An increased focus on spectrum is about national importance and pride 

To say that South Africa is under significant pressure to find a way to accelerate economic growth is an understatement. Once the strongest economy on the continent, it has been reduced to a fragment of its former self with growth figures struggling to reach over 1% in some quarters. Added to this is the Covid-19 pandemic which forced Government to impose a hard lockdown of the economy to prevent the spreading of the pandemic. This had a devastating impact on the economy and has left many South Africans tentative about what the future holds. 

Learning lessons

Like South Africa, many countries around the world have begun the hard task of trying to rebuild their economies. Many regions have learned one lesson from the Pandemic -  there is a need to embrace the Gig Economy. “It is important that South Africa does not ignore this lesson,” says Vuyani Jarana, Mobax Group Chairperson, “we have seen how Covid19 has redefined the notion of work being where people go to being what people do. The home has emerged as the new office. Technology has made the world easier, and if employees can use technology to do their jobs, entrepreneurs can use technology to improve their lives.” The logistics industry has just been rebirthed with online retailers accessing customers online and delivering customers’ orders to the home. New distribution value chain intermediaries are starting to pickup on the opportunities. Key to this opportunity in the logistics sector is the availability of reliable quality data networks as well as penetration of digital currency or  “digital payments” to facilitate online ordering and tracking of delivery as well bill settlement. Low cost transport system to deliver the goods as part of the overall ecommerce ecosystem is critical, that is where the opportunity for youth entrepreneurship through low cost motorbike delivery vehicles exist. Environmentally friendly or “green scooters” driven by an electric motor will not only save on fuel costs but will contribute to the reduction of carbon footprint. In the past, digital technology was a luxury. It has now become a necessity with the delivery of certain essential services dependent on technology to be effective. “There are two essential services where we are seeing the role of ICT taking centre stage. The first is in the delivery of healthcare services.

Hyper connectivity and intelligent health analytics platforms will make it possible for healthcare delivery to move from doctors’ rooms and hospitals to the home,” says Jarana. The second essential service where ICT is having a major influence is in education. “If we look at what is happening in education today, we are starting to see massive potential in flattening the cost of delivering education bridging the gap between the rich and the poor of our society, urban and rural. Broadband rollout, and access to devices by all children, the “one tablet per child”  are critical to eliminate inequality and normalise access to education. The days of huge libraries with impressive book collections are numbered,” says Jarana. 

Creating a need

The growth of the Fourth Industrial Revolution and the Gig Economy, coupled with the accelerant factor of the Covid-19 pandemic, has created a need for increased access to data services that would enable entrepreneurial growth and ease of access to data for every citizen. In realising the need to build telecommunications network that will meet the demands of a fast digitising economy, the Government is accelerating the allocation of the high demand spectrum through two processes, the auction process referred to as Spectrum ITA as well as the licensing process of the Wireless Open Access Network (WOAN), the WOAN ITA. By Licensing the WOAN, government seeks to achieve three policy objectives, namely create efficient telecommunications system through infrastructure consolidation, increase participation of previously disadvantaged groups in the ICT sector through retail-focused business models, and drive a pro-consumer industry competitiveness by lowering barriers to entry into the sector and promote the participation of Mobile Virtual Network Operators in South Africa’s Telecommunications sector. Spain alone with a population of 47 million people has more than 30 mobile virtual network operators (MVNOS) in the market.

The possibility of transforming the industry by aggregating and investing in common infrastructure that will provide wholesale access to empowered retail level operators makes the licencing of the WOAN an all-important process that needs to be undertaken with greater degree of care and skill. It is important that the WOAN is set up to succeed from the very onset. The success of the WOAN hinges on three major levers, that it gets access to enough spectrum to build an efficient commercial network, that it gains access to passive infrastructure such as cellular telephone towers at fair and competitive rates  and that it is seeded by initial traffic upon which to build an acceleration plan.

