- MTN has responded to the growing demand for data with a R300 million investment in a new fibre service to cater to under-serviced neighbourhoods which are not covered by traditional fibre networks.
- The company invested R300 million in the project and hopes to reach 600 000 households by the end of the year.
- The service comes as the rollout of high-demand spectrum has been hit by another delay, with a court set to hear a challenge launched by MTN against the process.
One lesson that mobile phone companies seem to have learnt during the Covid-19 lockdown is that data is gold.
Revenue derived from data has emerged as a key contributor to income growth over the past year, as demand for internet connectivity skyrocketed, driven by the changing work environment and increasing streaming demand.
However, uneven IT infrastructure and prohibitive costs have slowed down the full growth potential of the data market, meaning the returns currently enjoyed by telecommunications companies may just be the tip of the iceberg.
MTN has responded to the growing demand for data with a R300 million investment in a new fibre service to cater to under-serviced neighbourhoods that are not covered by traditional fibre networks, in what is aimed at reducing the digital divide and drive growth for the company. Supersonic AirFibre would use open spectrum, which is not licensed like the high-speed spectrum whose rollout has been bogged down by litigation.
"It is the right product at the right time," said Calvin Collett, MTN's managing director.
The company aims to connect 600 000 households by the end of the year, with the first rollout set for the beginning of May.
Much-awaited licensed spectrum
The process takes place as the future of the process of the much-awaited licensing of high-demand spectrum is on hold, due to a court injunction obtained by Telkom and e.tv, who are aggrieved by some of the provisions outlines in the invitation to apply by the regulator.
The legal bid stopped the Independent Communications Authority of SA (Icasa) from proceeding with the plan of conducting the auction by 31 March, dealing yet another blow to the protracted process which has been on the cards for over a decade. MTN has mounted its own separate legal action against the process, in a case that is yet to be heard.
"This product is not going to fall away once the high-demand spectrum comes online," said Collett.
MTN would deploy the service using repurposed bands for 2G mobile services and a new generation of mobile technologies, including third- and fourth-generation (LTE) technology, that does not required the digging up of trenches to install cables.
In the first half of 2020, MTN recorded a 26.4 % jump in data revenue, a period which coincided with the early days of the country's hard lockdown, but the company said in March this year it had seen a reversal of gains since the easing of restrictions.
"Due to the current major lack of available spectrum, MTN has located unlicensed spectrum, a readily available resource, and combined it with innovative technology now available to effectively leverage open spectrum," the company said.
"This is something that was previously not possible or stable."
Industry ripe for innovative technologies
According to Collett, only 2.3 million South African homes have fibre connectivity, adding that the industry is ripe for innovative technologies aimed at bridging the internet divide.
While MTN is banking on reduced geographical limitations as going to be one of the major draw cards for AirFibre, but tech analyst Arthur Goldstuck believes that wide reach alone won't be sufficient if the costs remained high.
"There is a pent-up demand for accessible and cost effective broadband," he said.
The growth in video-on-demand services such as Netflix, ShowMax and other streaming services has helped drive broadband appetite.
"With the delay in the rollout of 5G because of the spectrum auction being put on hold, mobile operators have to come up with innovative ways of getting high speed wireless broadband to people," said Goldstuck.