Expect data prices to drop quickly after mobile networks get spectrum

Mobile data pricing remains relatively high in South Africa, although this is somewhat mitigated by competition between mobile operators and a number of unique offers such as Rain’s data-only SIM.

The biggest obstacle to dramatically lowering data prices, though, is the lack of spectrum being made available to mobile networks in South Africa.

Due to the constant delays experienced by the digital migration project, a large portion of valuable sub-1GHz spectrum is used by analogue television transmissions.

If the digital migration project had been completed by now (the initial deadline for the project was 17 June 2015), the price of mobile data would be significantly lower than it is at the moment.

A mobile spectrum auction is scheduled to be held before April 2019, however, and MyBroadband spoke to Vodacom CEO Shameel Joosub about the potential effects of spectrum acquisition on mobile data prices.

Spectrum and cost-to-carry

Joosub told MyBroadband that the sooner Vodacom can obtain additional spectrum, the sooner it can improve its mobile data offerings.

“Access to spectrum has a big impact on data prices and the sooner we can get access to it, the sooner we can drive and deal with the underlying cost to carry a MB of data,” he said.

He added that while the spectrum auction scheduled to occur before April 2019 is a step in the right direction, only higher-frequency spectrum will be available.

“It is important to note, though, that even when we have the option, it is only 2.6GHz spectrum that will be available,” Joosub said.

“The 700MHz and 800MHz spectrum is still subject to the digital migration, so that needs to be sped up as well so that we can see the full impact of it.”

Joosub added that ideally, even the allocation or auctioning of 5G spectrum should be hastened, as this would help operators drive down their underlying cost to carry and pass on these savings to customers.

Implementation and development

The development of infrastructure can also be greatly limited by the lack of spectrum.

“Today we invest about R9.3 billion in infrastructure every year, but there is only so much capacity that a site can hold,” Joosub said.

“So you optimise, you re-farm spectrum, you do whatever you can, but technically there comes a point where you can’t anymore, and so you have to build additional sites.”

However, if an operator had access to the required spectrum, they could use their existing sites and drastically reduce their costs.

When asked how quickly Vodacom could offer reduced data prices to customers once it acquired the requisite spectrum, Joosub said this rollout could happen very quickly.

“The faster you can roll it out, the quicker it affects your cost base,” he said. “The 2.6GHz spectrum will help us in high-density areas like Sandton and so on.”

“It will be phased in over time, but you will see a much bigger price decrease which happens much quicker, but it just depends how quickly we can get access to the spectrum,” he said.

Joosub added that once mobile operators receive the required spectrum, customers should begin to see the benefits rolling out almost immediately, depending on how quickly operators can roll the technology on their networks.

He said that in Vodacom’s case, this infrastructure rollout would happen quickly, particularly in areas where it has capacity issues.

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Expect data prices to drop quickly after mobile networks get spectrum