Will LTE spectrum be wasted?

In December 2011 the Independent Communications Authority of South Africa (ICASA) unveiled their spectrum assignment plan for the 2.6 GHz and 800 MHz bands.

Sentech and WBS (iBurst) are the only companies which currently have 2.6GHz spectrum, and apart from the near-empty iBurst WiMax network, this valuable spectrum is laying idle.

Considering that 2.6GHz spectrum is sought-after for launching LTE services, it is a travesty that this national resource is going to waste.

Vodacom and MTN previously said that the only thing which is keeping them from launching commercial LTE services is a lack of LTE spectrum.

There is however one problem for the two cellular giants: ICASA’s current spectrum assignment plan does not allow them to apply for LTE spectrum.

Considering that Vodacom and MTN are the two players which are ready to launch national LTE networks, this is a strange decision from the regulator.

ICASA is planning to assign one 2.6GHz block to a wholesale player, which leaves the door open for the cellular operators to start a special purpose vehicle for LTE.

LTE Spectrum Assignment Plan
LTE Spectrum Assignment Plan

Questions have been raised about ICASA’s spectrum assignment plan, especially considering that all of the companies with the finances and expertise to roll out LTE networks are prohibited from getting 2.6GHz and 800MHz spectrum.

ICASA is clearly trying to encourage competition in the wireless market, but the cost of this exercise may well be that the spectrum is not used to serve consumers.

Sentech is a prime example of what may happen when a company is assigned spectrum based on magnanimous plans but without the proper expertise and funding to execute these plans.

Industry experts give their views

MTN SA CEO Karel Pienaar said it is of critical importance that any governmental policy relating to high-demand spectrum strikes the right balance between continued capital investment in current broadband networks on a sustainable basis, the increased roll out in rural areas, and the introduction of new players in this space.

Karel Pienaar
Karel Pienaar

“The rollout obligations and associated time-frames have serious dependencies on the success of the digital migration. If the digital migration is delayed until December 2015 as some parties may wish it to be, the rollout of 70% of geography will be incredibly difficult to achieve,” said Pienaar.

“Any rollout of network to achieve this type of coverage obligation will of course also depend on access to significant capital because networks of this nature are driven to a large extent by achieving significant economies of scope and scale. MTN is of course ideally placed to make that happen.”

Pienaar suggested that the allocation should follow global trends, for example, in the design of the auction rules.

“There are countries around the world (both developed and emerging) that have gone through the licensing process and it is our view that our regulatory bodies should benchmark in line with these fore-running countries,” concluded Pienaar.

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Will LTE spectrum be wasted?