Lack of resolution on spectrum allocation damaging growth prospects

The conflict between National Treasury and Department of Telecommunications and Postal Services (DTPS) with regard to the national spectrum auction in the 2.6 GHz band must be resolved and quickly.

Also, DTPS Minister 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 has a direct impact on the ICT industry and on essential economic growth. Growth should the only game in town. 

ICT, or Information and Communications Technologies, is the infrastructure and components that enable modern computing. It is generally accepted to mean all devices, networking components, applications and systems that, combined, allow people and organisations (i.e., businesses, nonprofit agencies, governments and criminal enterprises) to interact in the digital world. ICT is the backbone of a modern economy.

With 9.3 million 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 of becoming a third world country. Government should be grabbing any policy that has the potential to provide growth.   

Leon Louw said, “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.”

A Treasury statement released with the October 25 Medium Term Budget Policy Statement (MTBPS) said 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,” the statement said. 

The Treasury statement put forward the idea of the long awaited spectrum auction but this is at odds with DTPS Minister Cwele who has gone to court to prevent communications regulator ICASA from going ahead with the spectrum auction. In the meantime, Minister Cwele is forging ahead with the ICT Policy set out the 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 four core technologies: data centres, cloud, and big data.

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 3.9 million 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 says that every $1 of additional ICT spend made 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 communications have 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.

Louw said, “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. Universal service conditions can improve access for low-income households. And a competitive auction can sharply reduce data costs.”

Minister Cwele needs to abandon the idea of an open access wireless network and introduce market and investor friendly policies.

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