No successful example of a Wireless Open Access Network anywhere
“Data is the new currency” * said Chuck Robbins, CEO Cisco Systems and continued, “Data growth is fueling economies, sparking innovation and unleashing waves of creativity.” But data requires networks.
Currently, South Africa is on the brink of making critically important decisions on the future of our mobile networks in the form of the National Integrated ICT Policy White Paper and it is vital for every citizen that we get it right. In this respect, Minister Cwele is to be applauded for putting Information and Communication Technologies (ICT) center stage to transform South Africa into a thriving, dynamic and world-class economy. However, his proposed model is based on failed attempts elsewhere and we urge him to reconsider in light of industry feedback.
South Africa is seeing a massive surge in the use of data, particularly via mobile broadband as greater numbers of users become connected and own several mobile devices. While data is the lifeblood of the communications industry, the ICT network is the backbone of the modern economy. Without it, there can be no innovation and no transformation.
ICT is an umbrella term that includes any communication device or application, encompassing: radio, television, cellular phones, computer and network hardware and software, satellite systems and so on, as well as the various services and applications associated with them, such as videoconferencing and distance learning.
The ICT white paper introduces a single Wireless Open Access Network (WOAN) to replace the networks of competing mobile operators. However, research shows that countries which have attempted to establish WOANs or similar as an alternative to regular market competition, have not been successful. In fact, all have failed and only one is still experimental. Market competition drives innovation in networks, services and devices. Single monopoly structures tend to deliver the opposite.
Four countries (Rwanda, Russia, Kenya, Mexico) have attempted a WOAN network infrastructure, all based on a public-private partnership and with similar goals of universal coverage, encouraging greater competition and efficient use of available spectrum.
Only Rwanda has seen a rollout and it has not delivered on promises. Two countries, Russia and Kenya, have abandoned WOAN plans, the former due to a failure to agree among industry stakeholders, while the complicated nature of the negotiations finally defeated the Kenyan government which then awarded spectrum to existing mobile operators.
The much touted Mexican example has suffered delays and set backs since the original 2014 deadline and eventually awarded a contract to the Altán Consortium, the only remaining bidder out of 21, in November 2016. The Mexican bidders struggled with the business case and both funding and coverage targets had to be lowered by the regulator. The jury is very definitely still out on Mexico and it cannot be used as an example for South Africa to follow.
In Rwanda, probably the most advanced example of a single network is live, but is not living up to expectations. Launched in 2014 as a public-private partnership between the government and a single supplier, Korean operator KT, as of July 2016, the population coverage was estimated at around 30 percent and the forecast for the target of 95 percent achievable only by the end of 2017. Also, evidence suggests the WOAN has not caused mobile data prices to fall, which defeats one of the main objectives.
Now South Africa is pushing ahead with a similar model, untried in practice, repeatedly failing in planning stages and on a scale and complexity not attempted elsewhere. According to the GSMA (Global Systems Mobile Association), “Irrespective of its motives, the (SA) government is putting a lot of faith in an unproven model. The repercussions, if the project goes ahead, could be irreversible and result in a negative impact to the country’s economy”.
The benefits of market competition between network operators go beyond coverage. Innovation is a key driver in improved services and the introduction of new technologies and this occurs in networks as well as services and devices. While mobile technologies are typically developed at the international level, the speed at which they become available to consumers depends on national policies and market structures favourable to competition.
The full effects and benefits of new technologies such as the Internet of Things depend on South Africa getting ICT policy right.
*Foreword to the Global Information Technology Report 2016