Vodacom and MTN want action on spectrum

2016-05-23 16:40 - Duncan Alfreds, Fin24
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High speed mobile networks have the potential to drive economic growth. (Duncan Alfreds, Fin24)

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Cape Town – It has become urgent for the government to move on the allocation of mobile spectrum, local operators have urged.

As data demand in South Africa escalates, operators are under pressure to make more efficient use of existing spectrum. However, the country faces a data crunch if spectrum in the key 800MHz band is not allocated soon.

“The rapid adoption of smart devices, which compliments government’s vision of bridging the digital divide and universal access to broadband services, has increased traffic on our networks substantially, and has rendered access to spectrum more urgent,” said Mteto Nyati, chief executive officer of MTN [JSE:MTN] South Africa.

He added that in SA, 98% of mobile network subscribers are served by 40% of the allocated spectrum.

Vodacom [JSE:VOD], which on Monday delivered its interim annual results identified the lack of spectrum as a risk to the operator.

Data demand

READ: Vodacom, MTN hit massive 1Gpbs broadband speed

“I cannot emphasise enough how important it is to secure access to additional spectrum in all our markets, none more so than in South Africa where data demand continues to grow exponentially and technology continues to advance, beyond what we can viably deliver with the available spectrum that we have,” Vodacom Group chief executive Shameel Joosub told a media briefing.

Data revenue at MTN climbed to R33bn on the back of capex into the network of R29.1bn in 2015. Data traffic increased 108.5%.

Vodacom reported at 45% growth in active data customers to 18.7 million on the back of R17.4bn invested into the network.

READ: Data spurs on solid Vodacom revenue growth

The demand for data has driven networks into re-farming existing spectrum while they wait for the Independent Communications Authority of South Africa (Icasa) to announce a spectrum auction.

However, the department of telecommunications and postal services has indicated that there was “debate” about how to proceed with an auction.

“There has been a lot of debate on whether we should auction this spectrum: The key principle is that as government, we are not looking to making a kill out of this natural resource,” Telecommunications and Postal Services Minister Siyabonga Cwele told the media following his department’s recent budget vote.

Digital TV migration

READ: Cwele: Broadband more important than revenue

The department completed a white paper on spectrum policy, but it has not been approved by Cabinet.

“The availability of high-demand radio spectrum will allow deployment of networks for the digital age that permits higher data speeds, which increase network capacity and enhance customer experience,” said Nyati.

“There is no doubt in my mind that greater access to spectrum will give South Africans what they want and that in the interests of being fair, transparent and competitive,  that this be conducted through  an auction process,” said Joosub.

One of the constraints to allocating spectrum is that the SABC has not yet completed its migration to digital terrestrial television.

The Universal Services and Access Agency of South Africa (Usaasa) said that it requires a significant spike in its budget to accelerate the roll-out of broadband in the country to meet the 2020 deadline of universal access.

New spectrum will enable operators to make provision for greater broadband access, reducing prices for data.

“Our customers not only want faster speeds and wider access to LTE coverage but they are also demanding that data prices continue to decline,” said Joosub.

How much should SA be paying per gigabyte for data? Let us know


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