ICASA’s WiMax decisions raise concern

The Independent Communications Authority of South Africa (ICASA) recently published its final decision on the awarding of radio frequency spectrum.

The document focused on various issues, including the selection process of suitable operators, how much spectrum should be allocated to each operator and whether licences will be awarded to national or regional operators.

Not enough spectrum

On the question on how the remaining spectrum will be allocated, ICASA decided to allocate 20MHz per operator on a technology-neutral basis. Six additional national licences will be issued in the 2.5GHz band.

This decision has drawn criticism from Intel, one of the main companies driving the WiMax technology. Intel has long said that each player should get at least 30MHz of spectrum, excluding guard bands.

Intel SA’s business development manager, Danie Steyn, says that a 30MHz allocation per company would have made much more sense in the local environment. Steyn points out that more spectrum makes it more cost effective to roll out commercial WiMax services, and this in turn will bring down the cost for the end user.

Limited spectrum not only increases the cost of providing WiMax services, but also limits the speeds which can be offered to end users.

Neotel’s CTO, Angus Hay, agrees:  “Neotel is of the opinion that it would not be possible to operate a WiMax wireless access network at maximum efficiency, and pass on benefits (such as speed, price and related service quality) if operators are each awarded only 20MHz of spectrum in the 2.5GHz band.

“In particular, this spectrum limit places a limit on the transmission speed possible, which is one of the key benefits of a technology like WiMax to the end customer. Neotel therefore shares the view of many WiMax experts that 30MHz per operator (a re-use factor of 3, with 10MHz per sector, three sectors per base station) is the least required for an operator to build a network to deliver true broadband services to the customer,” Hay said.

According to Steyn the higher costs associated with only 20MHz of spectrum per operator will encourage WiMax licensees to target high-end customers like businesses first to cover their initial investment.

Who will get spectrum?

One of the biggest questions was which criteria ICASA should use in considering applications for awarding WiMax spectrum in both the 2.5GHz and 3.5GHz bands.

Here ICASA decided that it will start with a pre-qualification beauty contest phase followed by an auction. This, ICASA said, will give it the leverage needed to implement both its economic and social objectives.

The following issues will be taken into consideration during the pre-qualification beauty contest phase:

  1. Minimum 51% black owned with an emphasis on woman in line with broad based BEE;
  2. Levels of participation in management and control in line with the Employment Equity Act;
  3. Affirmative procurement in line with the Preferred Procurement Policy Framework; and
  4. Commitment to skills development of historically disadvantaged individuals in line with the Skills Development Act.

The fact that ICASA will give preference to companies with a 51% black shareholding is likely to be met with resistance from some of the front runners who may not qualify for this requirement.

ICASA has also indicated that it would only allow national operators to use the 2.5GHz band which disqualifies smaller internet service providers.

The high costs of rolling out WiMax as well as the need for an individual electronic communications network services (ECNS) licence mean that deep pockets are needed, something which will favour players like Internet Solutions, MWEB, Altech, Verizon Business and Vox Telecom.

ICASA has already indicated that it is not planning to provide more spectrum in WiMax bands to incumbent operators such as Telkom, Vodacom and MTN which further raises the question as to which six telecoms providers will in fact be interested in rolling out a WiMax network.

Consolidation in the market with MWEB’s imminent sale and MTN’s potential acquisition of Verizon Business further complicates matters.

More players in 3.5 GHz band

On the question of how the remaining spectrum in the 3.5GHz band should be subdivided, ICASA decided that the remaining spectrum will be considered for 2x15MHz per municipal geographic area.

In the 3.5GHz band ICASA believes that smaller operators should be accommodated within local municipality geographical areas.  ICASA said that between 9 and 20 can be issued within the available spectrum.

Despite the potential problems of spectrum allocation many operators may welcome the fact that ICASA has finally concluded this process which started in 2006.

The licensing conversion process is however another stumbling block which will have to be concluded before WiMax spectrum allocation and widespread roll out will be possible.

ICASA WiMax spectrum discussion

 

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ICASA’s WiMax decisions raise concern