South Africans will have to wait for some time more before they can benefit from mobile broadband speeds of up to double the current throughput, as a much-needed spectrum auction has yet to get off the ground.

Several operators have been testing the viability of long-term evolution (LTE), commonly referred to as 4G, but there is one major obstacle – it cannot be rolled out commercially until the Independent Communications Authority of SA (ICASA) makes more spectrum available.

LTE offers throughputs of up to 100Mbps, a much faster experience than the fastest currently available 42Mbps. However, mobile firms cannot upgrade the current networks to LTE because there are not enough handsets in the market that would benefit from the higher speeds and capacities.

As a result, mobile firms face a chicken and egg situation. To encourage adoption, faster speeds need to be available, but it does not make sense to spend billions on a new network unless people can use their current handsets to benefit, and prices have yet to come down enough to encourage rapid uptake.

In addition, current spectrum allocations are rapidly becoming saturated, so networks are investing in increasing the capacity on what they already have available, in a bid to relieve some of the pressure. Vodacom alone will spend R6.3 billion in SA this year, and MTN another almost R4 billion.

Waiting game

Operators argue they need more spectrum in the 2.6GHz and 3.5GHz ranges before LTE can become a commercial reality.

According to the GSM Association, there were already 51 LTE network commitments in 24 countries by October this year – a 96% increase in the past eight months. Demand will grow to the point where there are 430 million subscribers on 4G by 2016, says Juniper Research.

However, Juniper said despite this demand, the total subscriber base for LTE services would only represent 6% of mobile broadband users by 2016, as technologies such as HSPA remain standard.
Wireless Business Solutions (WBS) will beat SA’s leading mobile operators to the punch by introducing a commercial fully-fledged 4G network in the first half of next year, because it already has spectrum in the coveted 2.6GHz range, as well as at 1.8MHz.

Vodacom, Cell C and MTN have been testing the viability of LTE, but are waiting for ICASA to auction much-needed spectrum, as there is not enough space in current allocations.

MTN, SA’s second largest operator, has run a short trial in Cape Town, which follows a large-scale LTE pilot covering more than 100 sites in Gauteng. The company has ‘refarmed’ some of its 1 800MHz sites in Cape Town.

MTN expects to commercially roll out this new-generation network nationally within the next two to three years, once the regulator allocates the required spectrum.

Kanagaratnam Lambotharan, MTN SA CTO, says before launching commercially, MTN will need more network capacity. “We need as much spectrum as possible.”

To move to commercial LTE, MTN will need spectrum in the 2.6GHz channel, as well as space in the digital dividend, says Lambotharan. In addition, there needs to be a “commercial ecosystem” such as handsets and modems before the company can go live, he notes.

Vodacom CEO Pieter Uys says “LTE is a must”. He notes that 6% of the network is LTE ready, but it is difficult to jump over because the shift can only be made if all handsets support the faster technology.

Uys says, as a result, operators need to run two networks at the same time, which will require more spectrum. There will be a day when the 2G network is ‘refarmed’ to 3G, which is not far away, but as long as a large number of phones do not even run on 3G, 2G cannot be turned off, he adds.

It is difficult to define a business case for a huge amount of investment without access to more spectrum, says Uys. However, due to the changing of the guard within the Department of Communications, ICASA is still waiting for a directive as to how allocating spectrum should proceed.

Former minister Roy Padayachie had indicated his intention to issue a directive over how spectrum was to be dealt with, but he was recently replaced by Dina Pule" rel=tag>Dina Pule after a Cabinet reshuffle.

ICASA spokesman Paseka Maleka says the authority is now waiting for a directive from Pule and is not yet sure how to move forward.

Hurry up and wait

Richard Hurst, Ovum’s emerging markets analyst, says ICASA has been dragging its heels over allocating spectrum in these ranges. Two requests for proposals for space in the 2.6GHz and 3.5GHz ranges have been cancelled, and an expected audit of where free space is has yet to get off the ground.

Globally, operators are rolling out LTE in North America, parts of Europe, and the developed parts of Asia, says Hurst. Locally, however, operators are waiting for more space to be made available, especially in the key 2.6GHz, 3.5GHz and 800MHz ranges.

Before South African operators can expect space to be freed up in the 800MHz range, SA has to turn on digital television, and move off analogue. ICASA has previously indicated this range will not be freed up before digital migration is completed.

SA is moving to digital television using the European DVB-T2 standard, and expects to finish the move by the end of 2013, about 18 months before the International Telecommunications Union stops protecting analogue broadcast.

However, migration has been beset by delays, and it is increasingly likely the deadline will not be met. By the end of November, several key issues that would make switch-on possible had yet to be wrapped up.

Space in the 800MHz range is needed to expand penetration into rural areas, as the frequency makes it cheaper for operators to roll out because fewer base stations are required. Frequency in the 2.6GHz and 3.5GHz bands are needed for more built-up areas.

Hurst adds that new handsets are also key, as the current 2G and 3G devices will not be viable on LTE. He expects devices to start arriving in the second quarter of next year.

Spiwe Chireka, IDC’s African region programme manager for telecoms, says SA is still in early stages when compared to the rest of the world. She says WBS will be the first commercial launch of the latest technology, as other operators are still testing the viability of LTE.

Chireka says overall, LTE development and roll-out has been slow. She expects MTN to be the first mainstream operator to go live, with a commercial launch either early next year or the year after.

However, this depends on the department giving ICASA the go-ahead to auction spectrum. Dominic Cull, founder of Ellipsis Regulatory Solutions, notes that it is highly unlikely that spectrum will be auctioned before 2013, given the department’s intention of issuing a policy directive in the first quarter of next year.

The big operators such as MTN, Vodacom and Cell C, which do not have access to spectrum, are holding off until ICASA frees up frequency that is seen as vital for LTE, says Chireka.

Chireka says the amount of devices available is also a problem, as most of the handsets currently in the market cannot handle the speeds offered by LTE. For more people to buy compatible devices, economies of scale must kick in so the price drops, she adds.

SA relies on global uptake before the country is likely to benefit from lower prices, as that is when their will be momentum in handsets and modems, says Chireka.

LTE is expensive to roll out as it is a new technology, she says. However, the upgrade is forwards and backwards compatible, so operators can get base stations ready.

In addition, operators have been investing in backhaul and have been laying fibre in the ground, Chireka notes. She explains that LTE requires “big pipes” to carry the higher amounts of traffic that it enables.

Operators also cannot afford to sit back and wait for more frequency, says Chireka. They have to invest in upgrading the current networks and get as much uptake as possible from the existing device base, she says.

This leaves them in a position where they will also want to sweat their assets, as they have pumped billions into the infrastructure.

In addition, as there are still old 2G handsets in the market, the faster speeds will be wasted because the older phones will not be able to benefit, says Chireka. She points out that 83% of current subscribers will not benefit if the network is switched over overnight.

Chireka adds the global standard for LTE is to use frequency in the 2.6GHz and 3.5GHz bands. Equipment has been designed for those ranges and MTN’s re-use of its 1.8GHz spectrum will mean that infrastructure and devices will have to be customised, adding to the price, says Chireka.

Operators need two sets of spectrum; one to continue running the current network, and another to switch on LTE, she concludes.