London — Market changes are in danger of creating a situation where African regulation hits the buffers. With just over half of African countries having anything like true competition, now is the moment to ask: what will African regulation V2.00 look like? Russell Southwood looks at the contribution dynamic spectrum might make to opening up the market to those who are under-served or not served at all.
African regulation V1.00 - which has lasted over two decades - is coming to a close. It has taken many forms but the basic assumptions have been nearly the same across all countries. One major assumption has been that "Big Telco" will deliver investment and services and that competition will keep it honest, keep prices low and encourage innovation.
Just over half of the countries in Sub-Saharan African have got a level of competition where there are three mobile operators. But as anyone familiar with African communications knows, the level of competition has been falling. Tigo's rather stately exit from the continent is the most dramatic event but there are many operators up for sale or in financial difficulty.
Operators have been challenged by the irreversible shift from a number of highly controlled vertical markets including voice and SMS to an all-data platform. A data-centric future means that all services will be delivered via the same digital platform including services like financial payments.
This digital future entails substantial new investment in infrastructure that can carry large amounts of data yet with lower rewards than voice and SMS has given in the past. This has put the traditional MNO business model - historically based on voice and SMS revenues - under considerable strain.
Under financial strain, MNOs are less rather than more likely to keep expanding their coverage area and will certainly not take a risk on going to areas that are marginal in terms of market return. The only way to move beyond the dead end of a small number of "licensed profit-takers" is to open the market to a wider range of data service providers who are more willing to take risks and innovate quickly. The market needs a more complex ecosystem of data providers to make a reality of the digital transformation in Sub-Saharan Africa.
With the Dynamic Spectrum Alliance's conference taking place in Washington DC next week (25-27 June - see here) there will be a number of announcements that will move dynamic spectrum centre stage for African Regulation V2.00.
For a long time, dynamic spectrum (formerly called TV White Spaces) seemed marooned in the "chicken-and-egg" situation that blighted the chances of WiMAX becoming a mass technology. Without demand, you can't lower the cost of the CPE but in order to get demand, you need to lower the cost of the CPE. The only way to untie this Gordian knot is to find enough demand to get off the runway.
Microsoft's President Brad Smith has done this by committing to roll-outs in the USA. It has done deals in the last 17 months with16 states of the USA to cover one million Americans with wireless broadband connectivity using dynamic spectrum technology. He set a target of moving from 2 million connected in this way to 3 million by 2022.
He announced a dramatic reduction in dynamic spectrum CPE equipment from US$800 USD to US$300USD signed a framework deal with Adaptrum. He showed Adaptrum's first dynamic spectrum chip to a public audience (see here).
The technology will be available almost immediately in Africa (also from 6Harmonics) and wireless vendor Redline have picked up the technology and are offering equipment.
On the African regulatory front, South African regulator ICASA is in the process of committing to a dynamic spectrum database but is still debating whether it does it itself or opens up the market to external providers. It may make an announcement on this at the Dynamic Spectrum Alliance's Global Summit next week. They are issuing specific dynamic spectrum licenses but these will work on fixed spectrum until the database is in place.
Malawi has announced full deregulation of the space and has issued dynamic spectrum licences. The legislation is awaiting gazetting. Mozambique is following them down the same path. Nigeria has been more complicated as there are separate telecoms and broadcast regulators. The broadcast regulator NBC currently owns it but NCC will regulate it. The latter has done workshops on the issue as part of the process of deregulation and has given 7 test licences.
Ghana is further along with the regulation in draft form but has not yet issued licences. Microsoft has signed an agreement with BLUETOWN (one of whose investors is Ali Mufuruki) to light up 800,000 users in Eastern Ghana to a fibre cable financed by Danish development agency, Danida.
Kenya issued test licences but has not turned these into full licenses after the test period. Early dynamic spectrum pioneer Mawingu (which now has 100,000 users) had to shift to using ISM bands but a close observer believes that it will "start using dynamic spectrum again in the next six months."
On the innovation front, outside of the continent, a US College is experimenting with Massive MiMo (Multiple Input, Multiple Output) where you put several bands together to convey signals across them and is getting 1.2 gbps.
Dynamic spectrum works and can be used to deliver communications services in markets in Africa that are either under-served or currently stand little or no chance of getting a market-delivered service. The next generation of African regulation needs to seize this tool with both hands.
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