With SA’s telecom regulator having concluded a long-delayed radio frequency spectrum auction, netting the government R14bn, many are likely to be wondering when, and if, the benefits — such as lower data prices, 5G and technology backed economic growth — will actually happen.
Last week, the Independent Communications Authority of SA (Icasa) reached a milestone, raising R14.4bn in the country’s first spectrum auction since 2004-2005.
Mobile operators have long argued that the high cost to communicate in SA was down to a lack of spectrum, known as the “spectrum crunch”.
Without suitable radio waves to offer new technologies and cover long distances, mobile operators have had to build more cellphone towers and other infrastructure in SA than they would typically need to, thus increasing operating costs, which then get passed on to consumers as high data charges.
With spectrum now available, will prices come down? If the telecom providers are to be believed, such a future is not too far off.
“Vodacom’s immediate focus will be on the deployment of valuable spectrum to extend both 4G and 5G network coverage to more parts of the country and improve quality of service while we continue to address the cost to communicate,” said Shameel Joosub, CEO of the group, which spent the most money, R5.38bn, on new spectrum.
Another issue that has plagued the local telecom landscape is uneven distribution of high-quality connections, particularly in rural areas or outside big centres such as Johannesburg, Cape Town and Durban.
With internet connectivity a big part of President Cyril Ramaphosa’s economic agenda, Icasa had outlined plans to make rural connectivity a part of the licensing terms for the spectrum auction.
MTN, which shelled out R5.2bn on spectrum, says wider rural coverage is now possible, having used temporary spectrum — allocated to operators to cope with increased communications demands brought on by Covid-19 as a testing ground.
MTN SA CEO Charles Molapisi says the temporary radio waves “allowed MTN to reach deeper into small towns and particularly rural communities that were previously underserviced due to the lack of required spectrum.” MTN SA has 96% of the country covered by its 4G network and “the spectrum allocation promises even greater reach, coverage and speeds”.
Unfinished business
As Icasa completes the final administrative parts of the auction, which also saw Rain spend R1.431bn and Liquid R111m on spectrum, it has a number of issues to deal with to fully complete it.
Cell C, which spent R288.2m on new radio waves at the auction, says in many respects the outcome of the auction “was unexpected,” however it is pleased the process is complete as it was long overdue.
The question now is how will the WOAN [Wireless Open Access Network] spectrum be dealt with? says SA’s fourth largest mobile operator.
In January Telkom, which wrote a R2.113bn cheque for spectrum, took Icasa to court, in part, because of this question. The fixed-line operator said the auction process risks leaving little on the table for the national WOAN operator meant to foster competition in the industry.
Creating a separate open-access network is at the heart of the government’s goal to roll out broadband access, encouraging small and big players alike to compete on services rather than the quality of the network.
The government recently amended its policy around the WOAN, Icasa saying last week it plans to move forward with spectrum licensing for it.
Court battles continue
To add to Icasa’s list of unfinished business is looming litigation.
First is a legal challenge by partially state-owned operator Telkom, which has been picking apart the regulator’s plan for issuing new spectrum for more than a year.
In the latest challenge, Telkom filed an application asking the high court to review and set aside the regulator’s invitation to apply, citing a number of flaws in the proposal.
Telkom had argued that proceeding with the auction may be a fruitless exercise, especially if the outcome of the case — which is set to be heard in April — will have an effect on allocation.
Telkom recently asked for a structural interdict that would put Icasa under the supervision of the court, ahead of the auction.
The other issue is completing the move from analogue to digital television broadcast services, yet another long-delayed process. Its completion will free up some of the spectrum that mobile operators have been clamouring for. These radio waves are good for covering large distances, thereby reducing the need to build many towers to do the same job.
Communications & digital technologies minister Khumbudzo Ntshavheni is leading the charge, hoping to complete the switch by end-March. However, even this process is subject to a legal challenge by e.tv, which Icasa has now joined on the side of the minister.
What is unclear is how long it will take for the dust to clear and the economic benefits to truly be realised in SA, especially considering the minefield of issues that Icasa still has to deal with. That said, an important step has been taken with last week’s auction and that, at least, keeps hope alive.
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