Spectrum vital for economic growth

Mobile broadband will create at least 28 000 jobs, and add R72 billion to SA's economy by 2015, according to a recent research report.

However, this growth is only possible if broadband operators are allocated more spectrum, as SA is starting to run out of frequency in current allocations, warns global industry association GSMA.

The industry is unlikely to benefit from more spectrum until at least 2014, when government could free up a new block of frequency. Meanwhile, another vital band has yet to be sorted out because the regulator still has to audit spectrum allocations.

But SA needs the economic boost of the thousands of jobs and billions of rands sooner rather than later.

SA's economy is still coming out of a global recession that plagued the world a few years ago, causing the collapse of banking giants, such as Lehman Brothers. Economic growth has been slowly recovering, and reached 4.4% in the last quarter of 2010, up from 2.7% in the previous quarter, according to Statistics SA.

Last November, the GSMA commissioned independent research house Analysis Mason to assess the possible benefits to SA's economy and job creation, if government takes steps to unleash its potential by creating an environment that enables universal expansion.

The key to future growth depends on more spectrum in the 2.5GHz and 800MHz bands being allocated to operators, as current allocations are becoming overused, says GSMA's special government advisor, Ross Bateson.

SA is switching over from analogue signal to digital broadcasting, which will free up large chunks of spectrum in the 800MHz range - the so-called digital dividend.

Operators want spectrum in the coveted 800MHz band to be able to roll out faster broadband, cost-effectively, because the band allows for deeper broadband penetration. This white space can be used to expand penetration across the country and allow SA to join the global move to LTE - or 4G.

Bateson adds government must also sort out spectrum allocations in the high-capacity 2.5GHz band. Currently, Sentech has an allocation in the range, but isn't using it, he points out.

However, without swift action from government to free up more spectrum, the boost for SA's economy will be delayed, says Bateson.

Bateson says the Independent Communications Authority of SA (ICASA) must provide guidance on how this spectrum will be allocated to cellular operators this year, and start allocating new frequencies next year, or in 2013 at the latest.

In the short-term, broadband penetration will keep growing as cellular companies invest in network expansion, says Bateson. However, he adds, spectrum is finite and current allocations won't be enough to allow operators to expand broadband access in the short-term.

Without this guidance, which will allow operators to plan, SA will not benefit from the potential R72 billion injection into the economy by 2015, explains Bateson.

ICASA spokesman Paseka Maleka says the digital dividend can only be allocated after SA migrates to digital television in 2013. He says that's when ICASA will have clarity as to how much spectrum will be made available.

Steven Ambrose, MD of WWW Strategy, points out that ICASA has yet to audit the spectrum and the current allocations have not been done with an overarching plan in mind.

Ambrose says ICASA must sort out spectrum allocations urgently, because operators can't plan overnight and the current allocated space is becoming overused. He says the benefit of greater penetration will take between three and five years to filter through to the economy.

Job creation is at the top of government's agenda this year. The New Growth Path, SA's latest plan to create jobs and stimulate the economy, has set a target of five million new jobs in the next decade.

The Department of Communications (DOC) previously said the ICT sector could create more than 1.5 million jobs over the medium- to long-term. Deeper mobile penetration could aid SA's targets as infrastructure is rolled out and new online opportunities become available.

Broadband could make up 1.8% of SA's economy, a figure that could grow to as high as 7% when the spill-over effects of having a digital economy are taken into account, comments Bateson. However, this depends on government prioritising national broadband.

Over the past five years, there has been growing recognition of the link between broadband connectivity and economic growth, says Bateson. The World Bank previously said for every 10% increase in connectivity, countries gain 1.3% in economic growth.

“I'm not sure, given the transition process, how soon the digital dividend will be available in SA,” notes Bateson. He says there is a possibility that digital television migration will be pushed out.

DOC spokesman Tiyani Rikhotso says the department is “adamant that the country will meet the December 2013 deadline”.