Icasa proposals could cost SA billions - GSMA - TechCentral

Icasa proposals could cost SA billions – GSMA

The Independent Communications Authority of SA’s (Icasa’s) proposals for licensing high-demand broadband spectrum are “fundamentally out of line with international best practice”, the GSM Association (GSMA) has warned in a submission to the authority.

The GSMA is a powerful industry lobby group that represents about 800 of the world’s mobile operators, including SA’s incumbent players. It says in its written response to Icasa’s draft documents related to licensing of spectrum in the highly coveted 800MHz and 2,6GHz bands that the authority’s proposals would double the number of operators in SA from four to eight and directly assign spectrum to entities that have a “poor track record to date in using spectrum efficiently”.

“Empirical evidence and theoretical arguments suggest that the best balance between competition and cost efficiency in a county like SA is achieved when there are three or four operators,” the GSMA says.

Icasa’s proposals, if implemented, will probably lead to “limited and inefficient use of new spectrum by entrants that have little or no expertise in providing mobile services and [that]have limited access to capital markets to make the substantial investments required”.

The association says Icasa wants to assign a substantial portion of the newly available spectrum to two wholesale-only operators. Though this “may have merit in terms of generating economies of scale in the provision of radio access networks … the Icasa proposals fail to capture this effect, while retaining the main disadvantages of such a model in terms of limited innovation and limited opportunities for product and price differentiation”.

In its submission, the GSMA sets out a number of economic scenarios based on Icasa’s draft proposals. It suggests the best way of growing the economy and creating jobs is to assign the new spectrum to the incumbent mobile operators.

“The Icasa proposals for assigning the new spectrum would lower the net present value of GDP by between R450bn and R510bn over the period 2014 to 2025 when compared with the assignment of the spectrum to existing operators,” it argues.

“The Icasa proposals would reduce the net present value of government tax revenues by between R95bn and R110bn when compared with the base case [of licensing the spectrum to existing mobile operators],” it says. “The economic benefits of moving from the Icasa proposals to the base case assignment is equivalent to 500 000 additional jobs, at current SA wages.”  — Staff reporter, TechCentral

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