The auction of frequency should be allocated to companies that are willing to do something with it, such as bringing down costs, and companies that have passion, said Irene Charnley, CEO and founder of Smile Communications.
Speaking to ITWeb yesterday, at the Fortune Global Conference, in Cape Town, Charnley said it is far better for the telecommunications regulator to allocate frequency to companies that are willing to expand the market, rather than those that can afford it and then just sit on it.
The Independent Communications Authority of SA (ICASA) has set a deadline for 30 July for those interested in bidding for spectrum in 2.6Ghz and 3.5Ghz ranges. Apart from price, bidders have to meet certain social development criteria and have at least 30% black economic empowerment shareholding.
Charnley admitted that Smile Communications is preparing to bid for the 2.6Ghz spectrum as part of its plans to roll out a WiMax network, aimed at targeting the lowest earning segment of the population with a VOIP solution. “We will be happy just to get one of the four licences on offer,” she said.
The 2.6GHz licences - suitable for LTE - carry an obligation to achieve population coverage of 50% within two years of being granted spectrum. Local operators Vodacom, MTN, Cell C, Neotel and Telkom are all reported to be interested in the spectrum.
“What the regulator has to also think about is just who has the experience and technical know-how on how to use the spectrum so that the poor are serviced,” Charnley said.
She added that the BEE criteria is not such a big issue “...as anyone can obtain 30% BEE rating. It is about those who will work with it.”
Incumbent operators have deep pockets and will possibly easily outbid any smaller hopeful operator, but then they will more than likely leave the spectrum unused, Charnley said.
“They already have access to 900Ghz, 1 800Ghz and the 3G bands. What more do they want to do with the 2.6Ghz band?” she asked.
In her presentation to the Global Forum audience, Charnley said the traditional telecommunications operator model did not serve the majority of Africa's population, who earned around $2 per month. The aim of Smile Communications is to allow these people to make calls for between one and five US cents.
She said Smile has around 100 000 subscribers, with an operation already running in Uganda, and with plans to roll out a service in Nigeria and, ultimately, SA.
Charnley said countries with very clear licensing and regulatory rules were seeing the rollout first. “SA is very different as it has very powerful operators that have been instrumental in driving economic growth, but the cost (to communicate) must be brought down,” she said.
Charnley said her company model is based on low prices and scales over a long period, rather than the traditional model of getting returns as fast as possible based on an average revenue per user principle.
“Our model is based on offering basic voice connectivity using VOIP and basic Internet connectivity at the lowest cost. So we don't compete with the incumbents, but rather we complement them,” she said.
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