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Searching for spectrum

Johannesburg - The telecommunications industry is abuzz over the availability of radio frequencies in South Africa currently used for other technologies - such as analogue television.

There is a finite range of frequencies available; not everyone can have some and more will become available once the move to digital terrestrial television (DTT) is complete, freeing up more frequencies. But there are challenges.

Frequencies are licensed by the Independent Communications Authority of South Africa (Icasa) who ultimately decides who can do what with the spectrum available in South Africa. For example, cellular giant Vodacom Group [JSE:VOD] is licensed to operate its GSM cellular network in the 2.1GHz spectrum but, as CEO Pieter Uys explains, it is pushing at the limits of its existing spectrum and could do more with lower frequencies.

Uys said that the lower a frequency is, the more efficient it is. This is because the waves in that frequency are longer, allowing them to travel further and to penetrate things better, such as walls.

The lowest radio frequencies likely to become available for telecommunications are between 700MHz and 900MHz. These frequencies are more desirable than higher frequencies such as the 2.1GHz that Vodacom currently has and the 2.6GHz frequency Icasa is planning to auction off soon.

The problem with these lower frequencies is that they are occupied by analogue television signals used by the SABC, eTV and Multichoice.

The switch to DTT will optimise free-to-air television in South Africa and free up some of these desirable lower frequencies. This is what is referred to as the 'Digital Dividend'. It is also why telecommunications providers are so keen for the department of communications under general Siphiwe Nyanda to get a move on with the switch to DTT, a process which is currently being delayed by discussions over the technology South Africa is to use for DTT.

One of the problems currently facing MTN Group [JSE:MTN] and Vodacom is that cells created by base stations belonging to cellular networks shrink proportional to how many people are connected to them simultaneously, which causes coverage problems for the networks.

Works against lowering of prices

"The more people connect, the more holes you have in the network," explains Uys.

"We can build more base stations to compensate for this, but that's expensive and it takes a long time. It also works against the lowering of prices," he said.

Industry representatives from iBurst and Vodacom said it can take up to two years just to get the environmental impact study done before a tower can be erected. They'd like to do more with their existing infrastructure using more efficient technologies, but they do not have available spectrum to do this with.

New technologies include Long Term Evolution (LTE) which is the leading 4G cellular technology. It is more efficient, but the problem facing operators such as MTN and Vodacom is that they must keep their old GSM and 3G technologies running in order to service existing customers, which means they need additional spectrum for the likes of LTE. They can't just turn off the one and on the other.

Another possibility for freeing up spectrum exists with companies that have licenses that they aren't using, such as ailing parastatal infrastructure provider Sentech - and some have suggested that Icasa should adopt a 'use it or lose it' policy for such companies who have spectrum and aren't doing anything with it. No decisive announcements have been made on this front.

At the moment, the 2.6GHz spectrum is available and Icasa is making final decisions as to how to allocate it via an auction. It's a high frequency, and so less desirable, but it's much better than nothing.

MD of research and consulting firm WWW Strategy, Steven Ambrose says that an auction may not be the right way to go.

Massive resources needed

According to Ambrose, only the big guys can afford to enter in to such an auction, but they are not interested in the frequency. Telkom has already said that it will not be taking part.

"That leaves the small guys, but they can never ever, even if they form a consortium, meet the requirements of not only winning, but utilising spectrum. The guys who have money aren't interested and the guys who are interested don't have money - it's a catch-22," says Ambrose.

One small company, Skyrove, has said it will try to get spectrum via the auction, but Ambrose is doubtful of their abilities.

"It would be great if someone like that could do it, but it's not just about setting up the network - it's about infrastructure, billing, skills and other elements. They'd have to be ready and able to burn huge amounts of money before seeing any payback, and do so in a commodity environment where consumers don't care about anything except low prices and the company would have no differentiation," he said.

"There are massive resource needs. It's perhaps a little out of the small guys' league."

He says tier-2 telecoms players like Altech, MWEB or Dimension Data's Internet Solutions may be able to do something, however.

"But the fact is that unless spectrum is given at a reasonable price, the business model goes to hell," he adds.

"The days when spectrum was auctioned off for millions of dollars in Europe are over. Those environments don't exist anymore thanks to newer network technologies. Technology hasn't made spectrum less scarce, but is has made it less valuable," said Ambrose.

 
  - Fin24.com 
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