Spectrum impasse damaging SA's growth prospects - TechCentral

Spectrum impasse damaging SA’s growth prospects

Leon Louw

The conflict between national treasury and the department of telecommunications & postal services over a national spectrum auction in the 2.6GHz band must be resolved — and quickly.

At the same time, telecoms minister Siyabonga Cwele should abandon his attempt to prevent communications regulator Icasa from pressing ahead with the auction because lack of allocation of this scarce radio frequency is having a direct impact on the ICT industry and on economic growth. Growth should the only game in town. ICT is the backbone of a modern economy.

With 9.3m unemployed, serious, basic infrastructure services backlogs, rating agencies about to downgrade the rand to junk status, and a massive black hole in the budget, growth is the only hope for South Africa to drag itself back from the abyss. Government should be grabbing any policy that has the potential to provide that growth.

Unemployment is so severe that a national state of emergency should be declared. Jobs will only come from growth. Any policy that actively prevents opportunities for growth must be abandoned.

National treasury said with the 25 October release of the medium-term budget policy statement that the delay in allocating spectrum has had the effect of constraining growth across the economy. “Lack of radio frequency limits the ability of businesses to deploy new technologies and contributes to the high cost of broadband,” it said.

Treasury’s statement put forward the idea of the long-awaited spectrum auction, but this is at odds with Cwele, who has gone to court to prevent Icasa from going ahead with the auction. In the meantime, Cwele is forging ahead with implementation of the ICT policy white paper, released in October 2016, which would establish a wireless open-access network (Woan) with the available spectrum allocated to new black players. The industry reacted to this policy proposal with dismay and the top six operators have entered into behind-closed-doors discussions with the minister to resolve the way forward. However, signs are that this is not progressing well.

Technology is the driver of economic growth. Spectrum is vital for the roll-out of new technologies and innovation, which will drive economic growth, create jobs and allow South Africa to take advantage of the Internet of things and the other technologies.

Digital divide

Last month, the United Nations published its Global Broadband Progress Report 2017, which showed that while 48% of the global population is now online, around 3.9bn people still do not have access to the Internet, and that the digital divide between developed and developing countries is growing. South Africa is falling behind the developed world.

The report said that every US$1 of additional ICT spend could bring a return of $3 to a nation’s GDP. This is significant money and should encourage government, service providers and entrepreneurs to strive for growth.
Mobile communication has been one of the success stories in South Africa and the mobile operators are being hampered by the lack of progress on resolving the critical spectrum shortage.

We are moving into a world in which virtually everything will be mobile data-dependent. Universal service conditions can improve access for low-income households. And a competitive auction can sharply reduce data costs. A well-designed spectrum auction can promote transformation and improve competition as new participants enter the market.

Cwele needs to abandon the idea of the Woan and introduce market- and investor-friendly policies.

  • Leon Louw is executive director of the Free Market Foundation

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