The low-hanging fruit South Africa is leaving to rot

The last week has been heavy with economic data – including the national budget, poor job numbers, and the news that South Africa will move to a level 1 lockdown.

However, one disappointing piece of news that flew under the radar was the announcement of another delay to the spectrum auction by Icasa, says Stellenbosch University’s Bureau for Economic Research (BER).

“The announcement of qualified bidders will now only take place at the end of this month as opposed to last week,” the BER said.

“The freeing up of broadband spectrum is generally seen as a relatively low-hanging fruit in terms of policy reforms that could trigger significant private-sector investment, but frustratingly keeps on being delayed.”

The rapid growth in mobile data use and a lack of additional spectrum have forced Vodacom and MTN – the country’s two largest carriers – to partner with Rain and Liquid Telecom respectively to address capacity concerns.

This increases the operational costs which ultimately leads to higher mobile data prices to consumers.

The planned spectrum auction will give Vodacom, MTN and other networks additional spectrum, with increased network capacity and lower data prices expected to follow.

Delays 

In his state of the nation address on 11 February, president Cyril Ramaphosa said that the process for the licensing of high demand spectrum is ‘at an advanced stage’.

Ramaphosa also noted that there is ongoing litigation on the licensing matter which should provide legal certainty and will hopefully not unduly delay the spectrum auction process.

In January, MTN said that it will take legal action against the terms of the spectrum auction, saying the company and rival Vodacom are being shut out of bidding for the most appealing 5G bandwidth.

Africa’s largest wireless carrier asked the High Court in Johannesburg to correct or set aside elements of the process set to begin in less than two months, according to legal documents.

MTN fears that by the time it’s allowed to take part in bidding, there won’t be any of the most prized elements left, the company said.

Previous attempts to hold the auction have been scuppered by disputes between the government and Icasa over how it should be conducted and who should most benefit.

MTN and Vodacom are by far the two largest mobile-phone companies in South Africa, and the telecommunications department has in the past said that operators with no access to spectrum should be given the opportunity to enter the market and boost competition.

That may also encourage smaller businesses to take part, helping to address inequality concerns.


Read: New wages for workers from next week – and other laws planned for South Africa you should know about

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The low-hanging fruit South Africa is leaving to rot