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THE ANNOUNCEMENT of proposed new regulations by telecoms regulator Icasa concerning the allotment of radio frequency spectrum to provide WiMax wireless broadband services has caused a fair amount of consternation. The proposed regulations have laid out guidelines with regard to the way the spectrum will be allocated, how it will be divided as well as stipulating the empowerment credentials for potential bidders.
Although the empowerment component has caused substantial uproar – with Icasa proposing any company wanting to be allocated spectrum would have to have an empowerment ownership of 51% or more.
Siyabonga Madyibi, senior regulatory officer at Internet Solutions (IS), one of the companies angling for a slice of the WiMax pie, says in order to be allocated spectrum, companies first have to be awarded an individual electronic communications network licence. The requirements include a 30% empowerment shareholding and all the companies have structured their shareholding to comply with that.
“The 51% now proposed effectively moves the goalposts and none of the companies looking to offer WiMax services are positioned to comply with that,” says Madyibi. Just as concerning as the empowerment requirements is Icasa’s proposal to license six operators each with only 20MHz of spectrum, instead of the 30MHz that the industry had been looking for.”
Ian Isenberg, GM for the teleco business unit as IS, says in order for an operator to run an equivalent service with only 20MHz of spectrum instead of 30MHz it would have to deploy between 20% and 30% more base stations. “That would dramatically increase the amount of capital required to launch a competitive offering, playing into the hands of the incumbent telecoms operators, which have much deeper pockets than the likes of IS,” Isenberg says.
“It isn’t just a matter of putting up more base stations,” he says. “Each base station requires a lot of infrastructure that supports the network – generators, UPSs and data lines to link the base station to the core network. All of those add to the final cost the customer will be charged. It also makes it difficult to use the technology to service business customers with dedicated data rate services, as the amount of bandwidth that can be delivered per base station is limited,” Isenberg says.
But that shouldn’t have come as a surprise to the industry. At the launch of WBS’s WiMax offering, Icasa chairman Paris Mashile hinted the regulator was looking at leveraging the allocation of WiMax spectrum to bring more players into the telecoms sector and that the amount of spectrum allocated per operator would be in the 20MHz range.
However, a report from US-based research house Frost and Sullivan warns that mobile WiMax services – based on the 802.16e specification – run the risk of being outdated before they’re deployed unless they start to roll out before year-end 2008.
Madyibi hopes the consultation process with regard to those regulations will be concluded by end-September at the latest and that IS would be motivating strongly for the regulations to be modified to a more usable form.
Whatever the outcome of further hearings into the allocation process, the fact remains there are going to be more applicants than the 2.5GHz to 2.7GHz band can accommodate. With Neotel confirming last week that it’s interested in acquiring spectrum, the list is bound to get longer.
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