A strong regulatory approach, as well as clearing uncertainties around issues like digital migration, will be crucial for the wholesale open access network’s (WOAN’s) success in SA.
So says Christopher Geerdts, director and telecoms consultant at BMIT, after the local market analyst firm published its South African WOAN Opportunity Report 2021.
In this study, BMIT gathered WOAN-related information during the course of multiple engagements over the years with the mobile industry – including government, policy-makers, regulators and regulatory experts, telecom operators and vendors.
The report comes after telecoms regulator the Independent Communications Authority of South Africa (ICASA) in October last year opened the invitation to apply (ITA) for the licensing of high-demand spectrum and that of the WOAN.
The closing date for high-demand spectrum applications was 28 December 2020, while that of the WOAN is 30 March 2021.
Increasing competition
Government believes the WOAN will create more competition in the telecoms market that will result in data prices coming down.
Communications minister Stella Ndabeni-Abrahams also believes that through the WOAN, government is looking to change the status quo of SA’s telecoms industry and empower previously disadvantaged groups.
The WOAN will operate as a single network, built via a consortium, which will sell high-demand spectrum to telecoms operators on a wholesale basis.
ICASA has set aside radio frequency spectrum within the 700MHz, 2 600MHz and 3 500MHz spectrum bands for the WOAN.
The WOAN ITA provides for a radio frequency spectrum licence to be issued for the WOAN, which will be valid for a period of 20 years, renewable annually on payment of a prescribed licence fee.
Applicants for the WOAN licence must be at least 70% owned by South African citizens and must be at least 50% black-owned. It must also be at least 20% owned by black women.
ICASA has also imposed empowerment obligations on successful spectrum bidders, requiring them to support the WOAN through procuring, collectively, at least 30% of the WOAN’s national capacity on a proportional basis.
However, the concept of the WOAN has been met with some scepticism after failing to bear fruit in some countries where it has been implemented.
Industry bodies like the GSM Association have also cautioned about the implementation of WOAN models, noting they do not deliver on promises to provide better coverage, more competition, or lower prices for consumers, with most failing to get off the ground.
In an e-mail interview with ITWeb, Geerdts says in each country, the reasons for the wholesale network failing have differed, and quite widely so.
“In some cases, these failures could have been avoided. Pitfalls to avoid include over-involvement with government in operations (either directly or via an incumbent operator); forcing a disparate and unwieldy consortium to collaborate; and not paying enough attention to stimulating service-level competition,” he says.
In its report, BMIT has determined a number of policy and regulatory pre-conditions that would need to be in place to guarantee a successful WOAN.
According to Geerdts, the process ICASA is following is in line with a few of those conditions, but not others.
He notes it will help the WOAN to sell the obligatory 30% capacity off-take to the spectrum winners, and they need to leverage that.
“The WOAN needs strong regulatory capability to expedite its licensing process, manage uncertainties such as digital migration, gain rapid access to shared infrastructure and forge solid contractual deals with incumbent operators.”
Geerdts’s comments come as government has committed to complete the much-awaited digital migration process by March 2022.
This is a process that has been painstakingly slow, with controversies and department leadership changes bogging down the process even further.
In his State of the Nation Address last week, president Cyril Ramaphosa acknowledged the digital TV delays, promising action in the next month.
Addressing pricing concerns
For Geerdts, two other measures of success for the WOAN are the impact in lowering data pricing in the market (particularly at entry-level) and extending coverage to underserved or unserved communities.
Interestingly, he says, initiatives by ICASA and the Competition Commission to address pricing and coverage concerns through existing operators could arguably be reducing the competitive space for the WOAN.
“While certain sectors, especially in the fibre infrastructure market, have taken advantage of open access philosophies to build thriving companies and grow entire ecosystems around their infrastructure, the mobile industry has yet to take the step of opening the market to robust, service-level competition.
“The WOAN, by its very open-access nature, is positioned to change this. Other countries, especially those with advanced 5G plans, are seeing various infrastructure-sharing and open access models emerging,” Geerdts says.
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