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Spectrum shortage and merger by any other name in South Africa

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  • Howell, Bronwyn E.
  • Potgieter, Petrus H.

Abstract

Radio spectrum is a key input for mobile operators and the structure of the industry is strongly related to and influenced by the ownership of spectrum licenses. Spectrum is usually allocated for a limited duration and may or may not be tradable which further complicates the interaction between spectrum ownership and the retail market for mobile services. The adoption of a new constitutional system in 1996 in South Africa created the opportunity for importing a fresh set of recommendeded institutions and policies for telecommunications. This eventually included an independent telecommunications regulator (ICASA), the budget for which nevertheless comes form the responsible Minister. ICASA announced an auction of spectrum in the 2.6 GHz and 3.5 GHz bands in May 2010 and issued a tender for the design of the auction, but this was postponed several times and finally abandoned (Song, 2011). The same thing happened again in 2016 (Paelo & Robb, 2020). Late in 2020, the regulator again announced an auction, due to take place during 2021 but by the beginning of the year, two of the four national operators had already announced that they would go to court to stop the auction. A shortage of spectrum (or, inefficient assignment of it) is blamed for South Africa's relatively slow LTE speeds, among other things. The response of operators has been to innovate using roaming and network sharing agreements. By historical accidents, the country has two wireless networks in addition to the four licences mobile operators. The paper looks at how the de facto industry structure has been determined by spectrum holdings and sharing arrangements and asks how spectrum management could be improved. We observe that although the number of mobile operators has effectively aeen reduced to 3 (a number which would raise concern in some circles) there exist a variety of arrangements between the 3 and also other spectrum and network operator. The smallest of the 3 mobile operators is still not able to offer a nationwide mobile service without a roaming agreement but at the same time the two larger operators depend critically on spectrum and roaming agreements themselves, mainly with the two physical data network operators that function as wholesale providers.

Suggested Citation

  • Howell, Bronwyn E. & Potgieter, Petrus H., 2021. "Spectrum shortage and merger by any other name in South Africa," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238027, International Telecommunications Society (ITS).
    • Handle: RePEc:zbw:itsb21:238027
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    References listed on IDEAS

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    1. Anthea Paelo & Genna Robb, 2020. "Comparative approaches to key issues in the economic regulation of telecommunications markets in South Africa, Tanzania, Zambia, and Zimbabwe," WIDER Working Paper Series wp-2020-84, World Institute for Development Economic Research (UNU-WIDER).
    2. Howell, Bronwyn E. & Potgieter, Petrus H., 2020. "Politics, policy and fixed-line telecommunications provision: Insights from Australia," Telecommunications Policy, Elsevier, vol. 44(7).
    3. Woroch, Glenn A, 2020. "Spectrum Concentration and Performance of the U.S. Wireless Industry," Department of Economics, Working Paper Series qt8vv381jt, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    4. Glenn A. Woroch, 2020. "Spectrum Concentration and Performance of the U.S. Wireless Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(1), pages 73-105, February.
    5. Howell, Bronwyn & Meade, Richard & O'Connor, Seini, 2010. "Structural separation versus vertical integration: Lessons for telecommunications from electricity reforms," Telecommunications Policy, Elsevier, vol. 34(7), pages 392-403, August.
    6. Genna Robb & Anthea Paelo, 2020. "Competitive dynamics of telecommunications markets in South Africa, Tanzania, Zambia, and Zimbabwe," WIDER Working Paper Series wp-2020-83, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Spectrum auction; network sharing; South Africa; ICASA;
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