Already delayed by a week, the auction of two wireless broadband telecommunications licence has been postponed.

The Spectrum Management Authority (SMA), which was apparently unable to attract firm interest in the 700-megahertz (MHz) band licences at the minimum price of US$40 million ($4 billion).

The Government agency charged with overseeing the bidding process said it made the decision to postpone the public consultation — scheduled for last Wednesday — to a “date to be announced” to ensure “involvement of all stakeholders interested in this auction process”.

Meanwhile, Telecommunications Minister Phillip Paulwell jetted off to China to secure interest in the spectrum being sold, and hopefully press other players — local and overseas — to make a bid.

The SMA requires more than one bidder for the auction to be considered valid.

It is not yet clear how successful the auction will be, but it is happening at a time when similar auctions have fallen short of expectations.

Only two weeks ago, the Australian government fell nearly a US$1 billion short of the $3 billion it targeted in the wireless auction, which also included spectrum form the two gigahertz (GHz) band.

The BBC reported in February that the UK’s telecoms regulator Ofcom raised £2.34 billion from its auction of 4G mobile spectrum.

“The Office for Budget Responsibility (OBR) had forecast that the auction would raise £3.5 billion for the Treasury,” said the BBC.

The issue request for bids was slated for today, but the public consultation leading has to take place before bids can be placed on the table.

The sale of the two 700-megahertz (MHz) band licences, which allow for the provision of 4G technology, such as Long Term Evolution (LTE), are hoped will significantly deepen broadband Internet penetration in Jamaica.

Internationally the band was used for analogue television broadcasting, but has been allocated by the International Telecommunication Union (ITU) for broadband wireless services.

The reserve prices — US$40 million for the cheaper one and US$45 million for the other — were set so that it would be low enough to encourage multiple players in the market, while securing a “reasonable” payment for the licence, according to the information memorandum published by the SMA last month.

Locally, bids will have to include a business plan, which details the percentage population coverage after each year of expected rollout as well as the anticipated capital expenditure.

On the other hand, the Telecoms Amendment Act allows for an infrastructure sharing obligation on all licensees, which should allow new players in the sector to roll out without taking on heavy costs of infrastructure and facilities such as cell sites and towers, landing stations and cables.

More specifically, one of the main objectives of the auction is to increase competition in the provision of the telecommunications services through the entry of a new player, according to the information memorandum. Hence, the package is designed to incentivise new entry.

Winners of the spectrum licence will be required to launch commercial services within 18 months, if they already operate in Jamaica, or no later than 24 months for new entrants.

What’s more, incumbents will have to commit to 50 per cent population coverage within the first year-and-a-half and 90 per cent with four years, while newcomers will have to reach 30 per cent of the population by the end of its second year after getting the licence. They also get a year more than existing telecommunications operators to hit the 90 per cent mark.

Not meeting those requirements, means losing the licence.

“Together with the potential of 4G through WiMAX and LTE, the mobile broadband sector is likely to become a major revenue driver in coming years,” said the information document. “The reallocation of the band will provide enhanced flexibility and network-rollout efficiency, whilst promoting the growth and rapid development of communications technologies and services.

“This is in keeping with global trends and is consistent with the policy objectives of the Government to promote increased competition and also to provide all Jamaicans with access to ubiquitous communications connections.”

The country’s ICT exports include value-added products, such as computer-assisted designs at the high end to call centres at the low end.

But Internet penetration is very low.

Only 15.6 per cent of the population had access to the Internet at home compared to the corresponding global figure of 30 per cent, according to a 2011 study by the Telecommunications Policy and Management Programme at the Mona School of Business. It showed the country’s fixed broadband penetration rate at just over three per cent, compared to mobile penetration rate of 116.38 per cent.

The idea is that mobile technology is more suitable than fixed line for rolling out broadband in Jamaica.