New network taking on mobile big boys
Former bankers and investors to use their spectrum advantage to roll out speedy wireless broadband
FORMER top bankers Michael Jordaan and Paul Harris could steal a march on South Africa’s established mobile telecommunications operators when they launch their new national wireless broadband network early next year, thanks to their access to prized spectrum assets.
But it’s not going to be an easy ride. That’s the view of industry expert Tim Parle, senior telecoms consultant at ICT research and consulting firm BMI-TechKnowledge. Parle said this week that the plan to retool iBurst parent company Wireless Business Solutions as an urban 4G/LTE-Advanced operator made sense. It was well placed to use “carrier aggregation” technology (in effect, the pooling of radio frequency spectrum bands), for example, to offer speedy broadband to consumers.
Multisource, a company backed by Harris, Jordaan and other investors, bought WBS last year for an undisclosed amount. The company this week revealed plans to build an LTE-Advanced network, at a cost of billions of rands (using a mixture of debt and equity already secured), to take on incumbent mobile providers.
However, the incumbents would not sit back and watch the newcomer eat their lunch, Parle said. The new network would have to box clever.
WBS, which owns the consumerfocused internet provider iBurst and the business telecoms company Broadlink, has had designs on building an LTE network for several years, but has lacked the funding. The new investors said this week that by skipping 2G and 3G, and going straight to 4.5G (LTE-A) technology, WBS would not have to invest in legacy infrastructure. The new network, still to be named, will be deployed on some of WBS’s 400 own high sites as well as sites leased from tower companies and other telecoms providers.
A “limited number” of LTE-A sites are in operation and 30 000 iBurst customers will be transferred to the new network, with a national roll-out within months. The focus initially will be on Johannesburg and Cape Town, with commercial services likely to be launched early next year.
Jordaan, who stepped down as FNB CEO in 2014 to pursue technology investment opportunities, said this week that WBS’s initial focus would be on fixed, wireless (in-home) services, rather than mobility. But this could be expanded to mobile in a few years, once smartphones that supported its network were generally available. “We hope to get to 10 000 sites over five years.”
He denied that the investors were building the network in the hope of selling it to one of the big mobile operators. “This is a long-term game for us,” he said.
Parle said there was an opportunity for a new, data-led wireless broadband network in South Africa. But the market would be “fiercely fought for” and Multisource and WBS needed to be “very targeted with their planning, marketing and client acquisition to take significant market share”, he added.
“Through the acquisition of WBS, Multisource has gained access to a rich set of frequencies. Its assignment in the 1.8GHz band — the most widely used band globally [for LTE] — gives it the same amount of spectrum as Vodacom, MTN, Telkom, Cell C and Neotel . . . Multisource is the only company in South Africa with an assignment in the 2.6GHz band — the second-most widely used band for LTE globally.”
He said WBS would have a “slight advantage” if it could use carrier aggregation. “This is, however, subject to the market developing devices that use their particular set of frequencies and protocols.”
Its biggest challenge may be overcoming the head start of rivals. Vodacom and MTN already have more than 6 000 LTE base stations each, Telkom about 1 500, and Neotel and Cell C were building LTE networks.
“Neotel has similar spectrum assets to Multisource, and Liquid Telecom [which recently acquired the company] will certainly capitalise on these,” he said. Add to this new players such as Comsol and BitCo, as well as other emerging wireless internet service providers, and it is clear the market is quickly getting crowded.
There was an opportunity in the business market for WBS, too, with companies “hungry for a credible replacement for the Telkom Diginet Plus service . . . the mainstay of business communications in South Africa since the 1990s”, Parle said.
“There will be a sweet spot for business services in the 2-10Mbit/s range, which can be delivered wirelessly where fibre is not available or cannot be justified.”