Pricing regulations, infrastructure investment and effective spectrum allocation is critical to improve access to mobile broadband services, which are expected to drive socio-economic development.
This is according to a report commissioned by Vodafone and the World Wide Web Foundation entitled 'Making Broadband Accessible for All', released this week at the University of the Witwatersrand.
The report is the 12th instalment in a series of studies, which aim to strike public debate on the socio-economic impact of mobile broadband technologies and services.
During a panel discussion, Vodacom group CEO Pieter Uys explained that while it makes sense to roll out fibre in developed regions, Africa faces complex challenges such as a large geography, high population and low income areas.
He said the solution to affordable and quality broadband services does not necessarily lie in fixed-line broadband, but mobile broadband should be considered.
Uys said broadband penetration is key to drive socio-economic development and up until 2015, there will be a 100% compound annual growth rate of data traffic.
Spectrum challenge
However, Uys noted that scarce spectrum in a highly competitive environment is an added challenge.
“We should be working together to build out expensive infrastructure and to share the scarce resources. We need to have regulations that support broadband and competition to make broadband affordable and accessible.”
The panellists urged the Independent Communications Authority of SA (ICASA) to take note that fairer spectrum allocation is needed, as more spectrum provides greater bandwidth which enables mobile operators to provide more innovative broadband services.
Also at the discussion, Winfred Mfuh, associate fellow of the University of Warwick Business School and lecturer at London's Regents Business School, said mobile operators in emerging markets have a tougher task to provide affordable broadband services where consumers' incomes are constrained, and regulatory capability is fragile.
Mfuh pointed to growing mobile penetration rates which have increased to over 50% in Africa. “But while the growth has been extraordinary, there remains significant potential for future growth. Extending mobile ownership to low income and rural areas is likely to be more problematic and will be greatly influenced by market characteristics and government policies.”
Mfuh, agreeing with Uys, said there will need to be considerable investment in networks to extend coverage to lower income consumers.
He said while fibre offers the fastest Internet speeds, it might not be the most suitable form of Internet access for emerging countries such as SA. He said wireless is the cheapest and most accessible way to reach universal broadband coverage.
High broadband pricing
Mfuh explained that if mobile operators cannot recover their common network costs on their regulated services, such as mobile termination charges or retail voice prices, then they will have to charge more for other services, notably mobile broadband.
In addition, he said regulators with a “silo mentality”; are likely to affect the “affordability cushion for low usage low income subscribers, as markets move into a data-focused world”.
He said in the mobile voice market, the distribution of retail charges is recovered from operators' subscribers and wholesale charges are recovered from other network operators.
However, Mfuh said in the data broadband market, there are currently no mechanisms to divide or cushion charges. “The total cost of data is recovered from one side of the market only, namely the data user. This adversely affects the affordability of mobile data services.”
Mfuh added that many emerging economy regulators have adopted pricing strategies which can hinder the adoption of mobile broadband, as the strategies tend to discourage operators from investing in essential infrastructure, especially in rural and low income areas.
Unfair costs
In a questions and answers session, ICASA's GM of markets and competition Pieter Grootes pointed to extreme mobile operator pricing disparities between SA and Kenya.
However, Uys slammed back at ICASA, saying SA could not be compared with Kenya. “It's not possible to have a call that lasts long in Kenya. And it's not possible to have fast mobile broadband speeds at the same rate as SA. There's a direct relationship between pricing and quality.”
He added: “To really take broadband to the masses, we need regulatory certainty about what will happen to the scarce spectrum. At the end of the day, we all want quality broadband that's accessible to the millions, but quality costs money.
“Spectrum is being hogged by other players and we need to find a way to get that spectrum used so that it can deliver on this broadband dream.”
Mfuh said it is a complex problem because constructing and renting a base station can be three-times the cost in SA than that of Kenya, where there are a lot of price considerations. He said mobile pricing in SA is a complex challenge.
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