Icasa to sell spectrum for 4G services by April

SA’s communications regulator plans to auction batches of radio frequencies for 4G services by April 2019 and simultaneously establish a wholesale open-access network (Woan) aimed at lowering the cost of data.

The Woan will be a new entity that will sell connectivity to service providers.

Network operators have said for years that their limited access to radio waves, or spectrum, is hindering their ability to roll out services and reduce the cost to communicate.

New spectrum allocations were halted because the department of telecommunications and postal services disagreed with the Independent Communications Authority of SA (Icasa) on allocation methods.

But in September, President Cyril Ramaphosa said the government wanted to accelerate the licensing of spectrum in the 2.6GHz, 700MHz and 800MHz bands "to hasten the growth of mobile communications".

Icasa councillor Paris Mashile said the Woan would probably be required to achieve national coverage within five years.

"It’s a use it or lose it [principle] — we will probably give a period of time within which a certain percentage of coverage should be achieved, which may be 20% per year, up to five years, for national coverage," he said.

Minister of telecommunications and postal services Siyabonga Cwele said international mobile operators, financial institutions and the World Bank had expressed an interest in backing the wholesale network.

The World Bank, as well as Morgan Stanley, have backed Mexico’s wholesale network. In that country, the financiers are mandated to raise the national network’s coverage from 32% to 92% by 2024.

Dobek Pater, director at Africa Analysis, said the Woan may need as much as R100bn to become fully functional.

"It could be a couple of hundred billion by the time it has national coverage," he said.

Foreign telecommunications groups

The government could be trying to court foreign telecommunications groups that already have some form of a presence in SA, he said, citing China Telecom, China Mobile, Orange and British Telecom as examples.

Depending on how the Woan is structured, foreign operators may have to set up separate entities in SA if they also wanted to offer retail services. "And financial institutions would have to see if it makes sense and how much to put in," Pater said.

Meanwhile, smaller local operators such as FNB Connect, a mobile virtual network operator that rents capacity from Cell C, could be interested in the spectrum auction, Pater said.

Cwele said the government would also allocate spectrum for 5G services in 2019, and start issuing 5G licences by 2020.

"We have agreed that the regulator and the industry will have continuous engagements so that there’s no delay like we had with 4G spectrum."

The department of telecommunications and postal services agreed with Icasa and the industry "not to rush to the courts" when disagreements arose.

"If there are problems, we will meet even at midnight to sort things out. That’s a commitment also from the industry to expedite implementation.

hedleyn@businesslive.co.za