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EXCLUSIVE: Spectrum auction: A shot in the arm for SA telecoms

By , CEO of Ignition Telecoms and head of its subsidiary, MVN-X
South Africa , 04 Feb 2021
Valde Ferradaz, CEO of Ignition Telecoms and head of its subsidiary, MVN-X.
Valde Ferradaz, CEO of Ignition Telecoms and head of its subsidiary, MVN-X.

The long-awaited move follows an announcement by the Independent Communications Authority of South Africa (ICASA) that it has opened up applications for the spectrum licences.

The regulator has set reserve prices per spectrum band and the auction is due to be held in the first quarter of 2021. While the auction looks set to be delayed by legal challenges, it has been widely welcomed in principle.

The auction will be a huge boost for consumers. This is really good news. It was anticipated and we welcome it heartily.

What it means is more bandwidth will be available. In some areas of coverage, networks are running at capacity and consumers are experiencing congestion. Increased bandwidth means less congestion and a better customer experience.

The market is opening for new competition. It will see new entrants to drive up competition and inevitably drive down data prices.

Spectrum is a valuable commodity and this underutilised spectrum will now be monetised by the government. It will make the market fairer and improve cell phone reach. This is about making data more accessible. This has huge long term implications for improvements to basic services and needs such as health care, employment and education.

Key development

ICASA’s announcement is a key development in the telecoms sector.

The sector has been agitating for access to the release of more spectrum, which will enable the acceleration of services like super-fast 5G connectivity.

Opening up the spectrum also comes after movements like #DataMustFall and damning rulings from the Competition Commission around data pricing, that has hit consumers.

The cell phone market in South Africa is due for welcome change as a result of increased competition. The market is already saturated and providers will increasingly be distinguished by service offering, relevance and affordability. Mobile networks spent billions rolling out infrastructure and maintaining this, which meant they were not overly focused on customer needs.

This changed with competition and as a consequence companies like MVN-X have thrived.

As an MVNO, a company doesn’t have to own a mobile network infrastructure to participate in the provision of airtime and data.

The spectrum auction will be a shot in the arm for telecoms.

Whether we like it or not, existing players will have to buck up to stay relevant and retain their wallet share.

In December 2020, Rudolph Muller wrote how competition in the telecommunications industry had benefited consumers. Muller urged the government to “learn from its previous mistakes and trust in competition to achieve lower mobile data prices”.

As the telecoms market evolves, the power shifts from networks operators to customers and those who can best provide the most embedded value to their customers.

The industry is technically complex with many layers of value, like infrastructure, e-commerce, and over-the-top players. This sophistication and complexity is often expensive and means the barrier to entry in the telecoms sector is high.

Going forward industry players will continue to share synergies to reduce this high barrier to entry. It will demand co-operation to reduce the costs associated with technology and infrastructure.

But, the future of connectivity is not about telecoms and tech.

It is about making the lives of customers easier, more affordable and offering relevant services.

Pioneering companies

Take pioneering companies like Apple, for example. Last year one of the world’s richest men, Warren Buffett invested a chunk of money into Apple and CEO Tim Cook said although Apple was in the tech industry, it made consumer products that were at the intersection of ‘technology’, the liberal arts and the humanities...we make products for people.

Smart devices and smart communities are the future. The leaders in this space will be those who can make these complex and expensive ecosystems simple and accessible to all.

In South Africa, smartphone penetration is at 91% and the COVID-19 pandemic has contributed to an explosion in the use of technology in response to the new, digital way of living and working.

Over the top communication apps like WhatsApp, Facebook, Zoom and Teams have seen a spike in the demand for data. The telecoms industry is primed and hungry for the spectrum auction.

Networks will be investing heavily and so are our clients, the MVNOs. The fight for customer attention and wallet share can only benefit the consumer. We are really delighted about this. There is so much space for growth in the mobile and data business. This is in line with the digital evolution.

It should never be a monopoly and service providers will be judged on their price and their value offering, which is as it should be.

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