Open up networks for cheaper mobile data - TechCentral

Open up networks for cheaper mobile data

Duncan-McLeod-180-profileInternet service providers have done a commendable job of bringing down the cost of fixed-line broadband in South Africa. Although the actual connection fees to Telkom remain high (thanks to Telkom’s monopoly over the “last mile” into homes), the price of uncapped and large-cap data across those lines is much more affordable than it used to be.

This begs the question: can the same model be applied in mobile with similar beneficial results? After all, the majority of South Africans rely on the mobile networks for access, so could unleashing market forces help slash prices?

The Internet Service Providers’ Association (Ispa), which represents most of the country’s ISPs, thinks that not only that it can be done, but that it should be – and that regulatory intervention is needed to get us there.

In recent weeks, the association has repeated calls for communications regulator Icasa to force the country’s mobile operators — Vodacom, MTN, Cell C and Telkom Mobile — to open their data networks on a wholesale basis to ISPs, which would then be able to compete with each other to provide the best prices and services to end users.

“Ispa argues that the absence of a wholesale mobile data offering constitutes a lost business opportunity for mobile operators and an obstacle to deepening broadband penetration,” the association said in a recent statement.

Uncapped ADSL or large, capped ADSL accounts have become the standard in the fixed-line broadband market because of competition between ISPs. There’s no reason this shouldn’t happen in mobile, too, it argued.

“We believe that Icasa should take the necessary action to enable a simple resale model for mobile data to stimulate the same sort of consumer-friendly competition,” said Ispa chairman Graham Beneke. “It seems like regulatory pressure is necessary to spur the introduction of the necessary wholesale product to create this new market.”

The relationship between MTN and Afrihost could point the way to how such a regulatory framework might work, the association said.

For the past 18 months, Afrihost, an innovative ISP that traditionally focused on the ADSL and Web server hosting markets, has resold MTN’s mobile data at prices well below what the mobile operator itself charges, suggesting a generous wholesale discount has been offered to stimulate market demand. (MTN recently acquired a controlling 50% stake in Afrihost for R408m.)

When such a genuine wholesale offering is made, consumers receive immediate price benefits, Ispa said.

About five years ago, MWeb, led by then-CEO Rudi Jansen, shook up the ADSL market, introducing the country’s first uncapped products and changing the way those South Africans lucky enough to afford fixed-line broadband used the Internet. Today, many of us don’t think twice about streaming video online for hours on end. Those restricted to using mobile data only are not as fortunate.

Open access?

Open access?

But could uncapped mobile data even be an option? Already Telkom Mobile claims to offer unlimited voice and data on its Completely Unlimited plan, but it’s pricey, Telkom’s coverage is not as good as its rivals’ and there’s a fair-use cap of 10GB, after which the connection is throttled. Vodacom, MTN and Cell C offer (expensive) unlimited voice deals, but they haven’t extended these to data.

Even if Icasa creates a clear model by which mobile operators were required to open their data networks to resellers, it’s unlikely there would be a proliferation of uncapped options unless the operators are given access to much more radio frequency spectrum. Telkom is able to offer a (kind of) unlimited data option only because its network is empty. The other operators do not have that luxury.

Indeed, mobile may never be well suited to delivering the high-bandwidth applications like video on demand that fixed-line users have come to expect. Spectrum is just too limited and the demand for other applications just too great.

That doesn’t mean Icasa should shy away from exploring Ispa’s proposal. The wholesale model has worked well in fixed lines, and its feasibility should be explored in the mobile, too.

And, when government finally gets around to finalising its policy on licensing new spectrum, it should consider making at least some of it available on the condition it’s used on an open-access basis, meaning everyone has fair and equal access to it to provide services to consumers.

  • Duncan McLeod is editor of TechCentral. Find him on Twitter
  • This column was first published in the Sunday Times

7 Comments

  1. Ofentse Letsholo on

    Totally agree but knowing MTN and Vodacom they would fight it as it will affect their revenues in an unprecedented way. This spectrum issue needs to be sorted out because it is holding SA back. Man SA with uncapped mobile data would be on a world class level though we are and will be far from that even after allocation of spectrum. The wait is on and hoping for the best. 🙂

  2. Greg Mahlknecht on

    I don’t believe it’s a good solution; as the article says, there is a hard limit as to how much data can be delivered by wireless, by the spectrum – and with cheap bandwidth demand will always outstrip what is possible to be delivered. Unlike fixed line, where you can install new cables to get around capacity problems.

    > those South Africans lucky enough to afford fixed-line broadband used the Internet

    Here’s where the solution lies. People shouldn’t be “lucky” to have fixed-line broadband, it should be as affordable as electricity and water. Homes could then have a wifi ADSL routers and the issue of mobile broadband becomes a non-issue as they offload to the superior and cheaper fixed-line bandwidth. Mobile services should be the fallback service, not the primary one.

    We know ICASA is severely strained for resources and battles to get stuff done; they should be concentrating on cracking fixed-line rather than mobile. Telkom has bragged in the past that 100% of their exchanges are ADSL capable. Isn’t it sad that it only services 1mil households with fixed line internet, if the majority of people are able to get it? 3.5mil people have Telkom fixed lines; why not use some USAASA money to buy them all an ADSL/Wifi router and then get Telkom to get a dirt cheap 256kbit uncapped account? That’s the speed the guys out in the middle of nowhere get anyway, with their EDGE connections.

    >introducing the country’s first uncapped products

    Certainly not the first uncapped by a long way, but the first affordable uncapped. It pretty much killed everyone else’s uncapped products overnight and within a few months everyone had a competitive product out.

  3. Off topic but perhaps a rethink might be in order…’as affordable as electricity and water”. I don’t know about yourself but I find my electricity is anything BUT affordable and with the clown show at Megawatt Park about to bump up the wholesale power tariff by staggering 25% in a matter of weeks I would imagine that ISP’s and bandwidth will become the least of J6P’s worries.

  4. Greg Mahlknecht on

    Point taken, but I think you know what I mean – there’s a very cheap basic tier for electricity and water which allows the poor to get access to the services. India has done something similar for internet (cheap 256/384kbit uncapped connections) and it seems to have worked well. That’s enough internet to change peoples lives.

  5. MTN Sky has unlimited data with a 10GB fair use cap. The statement in the article that only Telkom offers it is incorrect.
    A wholesale model can work but as Greg says capacity on mobile is limited. Unlike Europe, our population is spread out over much more land which requires more fibre and microwave backhaul to be built as well as more usable spectrum. If we flood the market with cheap mobile data at this stage (which we would all love, don’t get me wrong) we will find ourselves all back here complaining about the speed and throughput more than we currently do. What we need first is for government to do something about spectrum allocation and do it fast.

  6. Sure, spectrum is important.
    But please don’t be fooled into thinking it’s the only issue. Another article, published today on Techcentral: “Technologies to supercharge mobile broadband” gives some useful multiplier values: –
    New technologies (3G, 4G, etc.): x5
    More spectrum: x 25
    Smaller cells: x 1600
    It’s this last one which is obviously by far the most important

  7. > Indeed, mobile may never be well suited to delivering the high-bandwidth applications like video on demand that fixed-line users have come to expect.

    According to Cisco’s latest VNI figures: “Mobile video traffic exceeded 50 percent of total mobile data traffic for the first time in 2012.”
    We have a way to go to catch up, methinks.