44 finweek 15 August 2019 http://www.fin24.com/finweekin depth telecommunications industry
WHY^ IS^ SOUTH^ AFRIC
A STILL^ W
Mobile^ data^ prices^ in^ South^ Africa^ are^ higher^ than^ in^ many^ other^ countrie
s in Africa^ and^ elsewhere.^
leaves consumers^ with^ costly^ data^ bills^ and^ hinders^ economic^ growth.^
a
long-awaited government policy directive has
raised more questions than answers for South
Africa’s telecommunications industry, and
quashed hope for the quick release of spectrum- which existing mobile network operators say would help
them to improve their services and cut data costs.
Spectrum refers to the radio frequencies used for
communication over airwaves by radio, television and
the mobile telephone industry, as well as other wireless
applications like Wi-Fi and Bluetooth. It is both a sovereign
asset and a limited resource, managed by national
regulatory authorities, which issue the licences needed for
its use.
However, policy paralysis and mismanagement has
blocked the allocation of new spectrum in SA for more than
a decade, forcing existing operators to spend more money
on repurposing their infrastructure to meet demand.
The indecision has also prevented local television
broadcasters from keeping up with digital migration,
a global shift in technology that would have released
spectrum which the broadcasters now occupy, to
mobile operators.
Addressing the scarcity is crucial to the economy,
as wider, cheaper and more efficient network coverage
would stimulate innovation, create jobs and ease the
cost of doing business in South Africa – attracting
more investment into the country. But analysts
say that the announcement by communications
minister Stella Ndabeni-Abrahams on 26 July,
while welcome, points to further delays.
The government has decided to allocate much
of the country’s unused high-demand spectrum
to a Wholesale Open Access Network (WOAN),
which will be established through a consortium of
companies with diverse ownership.
The intention is to boost competition by
opening the market to small- and medium-sized
enterprises, favouring black-owned businesses
and including the participation of targeted groups
including women, young people, and persons with
disabilities.
The directive sets conditions for existing operators
wanting to purchase the remaining chunks of spectrum,
requiring them to deploy infrastructure in less profitable
rural areas first. It gives preferential access and additional
support to the WOAN.
Operators that secure their own spectrum will have
to buy 30% of their national capacity from the WOAN
for at least five years, and will be required to make their
infrastructure available to the entity on a wholesale basis as
soon as it has been established.
The Independent Communications Authority of South
Africa (Icasa) will award licences for the spectrum and
government has asked it to reduce or waive licence fees
for the WOAN, which would give the entity an input cost
advantage and allow it to charge lower prices.
But no timelines have been set for establishing the
WOAN, for making it operational, or for auctioning what is
left of the spectrum to the existing operators. Shortly after
the announcement, Icasa issued an invitation for tenders
to help the authority value high-demand spectrum bands
ahead of the allocation of licences.
How much spectrum will be assigned to the WOAN and
how much to the existing network operators is also unclear,
apart from the guidance given in a study last year by the
Council for Scientific and Industrial Research, which
concluded that to be viable, the new entity had to have
20% of the entire market.
“What is absent from this directive are
prescriptions and mechanisms on how the spectrum
will be awarded, and what type of business model
is going to be used for the WOAN consortium,” said
Naila Govan-Vassen, research manager at Research
ICT Africa.
“The biggest concern is the timeline of WOAN,
along with the lack of clarity over what proportion
of spectrum will be assigned to it and the amount
of remaining spectrum that may be assigned to
other electronic communications network service
licensees.
“This whole process will take long and further
delay the release of spectrum. The longer the
delay, the longer prices will stay high.”
Mobile data prices in SA are higher than in
many other countries in Africa and elsewhere,
with a recent investigation by Cable, a UK
mobile broadband comparison website, ranking
the country 143rd out of 230 worldwide.
The Competition Commission has blamed the
absence of competition and lack of transparency by big
operators like Vodacom and MTN for high data costs, but
also acknowledged that scarcity of spectrum is a factor.
Vodacom CEO Shameel Joosub has said that access to
further spectrum would allow mobile networks to cut their
data prices in half, and has been scathing over what he
describes as incompetence among policymakers.
South Africa has had 11 communications ministers over
the past 11 years.By Mariam^ Isa“This whole process
will take long and
further delay the
release of spectrum.
The longer the delay,
the longer prices will
stay high.”
Pho
to:^
Shu
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