Last Thursday, the nation once again heard government’s assurance that “within the next month the communications minister will issue the policy direction” to the telecoms regulator to commence the spectrum licensing process.
This marked the fourth time president Cyril Ramaphosa has made this assertion since coming into office, as the South African government looks to speed up spectrum allocation.
Earlier this year, Ramaphosa said the process represents vast potential for boosting economic growth. Keeping to a similar note last week, he said spectrum allocation “is a vital part of bringing down the costs of data, which is essential both for economic development and for unleashing opportunities for young people”.
For Sabelo Dlamini, senior research and consulting manager at IDC, the president’s promise is much like his previous ones.
It was not strong enough or any different, notes Dlamini. “The most important thing is detailing the timelines and providing deadlines. We have had a lot of delays; this time we are hoping it is going to happen, as spectrum allocation will be key for the countries participating in the next industrial revolution.”
Thecla Mbongue, senior research analyst for Middle East and Africa at Ovum, says the president’s latest spectrum promise is the least he can say considering the long wait for a spectrum auction.
“For now, the president stated the minister of communications will issue the policy direction to ICASA to commence the spectrum licensing process. The challenge now lies with the Department of Communications and ICASA to make things happen,” Mbongue says.
The long wait
The last big set of spectrum issued was in the 2.1GHz band, which helped the operators in their 3G network deployment. Vodacom and MTN were allocated such spectrum, respectively, in 2004 and 2005, while Cell C received such spectrum in 2011.
With more than a decade since the last big set of spectrum was issued, recent promises from government indicated 4G spectrum would be allocated in 2019 and then spectrum suitable for 5G in 2020.
Mobile operators are waiting for the allocation of spectrum in order to provide faster and more widespread high-speed data services.
However, the allocation of more high-demand spectrum to mobile operators continues to be up in the air.
The Independent Communications Authority of SA (ICASA) last year confirmed plans to license high-demand radio frequency spectrum by the end of March 2019 but that deadline has come and gone.
The Department of Communications (DOC) then said a final policy directive on spectrum allocation would be issued by the end of April, which also did not happen.
In his first State of the Nation Address (SONA) in 2018, Ramaphosa promised swift action in regards to allocation of high-demand radio spectrum.
Last September, the president said “within the next few weeks, government will initiate the process for the allocation of high-demand radio spectrum to enable licensing”. The announcement was made as part of government's economic stimulus and recovery plan.
In the February SONA, Ramaphosa vowed communications minister Stella Ndabeni-Abrahams will "shortly be issuing policy direction" to ICASA; sentiments echoed by finance minister Tito Mboweni in his budget speech later that month.
However, in early May, the DOC revealed in a statement a decision to hold back on the release of the finalised policy directive.
"Following extensive consultations in this regard, the minister deems it necessary to hold the policy direction on unassigned high-demand spectrum in abeyance for consideration in the sixth administration," it said, indicating the topic would only be revisited after the May general elections.
Frost & Sullivan’s senior consultant of ICT for Middle East and Africa, Siyathemba Magobiane, points out the president made “bold and progressive announcements” in regards to the ICT sector ahead of the May elections. However, one hopes it’s not just promises but implementation as well.
“This latest promise is good news for South Africans and mobile operators. This has been a long time coming. We expect to finally see some action now from the government.”
Delay aftermath
South Africa is one of the few countries that have not allocated 4G/LTE spectrum in Africa, according to Dlamini.
This, he adds, has forced local operators to accept the situation and improvise with spectrum re-farming and carrier aggregation. “The continued delays have negatively impacted the telcos, especially in their budgeting, because once the spectrum is allocated, there is still quite a lot of infrastructure investment required to get the services to the end-user.”
Mbongue agrees the delay has impacted spectrum usage for 4G networks. “As operators could not use the most sought-after bands for 4G in the 700MHz, 800MHz and 2.6MHz bands, they had to tap into the spectrum they already had.
“However, that spectrum was already used for technologies; hence they had to reduce the amount of spectrum already allocated to other technologies (2G and 3G).
“These unlicensed spectrum bands are ideal for better coverage characteristics and reasonable capacity for efficient deployment of mobile broadband. At present, operators use other bands requiring more investments in network infrastructure and put pressure on costs. This partly is to blame for higher data tariffs.”
Magobiane adds mobile operators have had to deal with congested spectrum bands.
He explains: “Current spectrum allocations are not sufficient to deploy new technology along with existing legacy 3G and 2G voice services. Consequently, this has hindered their ability to rollout LTE on a wider scale, as well as the possibility to launch imminent 5G technology effectively.
“The opportunity cost of the delayed release of spectrum can be quantified from the point of view that there is a positive correlation between mobile penetration and annual GDP growth, and as a result, employment opportunities it provides. South Africa has missed that opportunity so far.
“Spectrum release will not only drive growth but is an effective platform for distributing economic opportunity. As a socio-economic development driver, spectrum can be a useful development lever that drives the opportunity for businesses and governments to transform sectors through mobile communications.”
Data cost battle
Aside from adding funds to the fiscus, government deems licensing of high-demand spectrum as a necessary step to reduce the cost to communicate and drive universal services and access.
Mboweni famously referenced the #DataMustFall movement in his budget.
As the country's governing party, the African National Congress has also called for action on the #DataMustFall cause, saying high data costs mean the majority of citizens are unable to enjoy the benefits of the digital economy.
On Thursday, Ramaphosa again called on the telecoms industry to bring down the cost of data, so that it is in line with the pricing that prevails in other markets in the world.
Arthur Goldstuck, World Wide Worx MD, is quick to point out that when the president talks of data having to fall, he falls into the trap of the #DataMustFall movement.
“Data has fallen dramatically, for the haves. It is not data that must fall, but data for the have-nots,” says Goldstuck. “Operators can readily point to how much they have bring down the cost of data bundles, and therefore safely ignore the president's call. It is a very specific need: the cost of ad hoc data, or pay-as-you-go data, must fall, as that is the data that has an impact on the poor.”
Spectrum opportunity
Magobiane indicates SA’s high cost to communicate has largely been blamed on lack of competition and the spectrum crunch.
The release of spectrum will be crucial in reducing the cost of carrying data and providing greater connectivity, he says.
“The demand for spectrum has never been higher due to the increase in the use of data-intensive applications, the need to deliver content instantaneously and seamlessly, and the need to provide connectivity to citizens.”
Dlamini concludes: “Spectrum licensing will go a long way in bridging the digital divide, especially addressing the data costs, which directly contributes to economic development for the country.”
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