ICT industry 'encouraged' by Mboweni's budget

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Spectrum licensing is expected to facilitate the deployment of 4G and 5G mobile technologies.
Spectrum licensing is expected to facilitate the deployment of 4G and 5G mobile technologies.

Finance minister Tito Mboweni used his 2019 National Budget Speech to shine light on some key priority areas in the telecommunications sector, namely spectrum allocation and the high cost to communicate in SA.

Mobile operators have been clamouring for spectrum for years, as they need it to provide faster and more widespread high-speed data services.

Yesterday, Mboweni told the National Assembly that "data costs must fall", and promised to work relentlessly with communications minister Stella Ndabeni-Abrahams to ensure the issue around spectrum allocation is resolved.

Such a mandate, he said, includes resourcing the Independent Communications of SA (ICASA).

Mboweni indicated Ndabeni-Abrahams will shortly issue policy direction for the licensing of spectrum.

Mark Walker, IDC associate VP for Sub-Saharan Africa, says the finance minister's budget speech focused on surviving in a tough economic environment, adding that much of the detail will be interesting to work through.

Specifically, Walker says it's encouraging to see the spectrum issue is getting top-line attention and direct focus. "IDC will be closely watching how this translates into action over the next few months."

At this year's State of the Nation Address, president Cyril Ramaphosa said government is determined to accelerate licensing of high-demand spectrum.

Since becoming president, Ramphosa has made sure to stress the importance of allocating spectrum, stating SA's prosperity depends on the country's ability to take full advantage of rapid technological changes.

According to Siyathemba Magobiane, senior consultant at Frost & Sullivan, the fact that both Ramaphosa and Mboweni have made this a priority is positive news for mobile operators and South African citizens at large.

"Spectrum allocation is expected to facilitate the deployment of 4G and 5G mobile technologies, stimulate economic growth and decrease data prices end-users pay.

"A lack of additional spectrum has meant operators have had to invest in more towers to build denser radio networks to increase capacity, which has led to increased costs and as a consequence higher data prices.

"Licensing additional spectrum to operators will make it much cheaper and easier to roll out 4G and 5G technologies. Savings can then be passed on to consumers in the form of lower data prices."

Paying lip service

Although Arthur Goldstuck, World Wide Worx MD, says it was encouraging that the finance minister gave data costs and spectrum a mention, he notes that not much detail was offered.

Goldstuck points out that Mboweni made it clear we would have to wait to hear from ICASA and the minister of communications on the way forward.

"Unfortunately, we have heard for a few years now about the cost of communications needing to come down, but no intervention with regard to cost of data, which is now the fuel for our most common forms of communication.

"Until tangible announcements are made, it remains lip service. On the positive side, the minister of communications is taking probably the most vigorous approach to the portfolio since Yunus Carrim. ICASA is also more active in moving the agenda forward than I can recall. It does mean we should see real movement this year."

South Africans have been vocal about their displeasure in regard to the high cost to communicate, using social media to complain, under the banner #DataMustFall.

IDC's Walker highlights that data cost reduction means more access to information.

Ben Bierman, MD of Business Partners, welcomes Mboweni's announcements on data costs, and says it is encouraging for small and medium enterprises (SMEs).

"SMEs are critical engines for growth and job creation in South Africa, creating an estimated 40% to 50% of jobs in the country. For many of them, Internet connectivity is an indispensable business tool for success. As such, the high cost of data in the country has, to date, negatively impacted the cost of doing business and profitability of many local businesses, meaning data costs have been a notable prohibitor when it comes to accelerating SME growth and, in turn, the sector's contribution to growing the economy.

"Data connectivity and digitisation are vital in levelling the playing field for SMEs, allowing them to compete with larger, more established companies in their industry. Digital technology has a pivotal role in increasing turnover, reducing operating costs, increasing turnaround times, capacity and scalability, and keeping a company relevant among its competitors. It also assists in improving business's accessibility and visibility to consumers and vice versa."

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