Spectrum bonanza, battle now over Woan
● SA’s first successful auction of radio frequency spectrum designed for high-speed broadband has paved the way for a new connectivity landscape — but also for debate on how this resource is used.
Six bidders agreed to pay a total of R14.47bn for 306MHz in four bands of “high-demand spectrum”, ideal for 4G and 5G wireless broadband. Only one lot, comprising 20MHz, went unsold. However, the question of a further 80MHz that was originally intended for a wholesale open access network (Woan) was left unresolved.
The plan for a state-owned Woan — from which major operators would have been required to rent 30% of their spectrum requirement — was scrapped last week. But there has been no indication of what will be done with the spectrum now available. It was not on offer at the auction.
The Independent Communications Authority of SA (Icasa) said in 2020 that the Woan allocation would “be shared proportionally among the successful licensees based on the amount of spectrum acquired from the auction by each”. It described the spectrum allocated to the Woan as “sufficient and lucrative”, suggesting it would be as sought-after among operators as the spectrum allocated this week was.
“The remaining unsold spectrum provides Icasa a great opportunity to consider new innovations in spectrum management and allocation,” said International Data Corp senior research and consulting manager Keoikantse Marungwana.
He said democratising access to spectrum allocations would drive digital and economic transformation.
Graham de Vries, general manager of regulatory affairs at MTN, said the scrapping of the Woan plan was a positive development, but it was still early days. “The minister [of communications] has clearly indicated that she is not in favour of the concept of a Woan but there is now a process to make the policy effective,” he said.
“We hope that particular frequency will be made available because frequencies are lifeblood and anybody in the mobile industry will be able to utilise these access frequencies very, very effectively.”
De Vries was wary about whether the auction outcome would lead to price cuts for mobile data. “That’s always a difficult question. We’d like to do it of course, and it has been coming down over the last couple of years. But at the same time, we see electricity rates going up along with other input costs, such as foreign exchange with which we buy international product. Certainly, it is on the cards, but there are quite a few decisions that still need to be taken.”
Marungwana, on the other hand, said consumers could expect relief: “The auction results are encouraging as most players gained additional spectrum in both lowand mid-bands. The incumbents should now be able to improve connectivity with improved coverage and affordable access.”
At the same time, the successful bids of smaller players Telkom, Liquid Telecom, Cell C and Rain, who between them won 96MHz of spectrum, would have positive consequences for consumers. It was also likely to blunt Telkom’s threats of going to court to overturn the auction.
“The new band entrants will now have an opportunity to disrupt the market with innovative offerings, translating into good news for broadband in the country,” said Marungwana. “With the additional spectrum holdings, Telkom has quite an arsenal to improve network strategy, and this might discourage litigation against the process.”
Icasa itself was a winner in the process, with operators praising the regulator for managing the auction efficiently.