South Africa’s mobile network operators (MNOs) are powering up their network capabilities as they phase out legacy 2G and 3G for more advanced 4G and 5G technologies, creating an opportunity for the country to catapult its digital economy into the future.
This is bringing an end to the days when many MNOs attempted to cater to every type of consumer, with services ranging from the legacy 2G to the cutting-edge 5G on their network.
But the opportunities that next-generation technologies bring must be balanced with a carefully executed transition. This transition must be enabled by the state and led by the industry, taking into account market conditions and other realities.
While the department of communications & digital technologies has pushed the switch-off date for both technologies out to December 31 2027, the Association of Comms and Technology (ACT) does not believe this approach is ideal and continues to advocate an industry-led process where users are encouraged to adopt newer technologies without strict government-imposed deadlines.
ACT believes this is a more prudent approach to avoid the risk of disrupting services for millions of users who still rely on legacy technologies and to manage the transition at a realistic pace.
The decision to change the timeline implicitly acknowledges ACT’s arguments that obligations placed on network licensees need to consider the resources and the process of moving consumers to newer networks and smart devices where poor communities risk the reality of digital exclusion. They are the majority in rural areas.
This is especially crucial in light of the fact that the sector has encountered significant economic challenges, including reduced consumer spending, and operators have been compelled to make substantial capital investments in power supply solutions to ensure connectivity in the face of load-shedding.
An industry-led but government-enabled change would also reflect the international experience. The Global System for Mobile Communications Association (GSMA), a body representing industry interests worldwide, has been monitoring global developments with regards to technology sunsets.
At the beginning of 2022, over seven years, a total of 56 networks had been shut down, of which 36 were 2G networks and 20 were 3G.
None of the network shutdowns observed were because of strict government-set deadlines but were mainly market-led, with regulatory guidance provided by the relevant regulator.
The government can, however, help in many ways, including community programmes on digital skills, access to
e-services and public awareness to help accelerate the transition to next-generation technologies. It should be prohibiting the import of 2G and 3G devices, for example, since they will shortly have no utility on next-generation networks.
It can also help enable the adoption of smartphones, which will be needed to use the 4G and 5G networks in place of legacy technologies.
This is a pressing problem to be overcome in the next two years and ACT approached the department of trade & industry to look at a possible reduction in customs duties to make these devices more affordable to all.
According to the Icasa State of the ICT Sector Report 2023 there are 73-million smartphone subscribers in South Africa, with the overall number of mobile subscriptions at about 106-million, which gives a sense of the internal digital divide.
Sars classifies imported smartphones as luxury items and they are subject to a "luxury tax" of 15% as well as an additional duty of 7%.
So, for example, a device priced at R10,000 would immediately attract another R2,750 in taxes. The incentives for operators to upgrade their networks are low if consumers cannot afford to make use of the more advanced technologies and a lack of adoption will threaten existing revenue.
While 60% of mobile internet subscriptions still rely on 3G, this is predicted to drop to 22% by 2025, but a careful approach is necessary to mitigate the risk of coverage gaps, particularly in rural areas where these legacy technologies are more prevalent.
Consumer usage of 2G is much lower. Consumer volume is so small on Telkom’s network, for example, that it has already shut down most of its 2G as it represents less than 1% of its traffic.
The 2G network is mainly used for voice and machine-to-machine interfaces such as emergency services, tracking services, metering, security systems and remote industrial interfaces. The Icasa sector
report says South Africa has more than
11.5-million machine-to-machine connections that use 2G or 3G connections.
But for consumers using 2G- and 3G-specific devices such as feature phones that rely on those networks, their handsets will become inoperable once those networks switch off.
It is unlikely poorer South Africans will be able to upgrade to smartphone devices without some sort of state intervention.
There is a precedent for such a move in the provision of set-top boxes in the migration from analogue to digital broadcasting. Free set-top boxes were provided to indigent or low-income households who underwent a means test to qualify for the upgrade. According to the department of communications & digital technologies, about 1.5-million applications for set-top boxes were received.
The broadcast migration took place over nine years and is still not complete, while the final date to switch off all analogue television broadcasting services above 694MHz is December 31 2024. The timeline for 2G/3G switch-off is much tighter, highlighting the need for an industry-led process.
Outside the consumer issue, the impact on machine-to-machine and internet of things (IoT) devices that depend on 2G and 3G networks, such as vehicle trackers and smart meters, must be carefully considered as this process unfolds.
Despite these challenges, moving away from legacy technologies presents a wealth of opportunities for South Africa’s digital economy, so it is important to get it right.
By freeing up spectrum for more advanced 4G and 5G networks, MNOs can enable the development of innovative services and applications that will drive economic growth and job creation.
The Genesis Analytics report "South Africa in the Digital Age" highlights the significant potential of the digital economy to generate new jobs and incomes in both the tradable and domestic sectors.
The study estimates that 500,000 cumulative net new jobs in globally traded services in South Africa could be created through the digital economy by 2030, mainly by expanding existing business process outsourcing operations in key markets such as the US, Canada and Australia.
Opportunities like these justify the continent-leading steps South Africa is taking to sunset legacy technology in favour of cutting-edge network capabilities. However, a concerted effort and diligence will be needed by all stakeholders to ensure success and that access to the existing digital economy is not disrupted for millions of South Africans.
• Batyi is CEO of the Association of Comms and Technology
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