Cell C will take action over '4G'

2012-11-19 08:30
Alan Knott-Craig poses with his book 'Second is Nothing' on driving network coverage while at Vodacom. (Duncan Alfreds, News24, file)

Alan Knott-Craig poses with his book 'Second is Nothing' on driving network coverage while at Vodacom. (Duncan Alfreds, News24, file)

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Cape Town - Alan Knott-Craig has threatened action over higher speed networks advertised as 4G, and argued that all broadband spectrum in SA should be managed by a single entity, and operators should compete at the retail level.

He took the reins of Cell C earlier this year and says that the government should regulate flat rate calls so build competition among operators. Knott-Craig also made no bones about Cell C's intention to take action against his former company Vodacom and MTN's rollout of a faster network if they advertised it as 4G.

Knott-Craig, author of Second is Nothing, spoke to News24 about his ideas, and also about a book on his passion of wildlife photography.

News24: Do you feel you're 'back in the saddle'?

Alan Knott-Craig: Yes, with saddle-sores!!

News24: How long did it take you to settle in at Cell C?

Knott-Craig: About a day

News24: Vodacom and MTN took action against Cell C over the 4G campaign. Will Cell C take action on the 4G offered by Vodacom and MTN?

Knott-Craig: 4G as defined by the ITU is LTE-advanced and WirelessMAN-Advanced and no operator in South Africa is currently offering these services. 

Both Vodacom and MTN used the ITU definition of 4G against Cell C when they lodged complaints at the ASA over its use of 4G or 4Gs in 2010 to advertise its HSPA+ network. 

They argued that according to the ITU, HSPA+, LTE and WiMax are not defined as 4G and only LTE-advanced and WirelessMAN-Advanced can be classified as 4G.  Should Vodacom or MTN use 4G to refer to LTE (which in 2010 they argued is not 4G), Cell C will take action.

News24: Explain how your wholesale LTE 'store' would work in practice.

Knott-Craig: Affordable broadband for all has become a national imperative.  To achieve this goal, we need an extensive coverage footprint that can deliver broadband services to all South Africans at high speeds and affordable prices.  The key challenges faced by operators in achieving these goals are capital expenditure and spectrum.

Capital expenditure determines network rollout (coverage footprint) and price, whilst Spectrum determines speed and price.  The more spectrum an operator has, the lower the price and higher the speed.  Less capital expenditure ensures an operator is able to offer services at lower prices.

A national wholesale broadband network would address these challenges, as spectrum would be allocated to a single entity made up of operators and entities (including state-owned companies) that have the means and willingness to participate in this initiative.  Capital expenditure per company would also be significantly less.

Government, through the regulator, would stipulate the footprint and determine the wholesale price. Industry players would then compete at a retail level on price (retail) and service to the benefit of consumers.

This has been done in other countries around the world with great success.

News24: Should government enforce the flat rate call rates you proposed?

Knott-Craig: Yes.  The incumbents insulate themselves from competing on price by having high off-net prices and relatively low on-net prices for their own customers. 

This provides a barrier for competition and maintains a high price environment.  Also, with the introduction of Mobile Number Portability (MNP), customers do not always know whether the call they are making is on their own network or on a competing network - and what the price of the call will be.

News24: What additional support should government offer smaller operators in order to facilitate better competition in SA?

Knott-Craig: Government, though Icasa, has three fundamental levers to ensure effective competition.  They are: Mobile terminating rates, asymmetry, and flat rates (as explained above).

Mobile termination and roaming rates remain the highest input cost when determining the retail rate of mobile services.  When Vodacom and MTN entered the market, they were afforded asymmetry at a ratio of 4:1 (400%) against the incumbent at the time, Telkom. 

The asymmetry enabled them to build very successful businesses.  The same level of asymmetry was never afforded to the new players (Cell C and 8.ta) when they entered the market. 

The regulator only introduced asymmetry in 2010 but only at a level of 20% in the first year, then dropping it to 15% in the second year (current year) and 10% in year three.  The level of asymmetry has not protected the smaller players or enabled them to bring prices down and remain sustainable.

News24: Would Cell C introduce an unlimited data plan for any device as a market disruptor?

Knott-Craig: No.  We already offer the most competitive and compelling data products in the market.  Data will always come at a cost, but the cost of data will drop significantly as speed and consumption increase.

News24: If you argue that there should be an effective single network, how does the operator differentiate itself?

Knott-Craig: Through price (retail) and service.

News24: You spoke about building a quality network. How's it been progressing, compared to the early days at Vodacom?

Knott-Craig: We are progressing very well.  We have rolled out more base stations per month over the last few months, than we’ve rolled out in an entire year previously.  We have built more than 1 000 3G base stations in the last seven months.

News24: Have you taken many wildlife pictures lately?

Knott-Craig: A couple.

News24: Are you planning another book?

Knott-Craig: Doing a book on my favourite photos. About 200 pages. Looking beautiful.

- Follow Duncan on Twitter

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