What is spectrum, why is it being auctioned, and how does it affect consumers?
The Independent Communications Authority of South Africa (Icasa) started its auction process of high-demand spectrum on Tuesday 8 March — allowing eligible mobile network operators to bid for international mobile telecommunication (IMT) spectrum licences.
This is the first time in more than a decade that mobile network operators in the country have the opportunity to bid for spectrum licences. Six operators — Cell C, Liquid Telecoms, MTN, Rain Networks, Telkom and Vodacom — qualified as bidders.
“The importance of this licensing process lies mainly in the enhancement of competition in the mobile services sector, increasing broadband connectivity and coverage, as well as bridging the digital divide between urban and rural access to mobile broadband networks,” said Paseka Maleka, head of communications at ICASA on Monday, a day before the auction launch.
During his 2022 State of the Nation Address on 10 February, President Cyril Ramaphosa noted that the auction “will unlock new spectrum for mobile telecommunications for the first time in over a decade,” adding that the government “will facilitate the rapid deployment of broadband infrastructure across all municipalities”. These reforms, said Ramaphosa, would “revolutionise” South Africa’s technological development by reducing data costs and making faster broadband accessible to more people.
What is spectrum, and why is it important?
We consume communication technologies via some form of transmission medium. A simple example might be the frequencies we choose when tuning into our favourite radio station. Mobile phones, analogue television, wi-fi, and even medical equipment use radio waves to transmit and receive signals. These frequencies are regulated and assigned to multiple mediums through international and local governing bodies — in South Africa the regulatory body is Icasa.
Frequencies are further split into what we will informally call “smaller chunks” that can be sold to service providers such as mobile operators, wi-fi service providers, individual radio stations, and so on.
When communication companies buy licences for these chunks of frequency waves, they can operate in the range of the frequencies they bought.
Professor Bruce Watson, chair of artificial intelligence in cybersecurity at the school for data science and computational thinking at Stellenbosch University, uses the image of a highway to simplify spectrum: a road with heavy traffic flows more smoothly when there are more lanes rather than only one or two available. More lanes could improve the flow of the traffic.
Why does the sale of spectrum matter to the day-to-day consumer?
Think of the highway: the more lanes, the more traffic and the better the flow.
Watson describes it by saying: “The more frequency spectrum we have, the more things we can do.”
“If your service provider has a lot more spectrum, they will be able to provide you with higher bandwidth. They’ll be able to give you less interference [from other consumers and frequencies],” he explains, adding: “If you have a service provider that has very little spectrum, then you’ll probably have a bit less bandwidth and a problem with interference”.
The pandemic boosted data and internet consumption globally, and boosted the number of people working from home. These factors influence the quality and speed the bandwidth mobile operators and internet service providers have at their disposal. More traffic on a highway with fewer lanes will lead to congestion.
Broader spectrum will allow the consumer to conduct virtual meetings or online calls, stream movies or videos with fewer to no interruptions, and provide faster download speeds.
Will data cost less?
Not yet. Instead, an initial increase in prices is more likely, says Watson.
“Given the big capital investment that [telecommunication companies] have to make initially, I think the companies are going to want to recoup their costs, especially whatever they spend on the auction. They may even turn up the pricing a bit.”
But, he points out, reliability and more bandwidth might be a “viable trade-off” for consumers opting to pay the higher fees.
During the “opt-in phase”, (the first phase) of the current auction process, four of the six bidders were eligible. Telkom won 2x10MHz of 800MHz bands, costing the telecommunication company R1 504 815 407.10.
Will rural areas get internet?
Broader wave frequencies might not yet lead to rural areas benefiting from better connectivity. Higher frequencies used in the case of 5G — and in some cases in the United States and Asian countries of 6G — are more successful in densely populated areas than over longer distances.
In addition to this, companies obtaining higher frequencies might find it financially difficult to expand to rural areas in the near future, following major capital investments to buy high-demand spectrum licences.
Watson says that if companies are not “encouraged, taxation-wise or subsidy-wise, by the government, it’s very possible that companies will underserve the rural community.” Low-density areas might not be profitable for operators at this point.
“Higher bandwidths will facilitate better quality, less interference, and less likelihood of your data being cut off by others.”
Why do telecommunication groups want spectrum licences?
A wider spectrum means more consumers and naturally more profit for telecommunication companies.
Again using the road analogy, Watson says: “It’s like having more lanes of a highway that serve your factory or company. The more lanes of a highway you have, the more traffic you can push down that highway.”
He says that in the short term, the sale of spectrum is an investment for companies, which would also need to recoup their costs.
Watson remains optimistic as he indicates the long term benefits consumers will have from the sale of spectrum licences. Looking ahead, wider frequencies can pave the way for newer technologies that hope to have safety, environmental and connectivity benefits. Watson referred in particular to South Africa’s plans for future smart cities, adding: “But those are things that won’t necessarily impact the average South African for some years to come.”
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