The current WOAN ITA does present doubt whether the WOAN will be viable and sustainable as only one of the three levers of success have been met through the WOAN ITA. Firstly the WOAN has been allocated a much lesser amount of spectrum than was contemplated by the CSIR study which set minimum spectrum allocation to the WOAN for it to be viable. The WOAN has been allocated spectrum in the 700Mhz band only in the Sub-Gig range, depriving it of the efficient 800Mhz band. This poses significant challenges to the WOAN viability, as it amongst other constraints, will not be able to employ some of the traffic management strategies such as carrier aggregation. Considering the bands allocated to it in the above 1 Gig range, the WOAN may end up investing in multiple radio technologies, thus driving up capex costs and killing the business model.The 700Mhz range is not clean, it is still occupied by broadcasters, which means that technically the starting point of the WOAN operations is predicated on the completion of the digital migration programme. Access to infrastructure on a fair and competitive basis is not being addressed on either the Spectrum ITA or the WOAN ITA, thus creating a grey area with regard to whether the WOAN can gain access to the current incumbents’ infrastructure at the required rollout speeds as well as competitive rates. The WOAN will need to be given a leg-up in the area of access to high-rise structures if it is to survive. “A successful and viable WOAN will increase service-based competition and will level the playing field so that new players in the form of MVNOs can compete with bigger MNOs on a fair basis, and winner can only be the consumer” says Jarana. 

Shifting focus

One of the other challenges that has been highlighted by Covid-19 is that every South African, from the public to corporates, are in some level of financial distress. There is hardly any South African that is not living according to some form of constrained cash conservation mode, where every cent is counted. The move towards the WOAN will act as a capital expenditure (capex) shield for new entrants in the form of MVNOs. This will allow them to look towards shared infrastructure in order to reduce costs. Currently, the only infrastructure that is shared by Mobile Network Operators (MNOs) are the high-rise structures and towers. It is not uncommon to see up to four Base Transceiver Station (BTS) containerised units sitting at the base of the tower which is owned and maintained by different Mobile Network Operators. This increases the cost of running these units for each operator. With price per megabyte of data and a minute of voice under significant pressure to come down, operators must look to reducing network opex to maintain margins. Energy cost increases, unstable grid supply as well as increased incidents of site theft and vandalism are an additional penalty on the operators’ profit and loss statements.

“This is where Mobax has a significant role to play. Multiple BTS units require multiple maintenance teams that need to be on call at any point in time to carry out necessary repairs. This is a massive cost to MNOs. These BTS units also have separate heating and cooling systems which are power intensive. Mobax can play a significant role in the consolidation of infrastructure where these BTS units are shared. Evolving their various BTS equipment containers into secure multi-tenanted mini data centres located at the foot of the towers will reduce maintenance costs, reduce the numbers of spares components retained for network repairs (lazy capex) by most importantly creating possibilities for edge network content caching thus creating greater backhaul efficiency and lowering the overall network operational expenditure for the MNOs.  With optimised passive network infrastructure, it is possible to give the WOAN a leg-up in terms of access to passive infrastructure without sacrifice. Mobax as a leading total telecommunications facilities management company in South Africa is well positioned to work collaboratively with MNOs to deliver the much-needed network economies,” says Jarana. 

National importanceI

n his delivery of the Covid-19 Economic Recovery Plan, President Cyril Ramaphosa stressed the importance of the Gig Economy and the need for South Africans to embrace an enhanced entrepreneurial spirit. “The acceleration of spectrum allocation is of national importance and Government need to fully embrace every necessary measure to make this a reality. An accelerated access to broadband facilitates job creation, access to medical care and improved education. Driving a service-based competitive strategy through the implementation of the viable WOAN strategy forces all retail telecommunications service providers including the Mobile Network Operators (MNOs) as well as Mobile Virtual Network Operators (MVNOs) to relook their commercial strategies and focus on competitive pricing, accessibility and  the quality of the service they provide. Whilst access to increased spectrum acts as the capex shield for Network Operators, greater opex efficiency will come from consolidating passive infrastructure, thus deepening the infrastructure sharing and distributing both the costs and benefits amongst network tenants. Mobax has the skills and expertise to address this need and contribute to a project of national priority and importance,” says Jarana.         

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