As with many markets, South Africa’s spectrum allocation is the purview of the government, which controls and regulates the process through the Independent Communications Authority of South Africa (ICASA). Operators are increasingly frustrated with the spectrum shortage, pointing to growing consumer demand and government inefficiencies. The government has also been chastised for failing to free up more spectrum by completing the transition to digital TV broadcasting.
Back & Forth
MTN and Vodacom were allocated spectrum in the 900-MHz band in 1993 and Cell C in 2001. Telkom uses the 1800-MHz band, and began using the 2100-MHz band in 2009. MTN, Vodacom and Cell C have expanded to higher frequencies in the last decade. “Spectrum will be required to expand 3G and LTE coverage throughout the country,” Ivan Dittrich, CFO of Vodacom, told OBG. “Higher frequencies carry more data, but lower frequencies go further, which is needed from a rural point of view.” Dittrich explained.
It is especially in the high-speed (800 MHz and 2600 MHz) ranges that the main operators covet spectrum, with Vodacom, MTN, Telkom and Cell C already testing or launching commercial 4G long-term evolution (LTE) services in some of the larger metropolitan areas.
Some companies, like state-owned broadcasting signal distributor Sentech and wireless broadband provider iBurst, have received spectrum in the 2600-MHz band, which has sat relatively idle. As a result, some was returned to ICASA. At the end of 2011, ICASA unveiled a proposal to assign 800-MHz and 2600-MHz spectrum, but deferred its plans in March 2012 until after the Department of Communications (DoC) announced a formal policy. Following delays throughout 2012, the DoC released a new broadband policy at the end of 2013, paving the way for ICASA to reissue its spectrum plan.
The delays have inhibited South Africa’s ability to reap its digital dividend and are partly the result of policy uncertainty at the Cabinet level, with six ministers of communication in less than as many years. Arthur Goldstuck, managing director of World Wide Worx, told OBG, “There has not been enough urgency around spectrum allocation in the past.”
Ways To Allocate
Although many countries use an auction system to allocate spectrum, there have been concerns that such a system would limit access for smaller players in South Africa. Earlier proposals focused on licensing players with strong business and technology plans and the capability to put spectrum to efficient use. Despite hopes that the Electronic Communications Amendment Act of 2014 would permit spectrum trading, no such policy was put into place.
ICASA has also indicated it must consider national development goals, such as black empowerment and sector-specific targets, like 100% broadband penetration by 2020. Indeed, the scrapped 2011 spectrum assignment plan had sought to ensure that participating licensees would contribute to black economic empowerment. In line with universal access goals, ICASA may favour operators seeking to invest in rural areas.
The ultimate challenge with spectrum is its finite nature. To work around this, countries have been freeing up capacity by moving TV and radio from analogue to digital. South Africa started planning its transition to digital TV in 2009, but failed to complete it before the 2010 football World Cup as planned. Another attempt in 2011 suffered lengthy delays.
Progress was made when the government announced that the control requirement on set-top boxes (STBs) would be lifted in June 2015, setting April 2012 as the digital migration date. STBs added complications, as government subsidies for the poor made a control system necessary to prevent unauthorised transfers of the units; however, some broadcasters opposed the control system as it makes switching providers more difficult. Transmission tower upgrade delays and lengthy public consultation also posed challenges for the migration timeframe, prompting the deadline to be rolled back to September 2012. Although the switch is still pending, South Africa remains committed to the International Telecommunications Union’s June 17, 2015 deadline.