The WiMax conundrum
WiMax is seen by many experts as a technology which can have a very positive impact on the local broadband market.
In the local market where Telkom has a monopoly on ADSL through its stranglehold on the local loop an ADSL replacement technology – which WiMax promises to be – will be of great value.
Current networks
Many companies, most notably MWEB and Internet Solutions, have already built fully operational WiMax networks and they are only waiting for the go ahead from ICASA to offer these services commercially.
In the case of MWEB it already provides close to 1000 residential trial users with broadband services on its network and has proven that WiMax can indeed breach the digital divide in townships like Soweto.
Telkom has launched a commercial WiMax service which is currently used as an ADSL replacement technology in areas where ADSL is not available.
Vodacom will launch its own WiMax service – using iBurst’s spectrum – in April. This service will however initially be aimed at the corporate market with residential offerings to follow later.
What is holding WiMax back?
Many people may ask why we are not seeing the widespread rollout of WiMax in South Africa, and the answer is not difficult: licensing and regulatory issues are holding the industry back.
Until ECNS licenses are awarded it is unlikely that WiMax spectrum will be allocated to new players like MWEB, Internet Solutions and Altech. The awarding of ECNS licenses was however delayed after ICASA decided to follow a more comprehensive licensing process rather than simply converting certain VANS licenses to ECNS licenses.
And ICASA is also busy with an investigation into the way in which spectrum will be allocated to providers, a process which effectively put a freeze on WiMax spectrum allocation.
This, coupled with the fierce battle for WiMax spectrum, could potentially push back spectrum allocation a year or more. Some industry feedback even suggests that companies should not expect WiMax spectrum before 2010.
Use it or lose it
A consequence of the delayed ECNS licensing procedures and stalling on WiMax spectrum allocation means that Sentech, Telkom, Neotel and iBurst hold all the cards in the WiMax space.
The value of this spectrum is already visible through Vodacom’s investment in iBurst which is mainly aimed at getting access to this valuable resource. Vodacom has also made it clear that they intend to increase their shareholding in WBS – the iBurst holding company – if they were to be allocated more WiMax spectrum.
The current problem is that companies like Sentech, Neotel and Telkom are arguably not making the most of their allocated WiMax spectrum, and many industry players are calling for a ‘use it or lose it’ policy.
The absence of true ADSL competition is costing South Africa millions, and the lack of spectrum and suitable licenses are the only things stopping companies like MWEB and Internet Solutions from launching WiMax based alternatives to ADSL to the market.
More spectrum in the hands of companies like Vodacom – which clearly has an intention to invest heavily in rolling out WiMax based services – will also enhance the broadband offerings from the cellular provider.
Vodacom currently only has access to 15 MHz of WiMax spectrum, something which may already inhibit the company and prevent them from launching multiple-Mbps services and residential offerings.
By ‘sitting’ on WiMax spectrum the likes of Telkom and Sentech are seen by many as hampering broadband growth as they are not making the most of the resource they have been given.
This scenario will however only change with effective regulation and policy directives. The lack of effective licensing and spectrum allocation policies are at the heart of the problem, making it unlikely that the situation will be remedied anytime soon.
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