Uncapped mobile is not feasible

Uncertainty around spectrum allocation, and a significant investment by mobile operators in fibre means local mobile Internet will not produce an uncapped offering any time soon.

Speaking to ITWeb this morning, Vodacom CEO Pieter Uys explained that the company has to take a long-term sustainable view on the data packages it offers. Without proper certainty around spectrum allocation, a mobile uncapped data service is not feasible for the mobile operators.

Uys's statement follows a flood of wire-line rate cuts, which have seen the cost of bandwidth for ADSL plummet over the last few months, making it the most affordable Internet offering on the market.

Companies like Vodacom and its competitor, MTN, hold a certain amount of spectrum that allows them to offer the services they have with a wireless last mile. These services need a certain amount of spectrum to function, and high-speed services like LTE need a different segment of spectrum to be feasible.

Additional spectrum will be made available when the broadcasters move from analogue to digital TV. However, the available spectrum will still be a scarcity, and the Independent Communications Authority of SA (ICASA) has yet to make it clear how remaining spectrum will be dished out.

Last year, around 300 companies were give licences to provide their own networks, and these companies will also need access to spectrum to build networks.

The Department of Communications has released a policy document around the allocation of spectrum; however, it has not dictated who should get the spectrum.

Endless hearings have presented the arguments of all the operators looking to get their hands on the remaining spectrum. MWeb, Altech, iBurst, Telkom and myriad additional players are circling to be the first to have a bite out of the pie; however, none are sure whether they will be granted the right to bid on the spectrum if the regulator releases it.

MTN has echoed Uys's sentiments, saying mobile data needs to be approached with a sustainable view.

Both companies have ploughed significant amounts of money into the fibre countrywide, which both companies are hoping to exploit soon. According to MTN, the company's recovery on the investments it has made in data will take time to recoup, which is why the current offerings are priced as they are.

Uys says it is the same situation for Vodacom. The company is currently on its last phase of fibre rollout, with the connection of its base stations to the 11 metro rings it has already completed. “We still have thousands to connect, but at least we have started on this section,” adds Uys.

Vodacom has also recently upgraded its network to allow all its Internet customers to run at 14.4Mbps.

Uys says the company pushed out the upgrade for as long as possible, since it has had to replace all its equipment with new technologies. “These kinds of upgrades are exceptionally disruptive, as you know from last week's downtime in the northern suburbs,” he explains.

However, Uys says the new equipment is now software upgradable and will allow the company to implement technologies like LTE, if it gets its hands on the much sought after spectrum.

Despite the costs involved, both MTN and Vodacom have started to introduce new cheaper products.

Vodacom says its announcement last week that it was cutting rates by up to 60% is just the beginning. Uys says the company will make more details available closer to the launch date of the new rate cut. “You have seen our voice specials coming through, it will be the same with our data packages.”

The company says it is moving away from charging higher rates for higher speeds, and will be charging the same data rates to customers on pre-paid and contract options.

The new price will be implemented at the beginning of next month, and Uys says Vodacom will communicate the details then.