Frequency roll-out delay enrages telecoms firms

2012-04-14 15:05

Government information technology company Sentech sits idle with technology that promises not only greater connectivity, but increases the speed of doing business and can contribute millions to the economy.

Mobile telephony companies are fuming at the loss of business opportunities from the delay in the issuing to telecoms companies by telecommunications regulator Independent Communications Authority SA (Icasa) of the high-demand 2.6 frequency ideal for the implementation of 4G signal for commercial use.

4G networks are the successors to the current and most commonly used 3G network.

4G networks are also referred to as Long-Term Evolution systems. It offers and supports higher-speed wireless services and greater broadband coverage – including to rural areas.

Telecoms companies complain that state-owned companies, which do not use the valuable public resource, have been allocated the much-prized frequency and this is a disadvantage to the economy, the public and companies.

The two spectrums at the heart of the heated battle are called the 800MHz and the 2.6GHz. They are the two spectrums on which 4G networks can best operate.

According to Icasa spokesperson Paseka Maleka, the regulator delayed the issuing of the spectrum to ensure Communications Minister Dina Pule’s forthcoming policy recommendations on high-demand frequency are taken into consideration.

Icasa received 20 submissions from companies wishing to bid for the use of the two spectrums for 4G networks.

MTN has called Sentech and Neotel “spectrum hoarders”, with no capacity to roll out the high-demand frequency for 4G use. Telecoms analysts have also accused the government and Icasa of nationalising frequency and stunting the national GDP growth.

They assert that for Sentech to roll out a national network will be a significant drain on public and Treasury funds.

Industry players point to a recent World Bank research document doing the rounds and indicating that each 10% of incremental broadband penetration adds 1.38 percentage points of incremental GDP growth and at least 20 000 direct jobs.

They complain that 40% of the high-demand spectrum for the roll-out of 4G has been allocated to Sentech, Wireless Business Solutions and Neotel.

An MTN document states that this has been done “at the stroke of a pen and without a beauty contest, auction or regard to past performance”. This, the telecommunications giant says, raises “serious governance issues”.

Technology companies said this week that 2012 was to be the year of the implementation of 4G – the fourth-generation LTE (Long-Term Evolution) – in South Africa, but that the communications ministry and Icasa have both delayed the emergence of this new era in mobile technology growth by postponing the auction of frequency for use by operators in the country.

They said that while mobile companies internationally have begun the migration on to this profitable high-speed frequency, in a scramble for competitive advantage, South African-based companies are facing relegation in the race to be the first to market.

Safaricom – in East and Central Africa – has begun setting up 4G networks. In October 2010, the company awarded Chinese telecoms giant Huawei the contract to go commercial this year. Movitel, the Angolan telecommunications company, signed a contract with Huawei to deploy 4G and launch a commercial network by the end of next month.

In Sweden, TeliaSonera began to deploy 4G in Stockholm and in Oslo (Norway) in November. Bel Canada, Sprint Nextel, Verizone and Vodafone have all begun their migration on to 4G.

According to the latest edition of Deloitte Review, the arrival of the 4G era has caused a “scramble for competitive advantage, which has reached fever pitch”. The semiannual magazine has for a number of years been researching the impact of the 4G era and has published a series of studies.

It forecast that 4G services will generate more than $11 billion (about R87 billion) in service revenue in the US by 2015, and global 4G subscribers will number 303.1 million by 2014.

Much to the displeasure of locally based telecommunications companies, Icasa has announced its decision to postpone the auction of what is termed the 1 800 and 2.6 spectrum, ideal for the roll-out of 4G, indefinitely.

Telecommunications analyst Arthur Goldstuck said this week: “The delay is a hot topic on the agenda of telecommunications companies because they have been preparing commercial launches of 4G and now they have to wait for an undetermined period of time. The regulator’s uncertainty is a concern to companies.”

Goldstuck said that the delay is a legacy issue. “The state seems to continue to believe that frequency is a scarce resource that it must hold on to. It is as though spectrum has been nationalised.”

A source close to the department of communications said government feared that the big players would hog the spectrum and crowd out small players in the future 4G market. He said the government was increasingly wary of holding an auction to distribute frequency, “as this would advantage big telecoms players as valuable frequency would go to the highest bidder and the smaller players would be outbid.”

The department’s spokesperson, Siyabulela Qoza, said: “The International Telecommunications Union has agreed on the identification of globally available spectrum and a process is under way for the minister (Pule) to instruct Icasa to conclude the licensing of this spectrum. The department will issue the policy directive after all the comments have been thoroughly analysed.”

Shalate Davhana, Huawei SA’s corporate affairs manager, said her company is ready to launch 4G, but are unable to do so because of the unavailability of frequency.

“We have competitively priced and reliable 4G products, but (we) are unable to go commercial here because the opportunity to acquire frequency does not exist yet in South Africa,” said Davhana.

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