15, pg. B119 -147.
[3]       C28 Laws of the Federation of Nigeria 2004.
[4]       Reg. 1, Licensing Regulation 2019, Federal Republic of Nigeria Official Gazette, Government Notice No. 24, Vol. 106, pg. B119-147(Regulation).
[5]       Reg. 2(a)-(d) Regulation.
[6]       Reg. 3(1) Regulation.
[7]       Reg. 5(1) Regulation. This provision is also contained in Section 31 of the Act, which provides that “No person shall operate a communications system or facility nor provide a communications service in Nigeria unless authorised to do so under a communications licence or exempted under regulations made by the Commission under this Act.”
[8]       Reg. 7(1) Regulation.
[9]       Reg. 7(2) Regulation.
[10]     Reg. 8(1) Regulation.
[11]     Reg. 6(2) (a)-(c) Regulation.
[12]     Section 4(2) of the Act.
[13]     Section 33 (3) (b) Act.
[14]     Reg. 9(1) Regulation.
[15]     Reg. 9(2) Regulation.
[16]     Reg.13(1) Regulation.
[17]     It states that ”Any person who acts in breach of sub-section (1) of this section commits an offence and is liable on conviction to— (a) a fine not less than the initial fee for the relevant licence ; (b) a fine not exceeding 10 (ten) times the initial fee for the relevant licence ; (c) imprisonment for a term not exceeding 1 (one) year ; or (d) both such fine and imprisonment; Provided that upon conviction, the person shall also forfeit to the Commission the property, facilities; installations and equipment used by him for the provision and operation of the unlicensed service.”
[18]     Reg.13(2) Regulation.
[19]     Reg.17(1) of the Regulation.
[20]     Reg. 17(2) Regulation.
[21]     Reg.18(1)(a)-(b) Regulation.
[22]     Reg.21 Regulation.
[23]     Reg. 22 Regulation.
[24]     Reg. (1) – (26), Schedule 2 of the Regulation.
[25]     Reg. 26 (1), (2) and (4) Regulation.
[26]     Reg. (1) – (7) Schedule 3 to the Regulation.
[27]     Reg.2(c) Regulation.
[28]     Reg.29(1) Regulation.
[29]     Reg.31(2) Regulation.
[30]     Reg.31(3)(a)-(b) Regulation.
[31]     Reg.31(4) Regulation.
[32]     Federal Republic of Nigeria Official Gazette, S.I. No 23, pg. B317 – 325.
[33]     Section 6, Part B, Second Schedule, S.I. No. 13, p. B83-104. According to Section 7(1), frequency licence may have different durations as they may be classified as short-term permit with a tenure of 4 months, medium-term permit with a tenure of one year, or long-term licence with a tenure of 5, 10 or 15 years. However, any frequency spectrum licence with tenure of one year and below is classified as a permit. The Frequency Regulation describes a licence with a tenure of 5, 10 or 15 years as a licence.
[34]     Ibid.
[35]     Reg. 40(1) – (2) Regulation.
[36]     Reg. 40(3)(a)-(b) Regulation.
[37]     Reg. 41(1)-(2) Regulation.
[38]     Reg.7, Second Schedule to the Regulation, Official Gazette No. 11 2019 Vol. 106.
[39]     Ibid.
[40]    Nigerian Communication Commission, Compliance Monitoring & Enforcement, available at https://www.ncc.gov.ng/licensing-regulation/legal/enforcement, accessed on 20th December 2019.
[41]    Ibid.
[42]     Reg. 42(1) Regulation.
[43]     Reg. 42(4) Regulation.
[44]     Reg. 44 (1) – (2) Regulation.
[45]     Reg. 45(1) Regulation.
[46]     Reg. 45(2) Regulation.
[47]     Reg. 51(1) Regulation.
[48]     Reg. 52(a)-(c) Regulation.
[49]   Reg. 53(a) Regulation.
[50]     Reg. 53(b) Regulation.
[51]     Reg. 54(a)–(b) Regulation.
[52]     Frequency licence is not identified as a category of licence in the Act. The only categories of licences identified in the Act are individual and class licence.

Source: SPA Ajibade & Co
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