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Competition the only viable solution for the frequency spectrum war

The Vice- Chancellor & Principal of the University of Johannesburg, Prof Tshilidzi Marwala recently penned an opinion article published in the October edition of Forbes Africa magazine..

The Minister of Communications and Digital Technologies of South Africa Stella Ndabeni-Abrahams issued, on the 26 July 2019, policy directions on the allocation of the frequency spectrum. The frequency spectrum is what telecommunications companies need in order to make it possible for people to communicate messages through a cellular phone. For example, a telecommunications company requires spectrum for its customers to communicate and download content from the internet. Frequency spectrum, like any other commodity, is a scarce resource.

The availability of the frequency spectrum will facilitate the introduction of the fifth generation, or 5G, communications, and associated technologies. The frequency spectrum is, in essence, the new gold of telecommunications companies. 5G communication, which combines ubiquity, reliability, scalability, and cost-efficiency is a crucial driver for the introduction of Internet-of-Things. Currently, the United States and China are battling on who should dominate 5G technology. Simply put, 5G technology is a telecommunications technology that is sufficiently localised that it can transmit information very fast. Instead of having telecommunications towers located to serve many people, in 5G technology “hubs” are located near users, such as in street poles to serve fewer users and thus facilitate fast transmission of data. How this war over 5G between the United States and China will end, is a subject of debate and different investors are putting their money on whom they think will win this war.

Now, what is the frequency spectrum? To understand the frequency spectrum, we need to understand frequency? Mobile or cellular communication is achieved using electromagnetic waves. Electromagnetic waves emanate from a branch of Physics that united electrical and magnetic forces. It is the physics that gave us electricity and electric motor. The electric motor is used to power electric cars, fridges, and assembly lines. Assembly lines gave us mass production of goods and services. Electromagnetism also gave us Einstein’s theory of relativity as well as the modern way of communicating via cellular phones.

Frequency is the number of waves that are transmitted in one second, and it is measured in Hertz (Hz). Heinrich Hertz was a German scientist who demonstrated the existence of electromagnetic waves. Radio broadcasting uses one frequency to broadcast to many people. For instance, the South African radio station Power FM broadcasts at a frequency of 98.7 MHz. Therefore, the transmission equipment that Power FM uses communicates 98.7 million electromagnetic waves every second. The receiver in our radios will capture this signal by tuning at 98.7 MHz.

Telecommunications companies give users a dedicated channel of communication. In this regard, if Thendo calls Denga, then these two need a dedicated channel to communicate so that no third party can hear their communication. As these telecommunications companies have multiple users, they need multiple frequencies, rather than one frequency as is the case in a radio broadcasting. The multiple frequencies are what is called a frequency band or spectrum. In this regard, telecommunication companies require frequency bands such as the Global System for Mobile Communications (GSM) band (900 MHz band).

Within the constraints of its scarcity, the frequency spectrum needs to be allocated in such a way that its usage benefits the South African society. What are some of the essential considerations needed in the allocation of spectrum? Firstly, it should facilitate investment. In this regard, there is no point in allocating spectrum to a company that has no expertise in the deployment of telecommunications infrastructure. If we allocate spectrum to such entities, we will end up with a rental market where entities acquire spectrum licenses in order to sell it, and this harms consumers because operators pass the costs to consumers.

The second consideration is that the allocation of the spectrum must facilitate competition. To ensure competition we need more players in the market. In South Africa, 400 telecommunications players who require spectrum cannot access it. More competition leads to lower costs of data. Therefore, the South African mantra “data cost must fall” cannot be achieved outside the promotion of competition. South Africa can only achieve the “fourth industrial revolution” if the 5G platform is enabled and in a cost-effective manner.

The third consideration is that it should facilitate entry by new players, especially small and medium enterprises. The famous scientist Charles Darwin in his conception of the principles of evolution observed that a system that does not allow for new players could not survive. In this regard, if the South African telecommunications market does not allow for new players, it shall die.

In South Africa, to ensure that the new policy directions meet these attributes for the efficient telecommunications industry, the Department of Communications and Digital Technologies contracted the Council for Scientific and Industrial Research (CSIR) to develop a framework for allocation of spectrum. This framework uses the 80/20 principle, where 80% is functionality and 20% for industry transformation considerations. We can have a competitive and transformed telecommunications industry if the public-private skills balance is adequate. The private sector exploitation of the public sector, a situation that is dominant in many African countries, can be eliminated if we follow these guidelines and educate our public sector officials.

*The views expressed in the article is that of the author/s and does not necessarily reflect that of the University of Johannesburg.

prof tshilidzi marwala
Prof Tshilidzi Marwala Vice- Chancellor & Principal of the University of Johannesburg
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