Big-picture thinking is required to ensure a fair and equitable outcome in the allocation of the available spectrum slated for 4G roll-outs in South Africa.
A great deal has been written, and said, about keeping the country’s best interests in mind, both in terms of the economy and the ICT sector, when dealing with the current spectrum auction debacle.
The issue is polarised along political lines, with the communications regulator, Icasa, opting to forge ahead with its auction process, with its hefty R3bn reserve price, while telecommunications minister Siyabonga Cwele seeks to oppose the process via the courts, deeming it unlawful and to the exclusion of smaller players.
Unfortunately, if both choose to pursue their respective strategies in this regard, they’ll likely find they’re playing a zero-sum game, both in terms of the South African economy and the ICT industry.
While it makes fiscal sense to sell off all the spectrum to the highest bidders — the three incumbents with the deepest pockets — and it makes operational sense, too, as they have the infrastructure in place to ensure the “digital dividend” spectrum can be put to use almost immediately, what Icasa’s approach fails to consider is the opportunity cost to the local economy.
By setting a portion of the spectrum aside for smaller, black-empowered industry players, at a lower cost, Icasa will get the best of both worlds.
Firstly, it will enable the major operators to leverage the economies of scale inherent in their existing network infrastructure to meet the mandate of expanding coverage to underserviced areas.
More importantly, though, it will also ensure that sufficient spectrum is available to smaller providers to innovate, and therefore grow and proposer. This approach, with its potential spin-offs in job growth and an even greater financial boost to the economy and fiscus than the auction — albeit over a longer term — therefore also meets the social mandate sought by the minister.
Simply allowing the incumbents to monopolise the spectrum, which they already have the economies of scale to leverage, means little in terms of job creation and industry growth in the ICT sector.
Yes, this spectrum may help the broader economy to grow as vertical markets find ways to leverage it, but it does little to empower smaller businesses. Nor does it drive growth and innovation in the broader ICT sector.
To this end, a hybrid allocation model would be best to meet the needs and the potential that this spectrum holds for both economic growth and the growth of the local ICT sector. Accordingly, Icasa and the department of telecoms & postal services shouldn’t be fighting an either/or battle in determining how this spectrum is allocated.
- Romeo Kumalo is CEO of Washirika, a pan-African investment holdings/private equity company with investments in the communication, construction, clean energy and ICT sectors. He is former CEO of Vodacom/Vodafone International for all Africa markets
