Philippe Berard, consultant at Coleago Consulting analyses the recent meeting in Johannesburg where telecommunications specialist discussed spectrum issues for the Sub-Saharan region.
On the 18th and 19th of February, industry experts from across the Sub-Saharan region gathered in Johannesburg for the Sub-Sahara Spectrum Management Conference. In a region where fixed networks are often limited if they exist at all, there is fierce competition for spectrum allocation coming from satellite, terrestrial and mobile companies.
At the event, attendees discussed the growing demand for the C-Band spectrum, which is largely used in Africa for satellite communications, and is recommended for re-farming by ITU. African regulators are therefore carefully looking at the countries where the C-Band is currently used for satellite communications and limiting the spectrum allocated for mobile telecommunications to the lower 3.4-3.7 GHz part.
Growing importance of 700 and 800 MHZ bands
On the other hand, the first digital dividend in the 800 MHz is well on track in Africa, and regulators are coordinating with television broadcasting bodies to define the best switchover strategy. At the conference, a representative from the FCC in the US presented the program that the American government used to switch the TV content, and highlighted the importance of subsidising the terminal. However, the challenge in Africa remains that the cost of the new terrestrial or satellite terminals will have to be subsidised by the relevant governments before the switchover can happen. Alternatively, the second digital dividend in the 700 MHz band is potentially faster and cheaper to implement, as the band is not currently used in most African countries. Therefore, some regulators are pushing their agenda to auction 700 MHz before 800 MHz.
Development of data services
For African mobile operators, the share of voice and SMS revenue is close to 80% on average, and operators are keen to keep this steady source of income while developing data services. The spectrum currently used on the continent for voice services is 900 MHz and 1800 MHz, together with 2100 MHz for UMTS. Those bands are very good candidates for re-farming, and one can anticipate that as soon as the mobile broadband services are rolled out there will be a cannibalisation of the legacy services helped by Over The Top (OTT) applications.
The adoption of mobile broadband services is hampered by the device diffusion of smartphones and tablets, which remain highly priced in a continent where the GDP per capita is $1,500 per year. Recent developments in China with handset and tablet vendors like Xiaomi, as well as Taiwanese vendors, are bolstering the penetration of the mobile Internet. There is undeniable pent up demand in urban areas of Sub Saharan Africa with growing cities like Lagos counting 20 million inhabitants, or Johannesburg with 7.5 million.
Spectrum strategy for Africa
It’s therefore important that when valuing spectrum in Africa, mobile operators are cautious of the special situation of competition for spectrum, the difference between urban and rural population with major differences in income, as well as access to infrastructure.
Philippe Berard is consultant at Coleago Consulting.