The local mobile virtual network operator (MVNO) market is opening up, but that growth can’t be accelerated if there is no spectrum being allocated to players.
This is according to Valde Ferradaz, CEO of Ignition Telecoms, a business unit of Ignition Group, speaking to ITWeb about South Africa’s spectrum woes.
The South African MVNO space has witnessed a surge in the form of new players coming to market in recent years.
While it’s been dominated by Cell C, with MVNOs such as FNB Connect, me&you and Mr P Mobile piggy-backing on the telco’s network over the years, SA’s MVNO market recently saw retailer Pick n Pay introduce an MVNO product – PnP Mobile – the first to launch on the MTN network. Others such as the Shoprite Group, Sakeng Mobile and Standard Bank have also rolled out their MVNO offerings.
Referencing some of these MVNO entrants, Ferradaz says it’s a positive sign that the market is opening but notes the lack of spectrum
is a hindrance.
He believes the longer the spectrum debacle continues, the more it’s likely to hurt the economy from a global perspective. “You’ve got to let the organic business roll on, grow and provide adequate services and pricing to the market.
“It’s not a secret that ICASA [Independent Communications Authority of South Africa] has asked the operators to open up wholesale in order to qualify for spectrum, and that’s why there’s possibly been a sudden interest in MVNOs. The danger here is that it becomes a
“We’ve already got MVNOs like Pick n Pay, FNB, Shoprite, Mr Price, with other banks and insurers coming to the party soon – why not award spectrum to the networks specifically allocated for those MVNO platforms, so that they can grow their customer base and offer them
“By default, MVNOs have to buy at the wholesale prices and when the spectrum is allocated, it should be fairly governed by the regulator, to ensure there is a balance in the market which allows the networks and MVNOs to grow without hindrance. If the operators can decide how much spectrum can be dedicated to their wholesale, there’ll always be constraints.”
Lengthy spectrum woes
South Africa’s long wait for spectrum has gone on for several years now, and what had been scheduled for March 2021, was brought to a screeching halt when the North Gauteng High Court ordered ICASA to suspend the auctioning of radio frequency spectrum licences.
Multiple court applications were brought by Telkom, MTN and broadcaster Etv. The three companies challenged some aspects of the process being managed by regulator ICASA.
The result of the opposition to the auction has been further delays and frustration for the sector, as well as for government, which is relying on a spectrum auction to boost the fiscus.
Last October, ICASA opened the invitation to apply for the licensing of International Mobile Telecommunications (IMT) spectrum, also known as high-demand spectrum, and that of the wholesale open access network (WOAN).
The telecoms regulator noted the closing date for IMT applications was 28 December 2020, while that of the WOAN was 30 March 2021. ICASA revealed the reserve prices for the spectrum ranging from R10 million to R1 billion. The cheapest is the 3 500MHz lot, with a reserve price per lot of R9.8 million, and the highest lot is 800MHz, with a reserve price of R1.1 billion per lot.
This development was seen as a breakthrough for the telecoms sector, which has, for years, been battling with ICASA over the allocation of these licences, and thus access to the spectrum needed to offer 4G and 5G services.
Government officials, including president Cyril Ramaphosa, have called for mediation in the legal impasse that has held back the country’s spectrum auction process.
Following the president’s pronouncements, ICASA said the ongoing settlement negotiations on spectrum litigation were unfolding “well” and with a “very encouraging” outlook.
Ferradaz proposes a formula that breaks up the spectrum allocation into different buckets, saying it’s his view that while ICASA has a plan to allocate additional spectrum, it isn’t one that is driven by or aligned to the economic agenda.
In terms of the first bucket, the CEO believes a portion of the available spectrum should be released to force down data prices and encourage further network investment. “Therefore, there needs to be an appropriate reserve or allocation to accommodate this need in the auctioning process, on the basis that the current incumbents keep the economy flowing. There should be a process where spectrum has a price and if they [operators] want it, they should be able to pay for it.”
The second allocation should be around bringing in diversity and opening up the market, including wholesale and MVNOs. “This is whereby spectrum is available to new entrants, which will bring in new investments, new ideas, new ingenuity and new services.”
For the third area, Ferradaz proposes government reserve a certain amount of spectrum for government sector recovery. “If you give the entire spectrum to the existing players, you’ve lost the ability to diversify, bring in new competition and reduce pricing in the market.
“As soon as you feed the same monopolies, they are going to do the same; there is no introduction to new competition. Likewise, services like policing, healthcare, access to job opportunities and education are neglected.”
Ferradaz emphasises that spectrum is an enabler for the recovery of SA’s economy, adding that the interdictions have the potential to remove the economic lens on the award of spectrum.
“Despite the networks being restrained, one of the things that South Africa has been able to do during the COVID pandemic, compared to other countries, is collectively provide digital services to the nation, keeping the economy going by working from home and by remote learning, to mention just two areas.
“Personally, the economic agenda is the most important. People and businesses have changed habits and digitisation in the form of people being able to do work over a computer, talk via video calling and having their businesses trade over the Internet. This is an area where South Africa can absolutely still thrive – but we cannot forget the importance of enabling the poor by giving people access to social services and job opportunities without having to pay for data.”
ITWEB: Simnikiwe Mzekandaba 23 June 2021