New minister lights a fire under stalled spectrum auction
The vigour with which newly appointed dual-minister Stella Ndabeni-Abrahams is tackling her portfolios may mean the imminent allocation of long-delayed spectrum for high-speed mobile communication.
While the immediate intention of her dual role is unifying the department of communications and the department of telecommunications & postal services, it is also set to light a fire under regulatory processes.
She has come under fire for her handling of the SABC board’s decision to retrench staff — four board members resigned in protest — but it is also an indication that she will be a hands-on minister in her areas of responsibility.
“Having both departments — and the regulator — now under a single minister is a massive plus,” says independent telecommunications analyst Charley Lewis.
“It will facilitate proper co-ordination again, and enable the process to move ahead speedily. The new minister has already shown she is keen to act swiftly.”
Spectrum allocation is regarded by most observers as her most important order of business, given the urgency of bringing down the cost of internet data, and extending access to all South Africans.
“High-demand spectrum consists of frequencies that are highly sought after by SA’s operators, both mobile and internet service providers, because they are ideally suited to provide 4G voice and data services to the country’s growing number of subscribers,” says Lewis.
“Licensees have long struggled with limited amounts of the spectrum required to provide [the high-speed bandwidth] increasingly required by their customers for applications like Netflix, YouTube, WhatsApp, and other streaming and gaming apps.”
The spectrum most suited for LTE-A (Long Term Evolution — Advanced), as 4G is formally known, lies in the 700 MHz, 800 MHz and 2,600 MHz bands. However, much of the spectrum in the 700 MHz and 800 MHz bands is currently assigned to broadcasting. The benefit of the release of this spectrum is known as the digital dividend.
“It will only become available once the migration to digital terrestrial television (DTT) is complete, and analogue TV has been switched off — supposedly some time in 2019.”
The date for digital migration has been a moving target since its original deadline in 2011, first set no fewer than 10 ministers of communication ago. The cost to the economy of both failure to migrate and inability to leverage the digital dividend has been estimated to run into tens of billions of rands.
The project to roll out set-top boxes for allowing analogue TVs to receive digital signals had already cost more than R10bn by September last year, with limited results, according to then communications minister Nomvula Mokonyane.
Ostensibly, the buck stops with the communications regulator, the Independent Communications Authority of SA (Icasa). However, the body still awaits the finalisation of a draft Policy Direction. This document directs Icasa in how spectrum should be licensed, and is required to reflect the provisions of the Electronic Communications Amendment Bill 2018.
“Given the recent collapse of the ECA Amendment Bill in Parliament, there may be some changes to that,” says Lewis.
One of the challenges facing the minister, the regulator and operators, he says, is that there simply is not enough of the more valuable “high-demand” spectrum to go around. Almost half of available spectrum, 45%, is expected to be reserved for the controversial Wireless Open-access Network (WOAN), in effect a government monopoly from which operators will rent spectrum at the behest of the state.
The rest of the available spectrum is expected to be licensed via an auction among both existing licensees and new entrants.
The draft policy requires the new licensees to offer facilities-leasing to the WOAN, among others, meaning that they have to allow other operators to piggyback on their infrastructure.
The unifying of the ministries, the appointment of a vigorous minister, and a sense of urgency at Icasa are all seen as representing a light at the end of the long regulatory tunnel. The latter, in particular, has shaken off the regulatory sloth that burdened it for many years.
According to telecommunications regulatory consultant Lisa Thornton, Icasa currently has three draft documents out for comment, in fields as broad as equipment authorisation, number portability and sports broadcasting. A further three proceedings are pending, and it has a hearing on cybersecurity scheduled for January.
Lewis agrees that Icasa is making progress despite a decade of ministerial confusion.
“There are encouraging signs that Icasa is ahead of the curve, having recently issued for public comment a draft Radio Frequency Migration Plan and a draft International Mobile Telecommunications (IMT) roadmap. We are therefore likely to see several rounds of spectrum auctions, one in the immediate future, once the final Policy Direction is issued, and another after the analogue TV switch-off has occurred.”
That will not automatically translate into lower costs, however.
“The global experience of spectrum auctions suggests that incumbents with deep pockets are the likely winners when it comes to spectrum auctions,” says Lewis. In the South African market that translates to the likelihood that the market dominance of Vodacom and MTN will be further strengthened by any spectrum auction. Auction design is therefore absolutely critical.
“Icasa needs to ensure that the socio-economic benefits of a spectrum auction are its key priority. Revenue maximisation — designing an auction merely to attract the highest bids — cannot be the No 1 priority, no matter how much [finance minister Tito] Mboweni needs the cash,” says Lewis.
Spectrum allocation is her most important order of business
Consumers want high-speed bandwidth to access apps such as Netflix, YouTube, streaming and games apps.