- High demand spectrum will enable mobile operators to offer data rich services at high speeds.
- The state stands to generate at least R8 billion in fees from the spectrum auction.
- Telkom and eMedia both took legal action to delay the spectrum auction.
- For more stories go to www.BusinessInsider.co.za.
Imagine there are only two types of mobile phones.
One type of phone can make calls over long distances, but has trouble transmitting through obstacles. The other is limited to shorter distances, but can easily transmit through walls.
Now picture the inconvenience of having to switch between the two devices. You must now go outside to get a good signal to make a long-distance call, but switch to another device if you want to contact someone inside the same building.
In the real world, there are no such limits on mobile phones. Rather, the thing capping their capacity is not the technology in these devises but rather, radio spectrum – the "highways" on which they operate.
Working with spectrum, however, is tricky – like the afore mentioned imaginary phones – as depending on their wavelength, they will be good for some aspects of transmission but bad at others.
For instance, some parts of spectrum are great for long distance transmission but are not good at penetrating walls. Other parts of the spectrum have little problem sending data through dense objects but can only travel short distances.
This is an issue mobile operators have long been able to work around when it comes to transmitting voice, because the existing mobile phone infrastructure and the available spectrum easily allowed phones to transmit over great distances and through walls.
The problem for mobile operators over the last few years is that as the traffic on their networks switched from mostly voice to predominately data, they were using radio spectrum that was best suited to transmit voice and not large amounts of data.
The growing demand for mobile broadband requires operators to adapt by using spectrum that can transmit large volumes of data, which can travel long distances and penetrate walls.
Their problem is that are extremely narrow bands of radio spectrum – known officially as High Demand Spectrum – that can provide services, like the live streaming of a football game onto a smartphone in an underground parking lot.
If the issues for operators was just about getting access to this limited range of spectrum, it would still be hard. But given South Africa's developmental needs, it means a difficult task was bordering on the impossible.
All WOAN out
The government, for instance, wanted some this spectrum set aside to bring smaller players into the sector. This is why they want to set up a wholesale open-access network (WOAN) with the goal of it being a provider for the over 400 operators which have no access to the High Demand Spectrum.
The state's thinking was that it did not want to see a repeat where the licensing of only two cellphone operators over 30 years ago effectively created a duopoly, which together had such market power, it made it difficult for new entrants (read Cell C) to establish themselves.
The established players like MTN, Vodacom, and Telkom are obliged to get 30% of their spectrum through the WOAN, but they will have to meet certain requirements like being suitably qualified when it comes to empowerment, agree to provide universal access, and to service obligations.
The major issue when it comes to WOAN, is that it still needs to be set up. Though the government has drawn up a policy around it, it has yet to put together the consortium to run it.
The big players can, however, to some extent circumvent WOAN by taking part in the communications regulator Icasa's spectrum auction, which is scheduled to start on 8 March 2022.
If they choose this route, they will have to cough up, as government is expected to get a minimum of R8 billion from the auction.
Not that simple
But once again, this is SA. Things are not that simple when it comes to the auction. Long delays in the country's migration from analogue terrestrial TV transmission to digital has inadvertency impacted the spectrum auction.
The idea was that the migration would free up this band of spectrum for sale in the auction.
Icasa wanted to finish the migration by the end of January 2022 but eMedia Holdings, the owner of free-to-air broadcaster e.tv, last year, launched court action to stop this from happening. It claimed that it would be negatively affected because there were still millions of people who still did not have the set top boxes which would convert the digital signal for older model TVs.
This case was set to be heard in March 2022; around the same time the auction is set to take place.
With this case looming over the auction, Telkom then opted to throw a spanner in the works by trying to interdict Icasa over it earlier this month. It argued that eMedia's legal action might delay it getting access to the spectrum it bought at the auction.
Days later Telkom reversed its decision, but it has been the latest attempt to stall a process that has been prolonged for years.
A slow win
In his 2020 State of the Nation Address, President Cyril Ramaphosa announced that Icasa would "conclude the licensing of high demand spectrum for industry via auction before the end of 2020".
Government has long seen the allocation of spectrum as a 'quick win' when it comes to spurring on a spluttering economy, in the wake of the Covid-19 Crisis.
Ramaphosa might be president, but he is not all powerful as he soon found himself having to cajole Icasa, which had initially laid out a truncated process for allocating the spectrum, into speeding it up.
Initially the auction was scheduled to commence on 31 March 2021, but eMedia's legal action ended up delaying it for about a year.
Aside from the auction delay, Icasa's move to suspend the setting up of WOAN in November 2021 has also drawn the ire of smaller players, which were looking to get a solid footing in the industry.
The president might want a quick resolution to distributing the spectrum, but government has itself to blame for the long delays in the process. Aside from being slow to give policy direction, having 11 ministers running the show since 2009 meant leadership on the issue was always in short supply.
If the powers that be can this sort out the issues holding up spectrum distribution, the pay off will be huge.
An end. And a possible new beginning
The state will gain much needed billions of rands pouring into its coffers, through the auction.
The telecom's sector, which is looking beyond offering voice telephony gets to play at offering new services like guiding self-driving cars on busy streets.
And the public gets access to a wide range of new data rich services – at hopefully much cheaper prices.