As six telecom operators throw their hats into the ring for SA's latest attempt to auction 5G wireless broadband spectrum, the big question is not only whether it will happen in our lifetimes, but why it is so important.
A 17-year gap since the last significant allocation of spectrum and a legal wrangle that has delayed a new auction of high-speed spectrum for six years mean that the massive opportunity it offers has been wasted for more than a decade.
The auction seemed set to go ahead a year ago, only to be delayed by the failure of the Independent Communications Authority of SA (Icasa) to appoint an external auctioneer.
Subsequently, the Pretoria high court blocked the auction after challenges from both Telkom and broadcaster e.tv.
A new invitation to apply (ITA) for spectrum was issued in January, and again seemed doomed to delay after a dual court challenge from Telkom, firstly to urgently suspend the ITA, and secondly to deliberate on the merits of Telkom’s arguments against the ITA.
When the last major spectrum
allocation took place, for 3G
frequencies
— 2005
However, pressure from other operators, the government and analysts appeared to have persuaded Telkom to drop its challenge — for now.
On January 19, Telkom announced it would drop the first part of its challenge if all parties agreed to an expedited review of the second part. Two days later, Telkom said it had reached such an agreement with all the respondents, but “reserves its rights to reinstate the matter on short notice should it become necessary”.
Telkom has proposed that the second part of the application be heard from March 1-4. Meanwhile , the bidding process has proceeded.
This week, Icasa announced it had received applications from Cell C, Telkom, Rain, Liquid Intelligent Technologies, MTN and Vodacom in “an important and critical step towards the auctioning of high-demand spectrum”.
Icasa will announce the qualified bidders on February 21 and the auction will take place in March, when an independent auctioneer will adjudicate on the bids.
Icasa chair Keabetswe Modimoeng said in a statement this week: “We intend to finally see the licensing of high-demand spectrum through to completion to ensure that all South Africans have access to a wide range of communications services, including data services, at affordable prices... Ultimately, public interest should prevail, as this process will yield positive spinoffs for the industry and society at large.”
We intend to finally see the licensing of high-demand spectrum through to completion to ensure that all South Africans have access to a wide range of communications services, including data services, at affordable prices
— Icasa chair Keabetswe Modimoeng
In a study released by PwC a year ago on the economic impact of 5G, it was forecast that productivity and efficiency gains enabled by 5G will add $1.3-trillion (R19.95-trillion) to global GDP by 2030.
More than half of this economic impact, it said, would be driven by the transformation of health and social care, with another quarter driven by smart utilities, through savings in energy, water and waste management.
Health care, for example, will be enhanced by remote surgery on patients in rural areas, quick transfer of large amounts of patient data wirelessly, and wearable devices that will monitor patient health. Social services will be able to monitor at-risk groups and individuals to a level of precision and scale that was not possible before.
In a study conducted by World Wide Worx, “5G prospects for South Africa in 2021", mobile network operators were unanimous that the allocation of new spectrum is an opportunity to use communications technology for economic development.
The study concludes that the allocation of new spectrum will form a foundation for the rollout of technologies underlying the Fourth Industrial Revolution, such as artificial intelligence, the Internet of Things, autonomous technologies and cloud computing.
For example, monitoring utilities will become significantly more efficient and cost-effective, allowing for better management of issues such as power failures and water leaks. The benefits that cloud computing has brought to the business world will more readily extend to the public, allowing citizens to gain access to richer experiences and services on online portals and apps.
These findings, however, represent an ideal. Many questions remain to be answered en route to leveraging spectrum for the good of the economy. These include both basic and complex issues, such as:
What is spectrum?
Spectrum is the area of radio frequencies allocated to the mobile networks (and other sectors, like the military) for communication over the airwaves. This is a finite commodity overseen by Icasa on behalf of the government, and auctions are held to sell “blocks” of it to the highest bidder.
Why is it important?
Radios, broadcast TV, and mobile phones wouldn't work without spectrum. If spectrum weren't licensed, it would be bogged down with interference. As a result, blocks of spectrum are sold for exclusive use. When some players have more spectrum than others, they may have a better position in the market to offer more reliable services.
Which spectrum one buys is also important, as lower band spectrum can travel further along the airwaves, which reduces the number of cell masts a network will have to erect. This makes it more valuable, and drives its auction price up.
Current state of spectrum in SA
The last major spectrum allocation took place for frequencies ideal for 3G in 2005. Since then, operators have been performing magic tricks to deploy 4G (and now 5G) with the spectrum resources they have.
Why is this ITA so important?
The migration from analogue to digital terrestrial TV will free up a huge chunk of low-frequency spectrum. This is of great interest to mobile networks, since they will be able to reach more customers in remote areas with fewer towers and less capital expenditure.
Fragmentation and Woan
Spectrum, in its current state, is fragmented almost to the point of not being feasible to use. Fragmentation can be seen as a highway and each operator can be seen as a car. Instead of each operator having a large vehicle to transmit data, they need several smaller cars in far more lanes. This fragmentation also makes signals more subject to interference.
To add insult to injury, spectrum was set to be further fragmented by a pool of frequencies in a Wireless Open Access Network (Woan), which has failed where it has been tried, as in Mexico.
The Woan is on the back burner for now, but it's not shot down yet. In a statement in November, Modimoeng said: “There is a compelling reason to revise this tactical approach with regards to the Woan process.”
What would be ideal?
Taking it one step at a time would be the best course of action. First, complete the digital migration to ensure operators aren't assigned spectrum they can't use. Second, perform the auctions in a way that is fair to all applicants and keeps competition healthy.
The best approach is just to get it done. We've been waiting for more than 10 years.
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