Vodacom, MTN in race to 3G

Johannesburg, 08 Jun 2004

Following the news yesterday that Vodacom has a third-generation (3G) test licence, MTN has confirmed it has been testing, demonstrating and evaluating 3G and EDGE technologies on a live pilot network since May, with applications such as streaming video, Internet access and gaming.

EDGE (Enhanced Data rates for Global Evolution, a wireless communications system that increases data throughput to 384Kbps) and 3G, a technology that will offer cheaper and faster Web connections and high-quality video, are seen as key technologies for the future.

According to the Independent Communications Authority of SA (ICASA), both MTN and Vodacom were issued with test licences in May, although they will be testing via different suppliers.

"MTN and Vodacom will have to give their test results to ICASA once they have completed them, and the test data will impact on when the 3G licence is awarded," says Peter Zimri, senior manager of spectrum management at the regulator.

According to section three of the Telecommunications Amendment Act, the mobile operators will have access to both 3G and the
1 800MHz spectrum. This is in accordance with a deal struck with the Department of Communications which will see the mobile operators supply four million SIM cards to underprivileged citizens and 250 000 free phones and numbers to public emergency services.

Asked about the costs of a permanent 3G licence, Zimri says: "A ministerial determination on 3G published in the Government Gazette sets an annual basic licence fee of R5 million and then a further R100 000 per megahertz they receive."

MTN`s concept plan

According to an MTN concept document leaked to ITWeb, MTN plans to launch 3G and EDGE with the aim of "positioning MTN as leading the way in the wireless broadband arena".

It states that while ICASA has not issued any permanent 3G licences, Sentech has launched "MyWireless" based on 3G cellular technology.

"We therefore have a competitor who is taking up the home broadband access market with a 'fixed wireless` offering of various unlimited monthly speeds to which we have no response," it states.

However, with EDGE and 3G, the concept plan says MTN can provide fast data speeds as EDGE is three times faster than GPRS (General Packet Radio Service) and 3G offers true multimedia.

MTN plans to represent itself to government and ICASA as being ready to deploy a 3G network, as well as to positioning MTN as the partner of choice for 3G-related mobile services and as the leader in the development of 3G applications.

The cellular operator has run trials with a provisional 3G licence granted by ICASA and says it looks forward to the super-speed and super-connectivity possibilities of the broadband generation.

Part of MTN`s tests included video calls between Cape Town and Johannesburg as well as tests of user experience, technical viability and commercial viability in the local market. It plans to host a 3G event on 23 June to demonstrate the technology.

3G suits Africa, says Vodacom

It has been reported in today`s press that Vodacom believes it can convert the current temporary 3G licence into a permanent one for a cost of around R6 million per year, which company CEO Alan Knott-Craig claims is a far more reasonable amount than the vast sums paid for 3G licences by European operators in the not too distant past.

Knott-Craig also says Africa is better suited as a market for this technology than Europe, because of the continent`s low penetration rate of broadband Internet services.

In Europe, 3G operators are finally beginning operations, but already several major wireless service providers are trying out Flash-OFDM, a new wireless technology able to carry data 10 times faster and cheaper than 3G networks.

There is also a rival system in WiMAX, supported by US chip giant Intel, which offers fast wireless Internet over distances of up to 45km. WiMAX aspires to be the long-distance version of existing local wireless Internet systems.

These facts will not prevent Vodacom from striking a deal with Vodafone - which has a 35% shareholding in the company - to gain access to the research and development already conducted within its global operations.

Fixed and mobile collaboration?

According Brian Nielsen, a director at BMI-TechKnowledge, fixed-line and mobile operators may be able to work more closely together in future in bringing high-speed wireless data solutions to the market.

"Both Vodacom and Telkom have mentioned WiFi/WiMax and 3G in this same context, indicating the possibility of having users with notebook PCs 'roaming` between these types of networks in future," he says.

"Indications are that 3G is becoming cost-effective to roll-out as an extension to existing GSM networks, so tomorrow`s GSM handsets with multiple band access will be able to connect to either GSM, EDGE or '3GSM UMTS/WCDMA` for both voice and data."

He says that as a mobile data solution, this could prove to be no more costly than Sentech`s MyWireless to implement, which is based on third-generation CDMA technology.

Nielsen says that according to BMI-T, revenues from 'mobile Internet` in the form of GPRS should grow to more than R500 million in the next five years.

"A substantial chunk of this revenue could end up in the coffers of the fixed wireless operators - including Telkom itself - although by that time a converged fixed-mobile operator licence is a strong possibility," he says.

"In the meanwhile, it will be interesting to see to what extent Telkom and Vodacom cooperate to bring wireless data solutions to the market, and exactly what shape this partnership will take."