https://www.engineeringnews.co.za
Africa|PROJECT|Service|Services|Infrastructure
Africa|PROJECT|Service|Services|Infrastructure
africa|project|service|services|infrastructure

Operators call for lower spectrum pricing

13th August 2020

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

Font size: - +

While the auction of high-demand spectrum by the end of the year is a promising step forward for South Africa’s fifth-generation (5G) ambitions, if the price is set too high in the bidding process, it may prove detrimental.

The interim findings of a study by World Wide Worx into the prospects for fourth-generation and 5G in South Africa show that major mobile network operators and Internet service providers agree that a high price for bidding on spectrum will directly impact quality of service.

While mobile operators have had temporary access to the high-demand spectrum during South Africa’s State of Disaster, the Independent Communications Authority of South Africa (Icasa) is planning to issue an Invitation to Apply (ITA) for the permanent assignment of the required spectrum by the end of the year.

The high-demand spectrum is due to be issued in the low frequency bands 700 MHz to 800 MHz and high frequency 2.3 GHz, 2.6 GHz and 3.5 GHz bands.

“Emergency temporary spectrum and the promise of permanent spectrum by the end of the year may have given a glimmer of hope to mobile network operators wanting to roll out next-generation 5G services, but spectrum pricing may well prove to be a barrier to the future,” said World Wide Worx MD and 5G research project principal analyst Arthur Goldstuck.

In the first phase of the study, in-depth interviews were conducted with Vodacom, MTN, Telkom, Cell C and Seacom, delving into the details surrounding their respective strategies, priorities and outlook, providing a picture of a complex emerging landscape.

Both Vodacom and MTN confirmed that lower spectrum prices would incentivise greater coverage of rural areas, noting that less money spent on spectrum translates to more money they can spend on infrastructure for serving consumers.

“When we look at other countries with lower consumer data prices, there is a direct correlation between lower spectrum auction prices and greater network investment,” Goldstuck highlighted.

The GSM Association (GSMA) has warned that governments and regulators should avoid inflating 5G spectrum prices “as this risks limiting network investment and driving up the cost of services”, he pointed out.

Effective spectrum pricing policies are vital to support better quality and more affordable 5G services. High spectrum prices are linked to more expensive, slower mobile broadband services with worse coverage.

“Only the major operators have the existing infrastructure and capital expenditure budgets to allow for a national roll-out of 5G, and a high upfront cost means that even regional newcomers will be kept out of the auction.”

One option is to implement an instalment pricing structure, allowing operators to pay off the auction fee, which would also make the auction more viable for smaller players.

Icasa has not yet offered this option.

“The promise of new entrants to the market will be stillborn if we do not see creative approaches to pricing,” Goldstuck said.

“At the same time, delays in making high-demand spectrum available will probably hurt poverty-stricken areas most, because those who are willing to pay for coverage will naturally see more infrastructure investment in their areas, compared to those who cannot afford data.”

Significant blocks of high-demand spectrum have not been issued to the major network operators by Icasa since 2005, when it allowed use of the 2.1 GHz band for the roll-out of third-generation (3G) networks by Vodacom and MTN, while Cell C was allocated spectrum in 2011.

Goldstuck explained that Icasa originally issued an ITA for high-demand spectrum in 2016, but withdrew it after being sued by then-Telecommunications and Postal Services Minister Siyabonga Cwele, who had accused Icasa of issuing the ITA “prematurely and precipitously without the existence of the requisite regulatory steps that must precede them”.

In 2018, Icasa agreed to withdraw the ITA; however, the document had provided an insight into the likely floor price for bidding for auction, set at a R3-billion minimum.

Owing to the delays, operators have had to refarm 3G spectrum to facilitate the roll-out of 4G to consumers.

“As a result, investment that could have been made in providing affordable access to customers was diverted to servicing technical issues. Both the delay and the likely pricing is regarded by the major operators as failure factors in the efficient and cost-effective roll-out of 5G,” he said.

Edited by Creamer Media Reporter

Comments

Latest News

An image of Maltento CEO Dean Smorenburg, Cape Town mayor Geordin Hill-Lewis and Cape Town premier Alan Winde
Maltento aiming to bolster sustainability efforts
18th March 2024 By: Tasneem Bulbulia

Showroom

Werner South Africa Pumps & Equipment (PTY) LTD
Werner South Africa Pumps & Equipment (PTY) LTD

For over 30 years, Werner South Africa Pumps & Equipment (PTY) LTD has been designing, manufacturing, supplying and maintaining specialist...

VISIT SHOWROOM 
Schauenburg SmartMine IoT
Schauenburg SmartMine IoT

SmartMine IoT has been developed with the mining industry in mind, to provides our customers with powerful business intelligence and data modelling...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (15/03/2024)
15th March 2024 By: Martin Creamer

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.086 0.145s - 168pq - 2rq
Subscribe Now