Picture: MAIK WOLLEBEN
Picture: MAIK WOLLEBEN

The government is pushing to finalise the licensing of high-demand spectrum, a move that is crucial for reducing communication costs.

Parliament heard on Wednesday that the department of communications has issued telecommunications regulator, Icasa, with an order to issue licences for spectrum in a manner that prioritises small, black-owned entities.

The licensing of high-demand spectrum will be finalised via auction before the end of 2020. The high cost to communicate in SA has largely been blamed on a lack of competition and the “spectrum crunch”. Spectrum refers to the radio signals set aside to carry data, including for smartphones, TV and GPS systems.

This is a limited resource, largely controlled by the government.

The release of additional spectrum will be important in terms of diversifying and boosting competition in the telecoms sector, and reducing the cost of data.

Briefing parliament’s select committee on public enterprises and communication on Wednesday, department officials said SA has more than 400 electronic communications network service licensees — but cannot access spectrum, due to its scarcity.

The SA mobile industry is characterised by an oligopoly, with a vertically integrated market shared among Vodacom (about 50%), MTN (35%) and Cell-C (roughly 12%), resulting in high prices. Telkom mobile and other smaller players comprise less than 3% of the market share, the department said.

“The market has lot of barriers to entry for small operators, particularly the historically disadvantaged,” said department director-general Robert Nkuna, adding that the current licensing exercise should be tilted in their favour.

He said the current model favours the big players in the market. “To realise the open-access principles, the white paper [to address SA’s market issues] provides for the introduction of a wholesale open-access network [Woan], as a wholesale provider. This should enable the entry of new, innovative, and black-owned service providers.”

Though the Woan will be a private company it will be modeled around a common carrier such as state signal distributor Sentech, which provides broadcasting signal distribution to all broadcasters

Nkuna said the white paper states that spectrum needs to be shared on a non-exclusive basis, meaning that more players will be allowed access, especially when it concerns “high-demand spectrum”. That is, highly contested spectrum in bands where demand exceeds the supply.

The regulator is required to conduct an industry-wide public consultation process to determine the terms and conditions, as well as time frames, under which the current exclusive contracts will be reviewed, Nkuna said. ​

Mobile companies, including Vodacom and MTN, have previously voiced concern about the proposal to reserve most of the high demand for Woan and the suggestions that the government would take away spectrum already assigned to operators.

phakathib@businesslive.co.za