High-speed ambition driving MTN

Mobile operator says nine in 10 people have access to its 4G service

● MTN is getting ready for a future in which consumers will be communicating and connecting more frequently and with greater demands for high-speed data services.

It announced this week that it was the first mobile operator in SA to provide 4G network coverage for 90% of the population.

For the fourth industrial revolution to truly take hold in SA, which will change the way we work and play, a number of systems have to be in place. Quality network infrastructure is among them.

MTN hopes that its investment in upgrading its network over the past four years will help to drive down the price of data and improve its service. CEO Godfrey Motsa told Business Times: “Running data on 3G is cheaper than 2G, 4G is cheaper than 3G and 5G will be cheaper than 4G.”

Ruhan du Plessis, an analyst at Avior Capital Markets, says moving more users to 4G would create opportunities in the economy for education, news and business as more people connected to the internet.

Du Plessis says the progress in data network coverage also creates an opportunity for businesses in remote areas to access internet services.

To counter losses in farming — cattle worth R1bn were stolen in the 2016/2017 season — companies such as Cattle Watch Africa have created technology that can remotely monitor the movement of livestock. Its system enables “geo fencing”, which alerts the owner if cattle move from a designated area, early warning of theft and automated stock counts.

Using mobile data networks, the technology allows GPS tags to transmit the location of specific animals; farmers can access this information on their mobile devices from anywhere in the world. In rural communities in which livestock is considered “living wealth”, such solutions will proliferate as internet speeds become faster, data prices fall and smart mobile devices become cheaper.

Likewise, a game lodge deep in the Eastern Cape or the Karoo can advertise its offerings to a global audience or live-stream game drives to attract tourists. Such businesses can also create a presence on Google, making it easier for their physical locations to be found using ubiquitous services such as Google Maps.

Despite no additional spectrum being released by the Independent Communications Authority of SA in almost 15 years, MTN’s engineers have been able to use its existing spectrum to offer more 4G and LTE services.

“Spectrum” refers to the radio frequencies on which data is transmitted. A good network strikes a balance between the frequencies that are good for built-up environments, able to penetrate places like elevators and parking garages, and those that can cover long distances with little interference.

More spectrum means a better quality service with fewer dropped calls and faster download speeds.

Operators are already looking at how they can unlock value through the faster speeds that the expected roll-out of 5G will enable. This is expected to boost their revenues and help to grow the South African economy as consumers spend more on apps and web services.

MTN says the arrival of 5G will not make 4G obsolete.

“The best is to have 5G and 4G as an ecosystem where the two technologies work together,” says the company’s chief technology and information officer, Giovanni Chiarelli.

“I don’t see 5G replacing 4G. I see 5G growing on the shoulders of 4G.”

Although MTN says its 4G service now covers 90% of the population, that does not mean everyone is taking advantage of it. According to analysts’ estimates, only about 45% of SA’s mobile market is making use of 4G.

With unemployment at 27%, a major barrier to 4G adoption is the high cost of, for example, 4G-enabled cellphones.

MTN is trying to tackle this problem. Early last month the company launched a 3G-enabled device at R290 as a way to move customers away from the old 2G technology.

Having all customers on 4G allows an operator to phase out 2G and 3G technology. It should also boost revenue because 4G users tend to spend more on data, which means operators can reduce unit costs.

“It is about capacity,” says Motsa. “If people can consume more, we can drop our prices.”

Indian mobile operator Reliance Jio is thriving at least in part because when it was launched in December 2015 it offered only a 4G/LTE network. This has meant relatively low operating costs because it does not have the legacy issues of 3G and 2G.

Michael Sassoon, CEO of Sasfin Holdings, says better networks and lower data costs will mean more consumers have internet access, which will in turn generate opportunities for financial services and fintech businesses.

Sassoon says 68% of all payments made in the South African consumer economy are still in cash. This is expensive for the consumer, he says, due to bank charges.

Access to the internet could help many South Africans move from cash to mobile wallets and online payment solutions.

Chiarelli said this week MTN’s plans for a 5G network included providing fixed wireless access, which would offer the same or better capacity as the fixed fibre networks that have been rolled out to homes. Such a network would allow, for example, the streaming of movies.

But Motsa admits that because the telecoms space is evolving so rapidly — the final global standards for 5G are due to be announced by the International Telecommunication Union only early next year — the final shape of MTN’s roll-out could differ from its current plans.

MTN rival Vodacom said in August it had launched a 5G service in Lesotho.

The best is to have 5G and 4G as an ecosystem

Giovanni Chiarelli

MTN chief technology and information officer