In South Africa, smartphone penetration is about 40%, and only 5.3% of the population have internet access via fibre or ADSL. Getting online using wireless technology and Wi-Fi is much cheaper than mobile data – so why aren’t more people doing it?
Refined by the free market, each technology connecting users is contextually appropriate to how and why it is being used.
Wireless gives quick and cheap internet
The market demand for internet supplied wirelessly via antennae is mostly found in areas where it is not feasible to deliver a physical connection, and mobile data is unaffordable.
“This is where wireless access networks are a very cost-effective and reliable alternative for people needing connectivity quickly, and who want flexibility in who they buy their service from,” advised Roger Hislop, of the Wireless Access Providers Association (WAPA), a body representing local independent wireless operators and service providers (WISPs).
Modern wireless networks “provide an extremely reliable, long-term solution that is easily scaled up. Even today’s budget systems are cheap to upgrade as needs change,” he told me during an interview.
Upgrades are necessary to keep pace with the ever-rising demand for data.
A sharing culture means cheaper data costs
The pressure to save costs commonly results in competitors sharing infrastructure, as well as the frequencies (also known as spectrum) used to transmit the data. “WISPs have been successfully sharing resources for years,” said Roger.
This culture of sharing lowers operational costs, and encourages competition as alternate service providers are easily able to identify potential customers, Roger explained. Sector experts expect this trend to increase as the wireless network industry matures.
More competition in this sector often results in more reliable and better-priced internet access.
“There is a strong policy direction from government to drive infrastructure sharing, as seen in the recent policy document from the DTPS [Department of Telecommunications and Postal Services], but this still has to be turned into regulations that have impact,” he said.
WAPA hold that sharing should be promoted through careful legislation, so as not to clash with network operators’ rights to do business. Part of this should be obliging mobile network operators (MNOs) to sell data at wholesale quantities and cost to allow smaller operators to break into the market dominated by those a few large firms.
The practices of large MNOs is to lock out smaller competitors and so give themselves more control over market rates. This type of behaviour is not uncommon; reports suggest that in 1994 and 1999 Vodacom and MTN, keen to protect their duopoly of the local market, colluded in anti-competitive behaviour against Cell C.
Increased opportunities for sharing spectrum available to wireless ISPs to transmit data would also bring the prices of data down for consumers. The business cases have been proved, but the market is prevented from taking advantage of the opportunity as the “current regulatory approach very much favours single licensees of bands with exclusive, and extremely inefficient, use,” Roger noted.
What’s the business case for wireless internet in township areas?
In low-income areas such as townships, the business case for internet service providers is harder to make.
In part, this is why the City of Cape Town is expanding their open access fibre network to all City-owned buildings, including those in informal areas. And, with the express purpose of helping suppliers bring connectivity to under-accessed areas of Cape Town, the local authority’s network includes high-spec switching centres.
“Unrestricted access to the internet is a step towards inclusion, and has to be treated as a distribution channel for education, banking and commercial sectors – so becoming a bridge between the formal and informal economy,” comments Paul Muller of Connect Earth, a specialist consulting and project management firm that develops models to manage and sustain sponsored public Wi-Fi zones.
Part of the City’s intention is to help users access wireless internet connectivity priced far more competitively than pre-paid data bundles used over a mobile network operator’s 3G connection.
In practice, however, wireless ISPs find it difficult to access the City’s network, Roger said.
“The City is moving in this direction, and they do have processes in place for using their fibre, as well as their towers, but there is a restriction that any wireless equipment on their towers [should] be licensed,” noted Wynand Pretorius of Wish Networks during an interview with me. Many WISPs transfer bandwidth using unlicensed spectrum.
According to Roger, the barriers to wireless connectivity are experienced in “many other metros, where it is still not easy for smaller operators to buy network capacity, and where access to desirable high-sites is difficult, and often for no good reason.”
He suggested that cities should allow WISPs access to their buildings as high sites for radio equipment, encourage building owners in their metros to do the same through incentives and also establish benchmark rates for rental of these high sites to reduce the public cost to communicate in Cape Town and South Africa.
Attempted solutions to bureaucratic blockages are seen throughout the ICT policies SA Connect and the National Integrated white paper, and rightly so as they obstruct job and skills creation, said Roger. He continued: “Smaller independent wireless operators have been proven to not only create local entrepreneurs, encourage the development of local skills and stimulate business growth, but also increase the accessibility of the internet.” Nationally, 300 000 people use wireless ISPs to get online.
Wish Networks is a Stellenbosch-based WISP that expects to soon use the City of Cape Town’s municipality’s fibre network to backhaul some of their main sites.
The City’s fibre coverage, their rate of network expansion and the projected user demand build a case to use municipal fibre, said Wynand. “Let’s not all reinvent the wheel. Also, [their] costing is becoming very competitive.”
Do state internet networks distort the local market?
Local and national governments should get involved in fibre networks, both through policy measures and direct investment into building infrastructure, agreed Roger. However, he is adamant to point out that infrastructure built or funded by government should be made available on a wholesale, open access basis at market-related rates.
“Doing otherwise can easily result in a distortion of the market, where taxpayer-funded internet services can crowd out private sector investment by competing with them, leading to a brief time of low prices for users, but which may leave them with inadequate performance or availability as technology and use of the internet advances,” he warned.
*Alan Cameron is a Senior Project Manager at Cape Town Partnership. Follow him on Twitter.