Data is the world’s most valuable commodity and the government has a critical responsibility to release spectrum in a manner that guarantees entrance for new market players, lower costs and equitable distribution.
This is the word from Ignition Telecoms CEO Valde Ferradaz, who highlights the importance of connecting the nation through digital channels.
He told a recent virtual conference that, without “fairly and responsibly” opening up the country’s spectrum to new competition, MNVOs and investment, that capacity was wasted.
“Valuable spectrum will be wasted if the same monopolies are allowed to generate bigger wealth instead of diversifying and allowing for spectrum to be more broadly used,” he says. “This is the natural evolution by which the government can grow the economy – they have no choice beyond recognising data plays an invaluable role in that process.”
Ferradaz’s comments come as the Independent Communications Authority of South Africa (ICASA) announced another delay in releasing spectrum. An interdict granted to Telkom towards the end of March saw the spectrum auction postponed further – only a few days before the spectrum auction was contractually due ahead of the March 31 deadline.
Telkom is asking the court to order South Africa’s migration from analogue to digital broadcasting – a move that will free up the 700MHz and 800MHz bands – be completed by 30 June 2021. However, President Cyril Ramaphosa has indicated this will only happen by March 2022 The spectrum auction delay is viewed as a victory for the parastatal telecommunications company and free-to-air television entity E.tv at the expense of network operators MTN and Vodacom.
The operators have stated South Africa lags years behind international schedules for licensing 4G-suitable spectrum and the spectrum auction delay will further hinder rolling out commercial 5G networks.
Ferradaz says the industry hopes the regulator would “deliver on economic expectations” and, despite the current controversies, there would be decisions on opening the market for MVNOs.
Those players have the opportunity to put data into consumers’ hands as rewards for shopping loyalty and thus boost access to education, healthcare, pharmaceuticals, medicines and studies in an economy struggling with escalating unemployment, poorly functioning state healthcare facilities and under-resourced schools.
“Historically, the government made mistakes on providing structures and services meaning the sector succeeded predominantly through a private sector accountable to shareholders. The spectrum auction provides the platform off which the government can balance the country’s economic growth against citizens’ needs,” he says.
Ferradaz adds that the solution could not pivot around the same “follow the capital strategy” and should focus on “follow the economic needs strategy”, particularly as South Africa battles the Covid-19 global pandemic.
“When the regulator awards spectrum, the national demand and market needs will balance connectivity allowance and availability … first-world countries are leap-frogging the old ways of doing business (by) recognising the need for wholesale spectrum,” he says, referencing the highly competitive Dutch system.
He adds that India’s decision to discount costs across the board effectively enabled business to make money while rendering data affordable.
Ferradaz believes that, locally, a potential solution could be for the government to release a portion of the available spectrum to force down data prices and encourage roll out, while reserving spectrum for a later allocation in line with economic needs. This allocation could facilitate diversification and open competition.
“This will balance the importance for connecting the nation with simply rolling out spectrum,” he says, indicating the long-term effect ensured economic growth.
He points out that the past two years had witnessed significant industry changes as retailers, banks and other players entered the mobile space and boosted customer connectivity. Pick n Pay, Shoprite Checkers, First National Bank, Mr Price, Standard Bank and Boxer are among the companies that have been first to market as corporate branded MVNOs. He highlights how consumers are now less sensitive to network operators than to pricing and access to data and connectivity was as much a basic human right as access to other basic services.
Last year Ignition Telecom’s subsidiary Mobius facilitated the launch of retailers Pick n Pay and Boxer MVNOs – PnP Mobile and Boxercom with MTN linked to the company’s Smart Shopper loyalty programme. In February, Shoprite Checkers announced its MVNO service K’nect with Cell C and MTN was effective from April.