Companies scramble for frequency bands as policy delays halt the fast network roll-out.
Policy direction remains a stumbling block for telecoms giants such as MTN and Vodacom in the race to long-term evolution technology (LTE).
Wireless Business Solutions (WBS) has a notable head start — it is the only company in the country with the necessary high-demand spectrum. But its 4G fortunes hang in the balance as WBS continues its complex legal dispute with the regulatory authority over its ability to operate legally.
LTE, also known as fourth generation or 4G, promises a faster and more efficient data network and means big money for telecoms companies that are anxiously awaiting the outcome of a policy direction from the government.
Exactly which frequency bands long-term evolution should use is still a matter of debate in the international telecoms community and the decision may only be made in 2015. But Dominic Cull, telecoms expert at Ellipsis, said one could use most of the spectrum below 4GHz — and "the lower you go the better".
Mervin Miemoukanda, an information and communication technologies research analyst at US market research company Frost & Sullivan, said the best spectrums for LTE are considered to be 800MHz, 2.6GHz and 3.5GHz. WBS (an iBurst sister company) and Sentech were fortunate enough to have been licensed in this high-demand spectrum before it was identified as such. But this valuable commodity, in light of a new licensing regime recently introduced by the Independent Communications Authority of South Africa (Icasa), has now come at a high cost.
So high are the new fees that even Sentech, a state-owned broadcast signal distributor, handed back a large portion of this frequency in April. It reportedly returned its full allocation of the 2.6GHz, which it has not used for years.
According to the TechCentral website, Sentech said this was because its licence fee payments would increase tenfold, to R40-million per year. Wireless Business Solutions, sister company of iBurst and Broadlink, appears to be hanging on to its ultra-valuable spectrum — including the 2.6GHz and 1 800MHz Global System for Mobile Communications (GSM) — but its legal right to operate in these spectrums, among others, is in dispute.
As recently as March 2012 it was reported that WBS was in discussions with various parties about a potential partnership for its unused 1 800MHz spectrum, which can be used for LTE. The MyBroadband website reported that the deal could even run into a few million rands a month. In July last year WBS chief executive Thami Mtshali said iBurst planned to spend $400-million on rolling out a faster LTE network in South Africa by 2015. But the messy dispute between WBS and Icasa could scuttle these plans.
In January Joseph Lebooa, an Icasa councillor, claimed he was hijacked and beaten by thugs he alleged were sent by WBS to pressure him into dropping an investigation into the company's alleged illegal radio links and unpaid licence fees. WBS denied any connection with the incident and also said all of its radio links were legal and it was awaiting the invoice for the licence fees to be paid to Icasa. It subsequently opened a case of crimen injuria against Lebooa.
On April 3 Icasa inspectors executed a warrant of search and seizure at WBS's premises and took vital equipment, which resulted in the majority of WBS's services being disabled for more than two days until the company obtained a court order to have its equipment returned.
In its application for the warrant, Icasa noted that the telecoms company had contravened the Electronic Communications Act through its "possession and use of radio apparatus to transmit and/or receive a radio signal without a valid radio frequency spectrum licence in the following six frequency spectrums": 15GHz, 5.9GHz, 10.5GHz, 26GHz, 2.6GHz and 1 800MHz GSM. The latter two may be most valuable as they can be used for LTE technology.
In the affidavit an Icasa inspector explained that many links in these spectrums had been rolled out without informing the authority, but also that some licences for access to a radio frequency spectrum, like the 2.6GHz, were no longer validly licensed.
The affidavit said that on July 14 2006, the authority issued WBS with a spectrum licence to erect, maintain and operate a 2.6GHz network and the licence would be valid until December 31 of that year and renewable upon payment of the licence fee within the renewal period. But "the last timeous licence fee payment received from WBS was on June 2011 … WBS's spectrum licence expired on December 31 2011 and has not been renewed within the renewable period, ending December 31 2012."
The affidavit noted that WBS made a partial payment of R2-million towards an outstanding licence fee of R3.6-million but that such payment "does not revive the expired licence and WBS needs to reapply for another licence to use this frequency".
The Icasa affidavit also claimed the last licence fee payment for 1 800MHz GSM was received on June 1 2011. The licence had thus expired on December 31 2011 and had not been renewed.
But in an application to the court WBS asked that its licence to operate in the six contended spectrums be declared valid and said the dispute was really about the method of calculation of fees. "WBS has made numerous tenders to settle the outstanding licence fees, but an agreement between the parties has yet to be reached," it said.
