The sale of two additional cellular licences for US$15 million ($975 million), which was approved by Cabinet last week, is expected to enhance the efficiency in the use of Jamaica's telecommunication spectrum, government officials say.a

Campbell. firms are normally given three to five years to achieve full coverage

Launching into what appears to be a saturated market, the two new investors - Wire 9, a United Kingdom-based company that sepcialises in voice over Internet protocol (VOIP) services, and Wiiscom of the United States - plan to focus on greater diversity in product offerings.

"The use of spectrum will be more efficient," said information minister, and former chairman of the Spectrum Management Authority (SMA), Colin Campbell in an interview with Sunday Finance. "They won't have to cover the island in precisely the same way and can get the coverage with the lower broadband."
The island's three existing networks - Cable & Wireless, Digicel and MiPhone - are believed to have a combined 90 per cent market penetration, leaving little room for new entrants.
The two licences now being sold give the firms two blocks of 10 MHZ frequency each - one in the 1800 MHz band, which is used for GSM, and the other in the 1900 MHz band, which is used for CDMA.

The licences that were sold before were for two 15 MHZ blocks.
But Campbell noted that the investors were confident that they could take up subscribers and secure a return on their investment by "not simply offering service to the voice market and not only using the spectrum for roaming".

Their expectation is despite the government's own uncertainty that "we could get two new firms due to market conditions (high penetration)."

The licences that the government is now about to sell include the one for which AT&T Wireless paid US$6 million a year ago. At the time AT&T had plans to focus on roaming to its existing American customers travelling to the Caribbean.

When AT&T was acquired by Cingular in late 2004 and sold its Caribbean assets to Digicel in June last year, it surrendered all its Jamaican spectrum and telecommunications licences "unconditionally".

That licence, however, was for 30 MHz of frequency altogether, or 50 per cent more bandwidth than either of the two licences now being sold. But the narrower focus on non-voice service will allow the firms to provide widespread coverage, while carving out a piece of the local market.

Currently Digicel, Cable and Wireless and MiPhone together have a reported subscriber base of 2.4 million users or 92 per cent of the estimated 2.6 million people residing in Jamaica.

Cable and Wireless reported a 28 per cent increase in its subscribers over last year, when it was 700,000, placing it close to 900,000 and Digicel's most recently reported figure was 1.4 million subscribers. MiPhone still maintains that it has 100,000 subscribers, a figure it has used for the last two years.

Once the licences, which have already been drafted are issued, the recipients will have a set time frame to build out infrastructure and roll out their services. Campbell noted that the timelines are still to be negotiated, but that the firms were "normally given three to five years to achieve full coverage".

Additionally, to eliminate "hoarding of frequency", as Campbell calls it, a clause is usually placed in the licence, as with all the mobile licences issued since 2001, that will disallow non-use of the frequency over 12 consecutive months, which means that the firms will be required to have some infrastructure in place before mid-2007.

So far, the government has earned US$98.5 million or $6.5 billion from the sale of cellular licences to Digicel, Oceanic Digital (MiPhone), and ATT Wireless.

According to statistics provided by telecoms regulator, the Office of Utilities Regulation (OUR), the three phone companies raked in combined revenue of US$751.43 or J$48.84 billion last year.

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