New min­is­ter lights a fire un­der stalled spec­trum auc­tion

Sunday Times - - Business The Big Read - By ARTHUR GOLDSTUCK

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

Pic­ture: Alon Skuy

Con­sumers want high-speed band­width to ac­cess apps such as Net­flix, YouTube, stream­ing and games apps.

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