The South African government's refusal of a R3.3 billion bid for 20% of Telkom from KT Corporation, because the price was not right, has led to "sad consequences" for SA.
Had KT's proposal been accepted, commentators say, SA would have benefited from the South Korean company's knowledge and expanded its own high-speed mobile network. Instead, SA is losing out on research and development, and intellectual property, at a time when the Korean company is moving towards a next-generation high-speed network.
Yesterday evening, Alcatel-Lucent said it had signed a memorandum of understanding with KT, under which they would collaborate to test technologies to introduce 5G. In a statement entitled "5G is coming", the companies said the collaboration would initially focus on Alcatel-Lucent's virtualised Radio Access Network technology.
5G technology promises greater speeds, capacity and flexibility in an era when data demand is exploding thanks to the uptake of machine-to-machine communications and the Internet of things.
According to the GSM Association, some of the requirements identified for 5G can be enabled by 4G or other networks. Yet, the technical requirements that necessitate a true generational shift to 5G are sub-1ms latency and more than a Gbps downlink speed.
Short-sighted
Ovum analyst Richard Hurst says if the South African government had been "more astute" it would have had access to this sort of intellectual property (IP) and the country could have been on the road to 5G. He notes KT is a forward-thinking company and undertakes ongoing research and development with many vendors.
Hurst adds, with the data explosion under way, new network technology is needed to cope with the demand. While 4G is available through the bulk of SA's operators, it is not living up to its promises, he says.
Among the challenges operators face with rolling out 4G on a massive scale is a lack of access to spectrum, a bone of contention for mobile players for years, says Hurst. He notes this has led to frequency being refarmed in many cases, which has led to bottlenecks.
Hurst notes the potential is there to unlock "a whole lot more" from 4G, which promises speeds of up to 100Mbps. However, SA's operators are offering long-term evolution - LTE-A in Telkom's case - and the speeds being experienced are not at true 4G levels.
Business acumen
Government should have looked further down the line when considering KT's offer, says Hurst. However, it was looking immediately at the price tag. He does not think another offer would have come close to what the Korean company put on the table. "It is a sad consequence that we couldn't access their IP."
The Democratic Alliance's shadow minister of telecommunications and postal services, Marian Shinn, adds the death of the deal is a lost opportunity. South Africa could have been much further down the broadband line if it was not so obsessed with centralised control.
However, Hurst notes, for 5G to start becoming a reality, the 4G landscape needs to have evolved to the point where there is mainstream coverage and a good ecosystem. He notes local operators tend to be cautious when it comes to new investments, and be followers of global trends rather than leaders.
Despite this, Hurst says, KT's experience and IP would have helped SA rollout 4G and other broadband services as it offers "clever" solutions. "The Koreans have a funky way of approaching broadband," he says of their ability to incentivise uptake.
BMI-TechKnowledge director Brian Neilson, however, says access to the Koreans' technology may not have translated to a "silver bullet" for SA because of its geographical differences with South Korea. Yet, he notes, the Korean company's business acumen would have helped Telkom Mobile grow its base and average revenue per user.
Neilson notes Telkom is the only operator in SA that can offer LTE-Advanced, which is true 4G. "If you don't have an A behind your name, you're not 4G." He adds the latest Ericsson Mobility Report notes 5G will only be mainstream in 2020.
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