Data price hike warning for South Africa

Telkom warns that Icasa will inadvertently cause degradation in mobile network quality and an increase in data costs.

This is because Icasa plans to take back the radio frequency spectrum that it temporarily assigned at the start of South Africa’s national state of disaster due to the Covid–19 pandemic.

If the regulator follows through on its plan, it will likely lead to a negative effect on the South African economy at a time when we can least afford it, Telkom said.

The Independent Communications Authority of South Africa (Icasa) surprised the telecommunications industry last month when it announced plans to take back the spectrum on 30 November 2021.

While the spectrum assignments were always temporary, the industry was surprised that Icasa would take it back when experts forecast that South Africa will experience a fourth wave of Covid–19 from the start of December.

Telkom argued that government’s Covid–19 lockdown measures drove digital adoption at scale across South Africa — permanently changing how we work, operate businesses, and trade.

Icasa’s decision not to extend the temporary spectrum at the end of November could have unintended consequences, Telkom warned.

The partly state-owned telecommunications operator gave four reasons why Icasa’s decision was premature.

Telkom CEO Sipho Maseko
Sipho Maseko, outgoing Telkom CEO

Firstly, temporary spectrum helps drive economic recovery, Telkom argued.

Citing statistics from the Old Mutual Savings & Investment Monitor released in August, Telkom said that nearly 60% of South Africans earning over R8000 per month continue to work from home.

“What this means is that we must continue as a telecommunications sector, and country, to support remote working with as much low-cost data and suitable access we can manage to drive economic recovery,” said Telkom.

“The issuing of temporary spectrum is part of the Government’s emergency measures to manage the impact of Covid–19,” the company added.

“The country is still actively working to contain the virus, with a fourth wave expected later this year.”

Secondly, Telkom said that statistics show South Africa is increasingly data-dependent.

The company said that Icasa’s withdrawal of the temporary spectrum would have two immediate impacts:

  1. Significantly reduced customer experience
  2. Increase in data costs

“Telkom’s mobile network data traffic jumped from almost 72 petabytes (PB) in March 2020 to more than 87PB in April 2020,” the network operator said.

“This set a new growth baseline in the network, with four months in 2021 exceeding 85 PB by August 2021.”

It said that, on average, the monthly data traffic on Telkom Mobile’s network grew approximately 70% year-on-year compared with pre-Covid–19 levels.

“Icasa’s role in supporting South Africa’s economic revival as a nation will be critical in this time, and this means extending the temporary spectrum window to service the country’s data requirements,” Telkom said.

Dr Keabetswe Modimoeng, ICASA Executive Chair
Dr Keabetswe Modimoeng, ICASA Executive Chair

Thirdly, Telkom said that Icasa needs to weigh the human cost.

“Icasa has a moral responsibility in our view to balance policymaking and national duty in a time of crisis,” said Telkom.

Telkom said that the spectrum facilitates online learning, working from home, and allows businesses to redefine their working models in an increasingly digital world.

“It is a lifeline to surviving the crisis, and Icasa must be commended for its swift action in allocating temporary spectrum,” the company stated.

“The temporary spectrum also came with obligations to enable access to services such as health and education. To date, Telkom zero rates approximately 1,500 sites to enable access to social services.”

Fourthly, Icasa needs to consider the financial losses, especially the government funds lost should it take away the temporary spectrum.

“By taking back the spectrum and shelving it, Icasa is effectively turning off the taps of revenue collection,” Telkom said.

“Icasa collects license fees from the use of the temporarily assigned spectrum. Ultimately the money ends up in the pocket of National Treasury.”

Telkom said that the government—and ultimately the taxpayer—will feel the brunt of this decision.

“This begs the question if National Treasury can afford to have a ‘parked vehicle’ in our current economic climate and recovery?”

Telkom said it appreciates the need for transparent and equitable policy decision making and implementation.

“But, now is not the time to prioritise policy over prosperity. We can only trust the leadership of the regulator will deeply consider the consequences of their decision.”

Now read: Back to square one for spectrum auction — Telkom declares victory

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Data price hike warning for South Africa