/ 24 April 2024

SA must tread carefully as it leads Africa to next generation network technology

Chinese Huawei Technologies Co. Telecom Operations In Africa
South Africa’s mobile network users will join consumers in leading global markets with access to next generation networks as domestic mobile network operators (MNOs) prepare to switch off legacy 2G and 3G for more advanced 4G and 5G technologies. Photographer: Waldo Swiegers/Bloomberg via Getty Images

South Africa’s mobile network users will join consumers in leading global markets with access to next generation networks as domestic mobile network operators (MNOs) prepare to switch off legacy 2G and 3G for more advanced 4G and 5G technologies.

This change, however, requires some careful management. While it can help the country to catapult its digital economy into the future, it also holds some significant risks. This is why the Association of Comms and Technology (ACT) is advocating for an industry-led but state-enabled transition, an approach that has been successful elsewhere in the world. 

While the department of communications and digital technologies has pushed the switch-off date for both technologies out to 31 December 2027, the ACT does not believe this approach is ideal because it continues to put the state in the driving seat setting out strict government-imposed deadlines.

A more prudent approach is to encourage users to adopt these newer technologies and allow the market and industry to lead the pace of the transition. To do otherwise could risk disrupting services for millions of users who still rely on legacy technologies. We need to manage the transition at a realistic pace.

The decision by the department to change the timeline implicitly acknowledges the ACT’s arguments that obligations placed on network licensees need to consider certain realities. Among these is the risk of digitally excluding poor people, particularly in the rural areas.

This is especially crucial because the telecommunications sector has encountered significant economic problems, including reduced consumer spending. The MNOs have also had to make substantial capital investments in power supply solutions to ensure connectivity in the face of load-shedding. 

An industry-led but government-enabled change would also reflect the international experience. 

The Global System for Mobile Communications Association (GSMA), a body representing industry interests worldwide, has been monitoring global developments with regard to technology sunsets. 

At the beginning of 2022, over a period of seven years, a total of 56 networks were shut down, of which 36 were 2G networks and 20 were 3G networks. None of the network shutdowns observed were because of strict government-set deadlines. These shutdowns were mainly market-led, with regulatory guidance provided by the relevant regulator.

The government can, however, assist with efforts such as community programmes providing digital skills, access to e-services and public awareness to help accelerate the transition to next generation technologies. 

It should be prohibiting the import of 2G and 3G devices, for example, because they will shortly have no utility on next generation networks. The state can also help enable the adoption of smartphones, which will be needed to use the 4G and 5G networks.

This is a pressing problem to be overcome in the next two years. The ACT has had discussions with the department of trade and industry to look at a possible reduction in customs duties to make these devices more affordable to all.

According to the ICASA State of the ICT Sector report 2023, there are 73 million smartphone subscribers in South Africa with the overall number of mobile subscriptions at about 106 million, which gives a sense of the internal digital divide when it comes to access to smartphones.

The South African Revenue Service classifies imported smartphones as luxury items and are subject to a “luxury tax” of 15%, as well as an additional duty of 7%. So, a device priced at R10,000 would immediately attract another R2,750 in taxes. 

Operators need to have consumers who can use their networks for the transition to next generation technology to make business sense.

While 60% of mobile internet subscriptions still rely on 3G, this is predicted to drop to 22% by 2025, but a careful approach is necessary to mitigate the risk of coverage gaps, particularly in rural areas where these legacy technologies are more prevalent. 

Consumer usage of 2G is much lower. For example, because consumer volume on Telkom’s network is less than 1% of its traffic the company has already shut down most of its 2G. 

2G is mainly used for voice and machine-to-machine interfaces such as emergency services, tracking services, metering, security systems and remote industrial interfaces. The ICASA sector report says South Africa has more than 11.5 million machine-to-machine connections that either use 2G or 3G connections. These connections need to be considered in the transition.

But it is unlikely poorer South Africans will be able to upgrade to smartphone devices without some sort of state intervention.

There is a precedent for such a move in the provision of set-top boxes in the migration from analogue to digital broadcasting. Free set-top boxes were provided to indigent or low-income households who underwent a means test to qualify for the upgrade. According to the communications and digital technologies department, about 1.5 million applications for set-top boxes were received.

The broadcast migration has taken nine years and is still not completed; the final date to switch off all analogue television broadcasting services above 694MHz is 31 December 2024. The current timeline for the 2G/3G switch-off is much tighter, highlighting the need for an industry-led process.

But moving away from legacy technologies presents a wealth of opportunities for South Africa’s digital economy, so it is important to get it right. 

By freeing up spectrum for more advanced 4G and 5G networks, MNOs can enable the development of new, innovative services and applications that will drive economic growth and job creation. 

The Genesis Analytics report, “South Africa in the Digital Age”, highlights the significant potential of the digital economy to generate new jobs and incomes in both the tradable and domestic sectors. The study estimates that 500,000 cumulative net new jobs in globally traded services in South Africa could be created through the digital economy by 2030, mainly by expanding existing business process outsourcing operations in key markets like the United States, Canada and Australia.

Numbers like that justify the steps South Africa is taking to sunset legacy technology in favour of these future-enabling network capabilities, which will place the country in a leading position on the continent. But we will have to tread carefully to ensure we do not disrupt digital access to millions in the process.

Nomvuyiso Batyi is the chief executive of the Association of Comms and Technology, which focuses on matters of importance to the ICT sector in the South African economy.