Mobile operators suggest payment plan for spectrum auctions
As some networks may not have cash on hand, instalment payments should be made available as an incentive to operators
As the Independent Communications Authority of SA (Icasa), SA's telecommunications regulator, pushes the release of new radio frequency spectrum back further, mobile operators have said allocations should be paid for in instalments, according to a new report.
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 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 in a recent study, “5G prospects for SA in 2021: The Operators”, aimed to assess the importance of mobile spectrum pricing in the long term; the importance of reasonably priced mobile spectrum for the economy; and the social and economic affect of 5G deployment, among other things.
In addition to arguing that high prices at auction may be a barrier to entry and impede quality, network operators have said payment plans may offer a solution to operators as well as Icasa.
As some networks may not have cash, instalment payments for spectrum should be made available as an incentive to operators participating in spectrum auctions, says the report, which took into account feedback from SA's largest mobile network operators — Vodacom, MTN, Telkom and Cell C — as well as 21 communications and internet service providers (ISPs). They could also act as an incentive to fulfil all obligations.
“This will allow the regulator to charge prices which they deem fair while giving operators cash flow breaks from paying for spectrum in a lump sum,” said World Wide Worx's MD Arthur Goldstuck.
The main thrust of the report is that the promise of 5G will not be felt or realised by the country if the state doesn't provide the much-needed radio waves to operators soon and at decent prices.
The invitation to apply for both the wireless open-access network and the international mobile telecommunications spectrum, also known as high-demand spectrum, was scheduled for July but was delayed. In early September, Icasa said the delay was partly due to the emergency spectrum allocation by the government to allow network operators to cope with increased communications demand due to Covid-19-related lockdowns.
The delay means that the new spectrum slated for allocation in December 2020 has been pushed back to March 2021.
President Cyril Ramaphosa said earlier in September he was unhappy with the delay, which Icasa said was because it had failed to issue the invitation to apply in time due to the lockdown. He said he wanted the auction brought forward.
“I’ve spoken to the minister of telecommunications and I’ve said we can’t keep the economy in limbo. I’ve said we need to find ways of doing things quicker,” he said in a session with editors and broadcasters organised by the SA National Editors’ Forum.
Another key insight from the study is how much the industry is likely to rely on large mobile operators to provide 5G technology because of the infrastructure they will provide for secondary networks and mobile virtual network operators (MNVOs). According to the report, 60% of ISPs in SA offer data services by means of these primary network providers, and a further 14% who aren’t, intend to do so soon. Half of the 14% intend to provide wireless data services when 5G is rolled out via their preferred primary network partner, says World Wide Worx.
This means the benefit of the granting spectrum to players such as MTN and Vodacom, which have spent the past decade repurposing their existing radio waves for 3G and 4G services, will be felt beyond Roodepoort and Midrand.
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