Infrastructure sharing SA’s biggest telecom hot potato

March 22nd, 2018, Published in Articles: EngineerIT, Featured: EngineerIT

At the recent DTPS workshop to consider the input from industry on the Electronic Communications Act (ECA) Amendment bill, industry was criticised for failing to implement infrastructure sharing and the Department of Telecommunications and Postal Services (DTPS) and the Independent Communications Authority of South Africa (ICASA) were taken to task for not enforcing infrastructure sharing as envisaged in the current ECA. It seems those who shout the loudest get most of the attention, but in real terms nothing has really happened.

Infrastructure sharing is an emotive issue and some see it as anti-competitive. If Company A builds a great competitive mobile network why should it share its network at cost with Company B to compete? It does not make much business sense. There is, however, an urgency to connect the unconnected. The industry has to play a role but cannot be expected to take sole responsibility.

The DTPS see the wireless open access network (WOAN) as a liberation of the communications industry by introducing many new operators in a service-based competitive market, sharing their infrastructure at cost, while most of industry see this as creating the monopoly that South Africans suffered for many years. The debate continues!

In 1996, ICASA published the outcome of a study it conducted about infrastructure sharing and questions around whether the current provisions of the ECA were adequate or if additional regulations should be developed. The industry was not in favour of additional regulations as the majority of respondents said the current provisions in the ECA were adequate. The view was that infrastructure sharing would not solve the lack of connectivity in deep rural areas, and alternative investment mechanisms (such as funds from the Universal Service and Access Agency of South Africa (USAASA Fund) may need to be explored to encourage network rollouts in areas that do not have infrastructure and are not considered financially viable.

A perfect example of a financially unviable network was Telkom’s gusty roll-out of DECT systems in underserviced areas in the mid-nineties as part of its license agreements. Apart from technical issues, the communities could not afford the service. The Meraka Institute, part of the CSIR, piloted a community mesh network administered for a small fee by a community member. Similar systems have been piloted in the Eastern Cape and are still operating. These are two examples of systems that should have moved beyond pilots and should have received more funding and taken to full implementation. The questions remains: should government use funding from USAASA to facilitate rural connectivity? Over the past decade, industry has contributed billions of Rand to the fund to connect the unconnected.

The issue of infrastructure sharing is a conundrum. MTN said at the workshop that in the mobile industry, infrastructure is shared on many fronts, yet the DTPS does not believe it is enough and ICASA is accused for not actively enforcing infrastructure sharing at equipment level.

Participating stakeholders in the ICASA study went to great lengths to address infrastructure sharing matters, including how the Authority could improve the regulation of the practise, inter alia, by strengthening the existing Facilities Leasing Regulations. Based on the submissions of the stakeholders, the Authority concluded that the ECA and the Facilities Leasing Regulations effectively cater for infrastructure sharing. In this regard, the Authority intended to actively monitor and enforce implementation of the Facilities Leasing Regulations and applicable provisions of the ECA to promote and facilitate infrastructure sharing. The Authority also undertook to assess whether there is a need to review and or augment the current Facilities Leasing Regulations to deal with, inter alia, local loop unbundling.

ITU has a different view for Africa

In a recent edition of ITU News Magazine, industry sources cited that Africa’s telecommunication companies (telcos) can potentially yield overall cost savings of between 15% and 30% and reduce capital expenditure up to 60% by combining resources and reducing individual infrastructure needs. This would reduce the pay-back period of investments and also ensure faster deployment of new technologies. Collaboration on network infrastructure and services is a proven global model. As such, incumbents in Africa will perhaps have to consider opening up their networks to generate new revenue even if that means they will get a “smaller piece of the pie”.

But will it really work? Take the example of seven submarine cable systems with an estimated combined capacity of 40+ Tbps completed in sub-Saharan Africa since 2009, which have transformed the availability of bandwidth in Africa’s coastal regions. Most African countries now have some form of fibre connectivity to one or more submarine cable landing station. Meanwhile, competition has crashed the wholesale price-per-megabit-per-second by over 80%. These are important gains but it remains astounding that Africa still has such low bandwidth penetration levels. With 29% internet penetration, Africa has the lowest internet rate in the world, compared to other continents: Western Europe (84%), Middle East (60%) and North America (88%).

But opinion differ. Funke Opeke, a Nigerian electrical engineer, founder of Main Street Technologies and CEO of Main One Cable Company says network sharing appears increasingly inevitable if African operators are going to survive.

“Also, major cities continue to receive the majority of telecoms investments while developing areas are neglected because they do not constitute a promising market. To address these issues, it’s becoming clearer that information and communication technology (ICT) players will have to come together more to share network infrastructure and services. This is an opening step that many African countries will need to go through, because in the most advanced markets, we’re seeing infrastructure sharing as well as a range of non-traditional players working with larger operators to provide greater services that improve lives well beyond mere connectivity”, Opeke said.

“Take cashless banking for example: it’s amazing to watch the significant shift from cash to cashless banking. What has happened could not have been achieved without a high degree of collaboration and considerable push from banking regulators. Perhaps this is a model African telecom regulators can use as a model.”

Will infrastructure sharing become a reality in South Africa? Unlikely.