Picture: BLOOMBERG/SUSANA GONZALEZ
Picture: BLOOMBERG/SUSANA GONZALEZ

With new radio frequency spectrum set to be allocated in SA at the end of 2020, mobile operators have said that high prices at auction may be a barrier to entry and impede quality, according to a new study.

Spectrum refers to the radio frequencies on which data and information are carried. Mobile operators have long argued that access to spectrum will help reduce the cost of mobile data in SA because it will allow the companies to cover a wider geographic area with existing towers while carrying more data traffic.

SA’s last big set of spectrum was allocated in 2004 and 2005, enabling Vodacom and MTN to roll out their 3G networks. Cell C followed in 2011.

Technology research company World Wide Worx said until industry regulator the Independent Communications Authority of SA (Icasa) acts decisively on both digital migration of TV — originally set for 2015 — and cost-effective spectrum allocation, the first phase of the study concludes that “consumers will continue to experience expensive data and poor coverage, compared to countries where spectrum has been issued efficiently and cost-effectively”.

The key finding of the study into the prospects for 4G and 5G in SA is that while emergency temporary spectrum and the promise of permanent spectrum by the end of 2020 may have given a glimmer of hope to mobile network operators wanting to roll out next-generation 5G services, spectrum pricing may well prove to be a barrier to the future.

This study was done based on engagements between the country’s major mobile network operators and internet service providers.

A glimmer of hope for new spectrum came about earlier in 2020 as the government issued additional temporary allocation to operators such as MTN, Telkom, Vodacom, Rain and Liquid Telecom in the hopes of coping with increased communications demand because of Covid-19.

Vodacom and MTN have already used this to launch commercial 5G services.

According to the study, both companies said lower spectrum prices would incentivise greater coverage of rural areas, noting that less money spent on spectrum translates to more money they can spend on infrastructure for serving consumers.

Arthur Goldstuck, MD of World Wide Worx and principal analyst on the research project, said: “When we look at other countries with lower consumer data prices, there is a direct correlation between lower spectrum auction prices and greater network investment.” 

Delays in making high-demand spectrum available “will probably hurt poverty-stricken areas most, because those who are willing to pay for coverage will naturally see more infrastructure investment in their areas, compared to those who can’t afford data”, he said.

Icasa has yet to issue an Invitation to Apply (ITA) for the spectrum auction, which would give guidance on prices. A previous ITA was scrapped in 2018 after squabbles between the regulator and minister of telecommunications and postal services Siyabonga Cwele. That ITA did indicate that a minimum bidding price at auction would be about R3bn.

gavazam@businesslive.co.za

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