As part of its court application WBS supplied the original 2.6GHz station licence certificate and a GSM 1 800MHz network licence certificate, but not the proof of annual renewal, which Icasa claimed had not been done. Amid great pressure to fast-track the process, the department of communications is still in the process of deciding on a policy direction related to high frequency bands and it seems Icasa will also take no action until then.
"Icasa is sitting with enough spectrum to assign to all mobile operators, but that is simply not happening. That's been the status for the past seven to 10 years," said Cull.
While WBS and Icasa fight it out in court, telecoms giants Vodacom and MTN have overcome slow departmental processes by re-allocating their existing telecoms spectrum for the use of LTE, a process described as "re-farming".
This 1 800MHz spectrum, according to Richard Boorman, head of Vodacom's corporate affairs, was traditionally used for voice and 2G services. But experts warn the move could be to the detriment of other services. "It's not an ideal situation," Boorman said, "we do our best to make sure the impact is minimised".
At the last count, Vodacom had 600 live sites across South Africa, and aims to have 1 000 by the end of the year, Boorman said. But Cull believed it would be difficult to roll out LTE by re-farming alone. "They [service providers] can go to a certain level by re-farming. But it has implications for other services they provide, particularly in terms of voice."
Cull said there was no empirical evidence at this stage to support the notion that LTE is interfering with other mobile services, but "plenty of people are saying they are experiencing more problems, like dropped calls, particularly in these areas where LTE has been rolled out".
As there is ultimately only a finite amount of spectrum for each provider, the advantage lies with Telkom and Cell C, who have fewer voice users on their networks, he said.
In Europe, some service providers have deployed LTE based on 3G spectrums. The only drawback is the availability of devices in certain bands, Miemoukanda said.
But LTE can certainly become faster if more spectrum is made available, said Boorman. "It is still 10 times faster than 3G, and it is still a massive improvement."
Icasa and WBS did not respond to the Mail & Guardian's questions.
Investment awaits green light from minister
Richard Boorman, head of Vodacom's corporate affairs said operators are making massive investments in networks in this very capital-intensive industry, but desperately need spectrum.
"We are pouring massive amounts into network capex [capital expenditure] — more than R6-billion a year and the number of 3G base stations are increasing at annual increase of 25%, as well as massive investments in fibre optic back haul," he explained.
"All of this stuff is going on, but spectrum is key."
Boorman said valuable spectrum, recently handed back by Sentech, could be licensed right away and the Independent Communications Authority of South Africa (Icasa) need not wait for the department of communications to get its house in order before it can proceed.
"There is a chunk of spectrum available. We are being reasonably vocal in explaining that we are keen for it to be assigned as quickly as possible," Boorman said.
But on April 17 Icasa made it clear to the parliamentary portfolio committee on communications that it would not make a move until the minister said so.
Kanagaratnam Lambotharan, chief technology officer at MTN South Africa, said the qualification criteria for 4G spectrum were still being finalised by the minister of communications.
Mervin Miemoukanda, information and communication technologies research analyst at Frost & Sullivan, said there are various reasons for the delay.
"One of them is the uncertainty around the digital migration in the country. Icasa is still busy drafting the framework for long-term evolution. I think the government wants to get it right, but it's taking too long," he said.
"This situation really impedes market development as service providers, such as MTN and Vodacom, won't be able to launch certain products in the market or invest heavily in their current long-term evolution services." But time means money, according to telecoms expert at Ellipsis regulatory solutions Dominic Cull: "The opportunity cost to South Africa of not finalising this process runs into billions of rands: decisions need to be made now," he said.
4G is 'a bit of a luxury'
Long-term evolution (LTE), also known as 4G, is critical to the introduction of advanced broadband services in South Africa, said Mervin Miemoukanda, research analyst at Frost & Sullivan.
"It would enable South Africa to introduce bandwidth-hungry services such as telepresence and telemedicine," he said. "Globally, governments are pushing for long-term evolution deployments, putting in place the required frameworks for the technologies to be deployed. This technology will also assist with the roll-out of broadband services in rural areas." Kanagaratnam Lambotharan, the chief technology officer at MTN South Africa, said 4G has the potential to allow the local broadband market to make significant strides in future connectivity and customer experience.
But LTE or 4G is really a marketing term at this stage, said Dominic Cull, Ellipsis's telecoms expert. "I don't feel there is any really substance to it. There is a hype curve, and we are at the top of it. I anticipate real problems as they roll this out and the theoretical throughput promises are not met."
He said that, despite the marketing hype and lobbying for 4G to address universal access and service challenges, this is not, in fact, where the service is being rolled out. Simple economics dictate that it will, in the short-to-medium term, be taken up by existing customers in high-income urban nodes.
"When it's a problem to provide basic services to everyone, having this bigger, faster offer is a bit of a luxury."