Only established networks can handle the investments required to run a sustainable WOAN

23 July 2018
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The idea of a wireless open access network – WOAN – is the central plank of government’s information and communications technologies (ICT) policy as set out in the Electronic Communications Amendment (ECA) Bill. But this requires the release of significant amounts of high demand spectrum which regulatory and policy failure prevents from happening. Open access networks already exist in South Africa so there is no compelling need the introduction of an untried and untested WOAN model. More importantly, only the big established network operators have pockets deep enough to fund new network development and maintenance. Government’s dream of more and smaller players via the WOAN will not drive South Africa’s network infrastructure development forward effectively. 

Radio Spectrum, a set of electromagnetic waves and frequencies used to transmit communication signals that carry audio, data and video content over a wireless transmission medium, is the lifeblood of mobile communications. For network operators, particularly mobile network operators (MNOs) spectrum is essential to their very existence. Without it their extensive investments in network infrastructure mean nothing.

New spectrum allocation is critical in today’s data hungry environment but it is a limited and scarce resource that needs to be shared among existing and new players. Currently spectrum is licensed via the regulator – the Independent Communication Authority of South Africa (ICASA) for substantial fees – however, new allocations have been tied up in litigation between the DTPS Minister and ICASA for nearly two years, in addition to the country’s failure to release the Digital Dividend spectrum through introduction of the more spectrally efficient Digital Television Broadcasting Services.

The high demand for radio spectrum is largely driven by the explosion of mobile services and consumer demand for high quality multimedia content. The upsurge in the use of data hungry applications across all mobile devices means the ability of mobile networks to seamlessly deliver content instantaneously is under immense pressure. The demand for spectrum has never been so intense.

Without the ECA Bill and the WOAN, open access networks already exist in South Africa and internationally across fixed wireline networks, wireless networks and data centres. Although no longer enjoying monopoly status, Telkom still acts as an open access network providing network links on a wholesale basis to all mobile network operators through Telkom OpenServe.

When exclusivity regulations were relaxed, there was a phenomenal explosion of investment growth and consolidation in the development of carrier-neutral open access optical fibre networks such as Dark Fibre Africa (DFA), Link Africa (LA), Seacom, Liquid Telecom (including the Neotel acquisition), Metro Fibre Networx (MFN), FibreCo, Vuma and Broadband Infraco (BBI). Many of these network operators provide carrier neutral open-access network infrastructure services. While business models may differ slightly, these represent open access optical networks (OAON).

Also, the big Metropolitan Municipalities of Cape Metropole, City of Joburg, Tshwane Metro, Durban Metro, Ekurhuleni and other smaller municipalities have introduced broadband services over optic fibre and wireless networks albeit with varying degrees of success. The provincial networks in the Western Cape, Gauteng and Limpopo have implemented similar network developments as well to provide access to schools, hospitals and government facilities.

In South African broadcasting, Sentech SOC remains the common signal carrier for distribution of terrestrial audio and television broadcasting services. Sentech also provides services to community broadcasting services, commercial broadcasters and public broadcasters.

On the data and internet fronts, a similar pattern of neutral Internet Exchange Points (IXP) has been developed by the likes of Teraco Data Environments, the South African Internet Exchange (SAIX), Internet Solutions and lately Liquid Telecom’s Africa Data Centres. All these are carrier neutral open access data centres for data interchange between various service providers.

At this stage regulations in South Africa do not permit spectrum sharing and spectrum trading. However, during the last two years, entrepreneurs have transformed poorly performing assets such as WBS, into an LTE-Advanced network operation. Newcomer Rain has succeeded in implementing a Wireless Open Access Network (WOAN) in South Africa without the explicit intervention of government. To date they have signed lucrative wholesale deals with Vodacom and Internet Solutions, while continuing to support their own high-speed broadband wireless network portfolio of services.

A simplified version of WOAN can be found in the Cell-C model of Mobile Virtual Network Operator (MVNO) through which the likes of FNB Connect and Virgin Mobile access the Cell-C network infrastructure to deliver mobile broadband services.

All network operators have invested heavily in the development of their respective networks which require substantial capital resources. While the South African government may be able to license a state-owned and/or empowerment WOAN operator, capital and access to capital remain a key ingredient to ensure sustainability of such operations. In the past, the failure of WBS to invest resulted in a huge spectrum license debt to ICASA. Sentech SOC, which had access to similar high-demand 2600MHz spectrum decided to surrender spectrum back to ICASA after battling to build a sustainable wireless network and also due to inability to finance the cost of holding on to this spectrum without a solid business case.

The anticipated release of additional radio spectrum through the implementation of Digital Terrestrial Television (DTT) in South Africa has still not been implemented more than three years after the recommended International Telecommunications Union (ITU) implementation timeline.

South Africa’s policy and regulatory framework implementation process has failed to unlock the desired 800MHz (790-862MHz) and 700MHz (694-790MHz) spectrum bands (the Digital Dividend 1 and 2, respectively) that are currently occupied by terrestrial television broadcasting services. DTT would have allowed for the release of these Digital Dividend spectrum assets.Litigation between the Regulator, DTPS and related MNO parties on the auction release mechanism of the high demand 800MHz and 2600MHz radio spectrum during 2016 has compounded the problem.

In the absence of the Digital Dividend spectrum, wireless networks have no choice but to scramble for every available spectrum asset in their arsenal, including the re-farming and re-assignment of existing 2G and 3G spectrum assets to enable the implementation of LTE wireless networking.

Intervention by the government may be motivated by a noble desire to improve universal wireless network access and a desire to achieve more affordable broadband pricing models. However, governments do not have a great record of running successful network operations and lack the capital resources to implement an affordable open access national network. Smaller and fragmented network operators do not have the necessary financial muscle to roll out a highly capital-intensive national WOAN infrastructure build. Only the established networks and private capital can handle the network investment required to run a sustainable WOAN operation in South Africa.

Interventions, such as making contributions towards Universal Service and Access Funding, remain a necessary tool to encourage and fund network expansion to underserviced and rural areas provided such funds are managed efficiently.

Once the constraints to access radio spectrum are addressed, there would be sufficient spectrum resources at 700, 800, 900, 1800, 2100 and 2600MHz to sustainably support network demand for no less than four full-service national network operators in South Africa.

Thabo Mofokeng is MD of Solario Technologies and Vice-President of the Information Technology Association (ITA)

 

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