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High hopes for spectrum to play key role in economic revival

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 02 Aug 2019
Helios Towers operates phone masts in the Democratic Republic of Congo, Republic of Congo, Ghana, South Africa and Tanzania.
Helios Towers operates phone masts in the Democratic Republic of Congo, Republic of Congo, Ghana, South Africa and Tanzania.

Spectrum is beyond the lifeblood of the telecommunications industry, it is the lifeblood of the economy.

This is the sentiment shared by Mohamed Madkour, VP of wireless and cloud core marketing and solutions at Huawei HQ, at the first ICT editors Xchange event hosted by Huawei at Founders Factory Africa yesterday.

"The more spectrum is licensed, that's how things will be deployed and how mobility will be enabled. Connectivity for enterprises is mostly going to be wireless. So, mobility is the key for everything.”

Madkour emphasised the importance of understanding which spectrum bands are licensed, how they are licensed and to whom. “The fragmentation, technology neutrality, service neutrality and cleaning of the spectrum are the things government needs to look at when licensing the spectrum.”

The Huawei VP’s comments about the value of spectrum for economic benefit come as communications and digital technologies minister Stella Ndabeni-Abrahams just recently issued SA’s much-anticipated policy that paves the way for the allocation of spectrum.

South Africa’s last big set of spectrum issued was in the 2.1GHz band, which helped the operators in their 3G network deployment. Vodacom and MTN were allocated such spectrum, in 2004 and 2005, respectively, while Cell C received such spectrum in 2011.

South African government officials, including president Cyril Ramaphosa, have reiterated the importance of licensing spectrum, as a spectrum auction could raise several billion rand for the state. The mobile industry makes an important contribution to the country’s economy.

According to GSMA Intelligence, in 2018, the mobile ecosystem in SA generated 7.6% of gross domestic product or $28.5 billion in value added. This economic impact is expected to rise to $30 billion by 2023, due to the productivity benefits from increasing mobile Internet penetration.

On the same page

Speaking at the same event was Nozipho Mngomezulu, ICT lawyer and partner at law firm Webber Wentzel, whose topic focused on: “What needs to happen from a legal point of view to facilitate the move to the digital economy.”

Echoing Madkour’s assertions, Mngomezulu indicated spectrum is “absolutely essential to the development and operation of the technologies required in order for us to innovate, in particular 5G”.

We have a situation where spectrum is currently a scarce resource, which creates a situation where the critical and scarce resource is wanted by everyone, she said.

“Everybody wants it. How do you then allocate it, how do you make sure the spectrum that is required, in order to develop the services, is allocated appropriately, correctly and fairly? That is key.”

The GSM Association (GSMA) recently issued a report, highlighting best practice for auctioning spectrum. The GSMA report warned the benefits of auctions can be lost when they are not properly planned.

The mobile industry body advised that allocation should not be designed to artificially inflate prices, or inefficiently distribute the already scarce resource. 

Explaining the communications and digital technologies ministry’s policy on the allocation of high-demand spectrum, Mngomezulu highlighted the government framework prioritises a wholesale open access network (WOAN).

In her spectrum policy, Ndabeni-Abrahams indicated a WOAN will encourage licensees to work together and that government fully supports its deployment.

“High-demand spectrum maybe assigned to a WOAN and the remaining high-demand spectrum maybe assigned to other electronic communications network service licensees, which spectrum assignment processes must commence simultaneously,” the minister stated.

Mngomezulu explained: “Anybody can apply to be a WOAN. If you meet particular criteria, you can apply to be a WOAN, and will be allocated the necessary spectrum; rather you will be prioritised insofar as spectrum allocation is concerned.

“If you have the necessary resources, you will be eligible to apply for a WOAN and will be allocated spectrum, which is an essential resource.”

The ICT lawyer was asked whether the WOAN structure, for which anyone or any organisation, even current licensees, can apply, will perpetuate the current status quo. 

She answered: “The problem here is that we have a situation where the resources and infrastructure required to become a WOAN are concentrated in the hands of the few. The WOAN will be required to provide wholesale open access services to people wanting to enter into the industry, and in order to be able to do so, must have access to the infrastructure and resources to begin with.

“What is likely to happen, in my view, is that we will likely have the current dominant incumbents being the ones applying to become WOANs.

“We’re likely to have a situation where those that currently have high-demand spectrum are being given additional high-demand spectrum. Thus, you have a situation where the exact same entity has a concentration of spectrum.

“That is the danger and that’s what the regulator [ICASA] will have to be quite mindful about in terms of how it grants licences to entities wanting to become WOANs.”

Economies of scale

According to Madkour, as the race to deploy 5G heats up, there are a lot of people that think 5G will be more expensive than 4G.

However, when considering costs, 5G is much cheaper than 4G because of the unit price, he stated.

“Simplicity is important for 5G. In our general consensus, a base station that's 20% less-sized than 4G, it may be 10 times more capable. That tells you the scale of power, of how powerful 5G is.”

In June, Nokia said it is laying the groundwork to unlock new 5G opportunities in SA and the African continent, saying it has 42 commercial 5G deals in place with operators around the world.

At the same time, Huawei also revealed it has obtained 46 commercial 5G contracts so far in 30 countries globally.

Madkour concluded that Huawei’s core vision for the development of 5G comprises four values: society, industry digitalisation, technology innovation, and the creation of a prosperous economy.