SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services
Inquiry
INTRODUCTION
1. The South African Communications Forum (“SACF”) is an industry association in
the ICT sector and enjoys diverse membership with leading players operating
in the ICT sector. Our diverse membership allows us to advance views that are
balanced and seeks to promote a sector that is inclusive, competitive, able to
sustain growth and attract investment.
2. The SACF welcomes the opportunity to comment on the Discussion Document
on the Mobile Broadband Services in South Africa Inquiry (the Discussion
Document) as published in Government Gazette No. 42878 General Notice No.
1560 on 2 December 2019. We further welcome the extension of the written
submissions.
3. The focus of our comments is towards creating an inclusive, competitive sector
capable of sustained growth and investment. We would further like to register
the SACF’s interest in participating in any further consultation in this regard
including public hearings.
4. Our comments are set out in two parts, the first has general comments that we
believe is essential to the discussion on data pricing, followed by detailed
comments on the questions posed by the Authority in the Discussion Document.
General Comments
Context
Mobile Penetration
5. There has been an exponential increase in the penetration of smartphones
since 2007, without a corresponding increase in spectrum capacity.
6. South Africa’s smartphone penetration has nearly doubled in the last two years
and is now sitting at over 80% according to ICASA’s State of ICT Sector in SA
2
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
2019.1 SA’s smartphone penetration was 81.72% as at the end of September
2018, compared to 43.5% in September 2016 and 74.2% in September 2017.
ICASA recorded smartphone subscriptions at 46.9 million as at 30 September
2018.
7. This figure needs to be taken in the context that SA’s population was estimated
at 57.7 million as at 1 July 2018, according to Statistics South Africa’s mid-year
population estimates report for 2018.
8. The penetration rate likely reflects that many South Africans have more than
one smartphone, while a significant portion of citizens are still reliant on basic
or feature phones. ICASA did not include feature phone penetration rates.
Smartphone penetration, as at 30 September each year**.
Source:
9. According to ICASA, the total number of 4G/LTE device subscribers in SA in 2018
was over 12.6 million. Gauteng had the highest LTE devices at 4.3 million,
followed by KwaZulu-Natal with almost 1.9 million and the Western Cape with
almost 1.6 million. Meanwhile, the province with the lowest number of LTE
devices was the Northern Cape, where there were only 220 700 in 2018.
1 https://www.icasa.org.za/legislation-and-regulations/state-of-ict-sector-in-south-africa-2019-report
3
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
Total number of LTE devices per province in 2018
Source:
Mobile subscriptions
10. Total mobile voice subscriptions increased by 5.2% from 87.2 million in 2017, to
91.7 million in 2018. This figure must once again be taken in the context that
SA’s population is around 57.7 million.
11. According to ICASA, of the 91.7 million mobile voice subscriptions in 2018, 88%
or 80.4 million were prepaid subscriptions, and 12%, or 11.2 million, were
postpaid subscriptions.
12. Since 2015, the total number of mobile voice subscriptions slightly increased by
1.8%. Prepaid cellular subscriptions slightly increased by 3.6%, and postpaid
cellular subscriptions decreased by 8.2% over the four-year period.
4
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
Prepaid and postpaid cellular voice subscriptions, as at 30 September each year.
Source:
13. In terms of mobile data subscriptions, ICASA recorded an increase of 7.1% from
61.4 million in 2017 to 65.8 million in 2018. Over the four-year period from 2015
to 2018, mobile data subscriptions increased by 12.3%.
Mobile phone data subscriptions, as at 30 September each year.
Source:
14. The above serves to illustrate the fact that the industry has had to operate
within constraints beyond its control.
Network Investment
5
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
15. According to Africa Analysis,2 CAPEX investment growth is outpacing retail
telecoms revenue growth which has compelled operators to innovate through
network sharing deals done between telecoms operators, as they strive to
alleviate the increasing CAPEX pressure.
Figure: Total industry CAPEX for FY 2018
16. Over the same period operators cumulatively investedR100 billion. In the FY
2018, MTN, Vodacom Group, Telkom Group, Cell C and Liquid Telecom
respectively:
Licensee ZAR
MTN SA 9 billion
Vodacom Group 1 billion
Telkom Group 8 billion
Cell C Combined R6 billion Liquid Telecom

17. Three of the large fibre operators a combined R8.2 billion in their networks.
During this period CAGR was 7.5% and CAPEX growth for the same period was
2 https://africaanalysis.co.za/2018/08/31/south-african-telecoms-operators-capex-challenge/
6
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
3.4%. Network investments are anticipated to be ramped up over the next few
years in preparation for the launch of 5G networks that will need more
extensive rollouts by mobile and fibre operators.
18. This combined with the forecast economic growth rate of less than 10% for the
year, anticipated investment downgrade and declining margins for electronic
communications investments, operator profitability is essential to raise funds for
capital projects such as network expansion.
Contribution to the economy
19. The SACF understands the importance of data and its central role to economic
and social inclusion and appreciate the causal link between affordability and
access.
20. Licensees in the electronic communications sector are significant contributors
to the economy through tax, employment, investment, enterprise and skills and
infrastructure development. The table below demonstrates their contribution to
the economy based on information from annual reports from the past financial
year.
21. Communications networks need consistent upgrades and maintenance to
keep pace with the demand for services and capacity – capacity demands
and quality of service standards keep increasing due to evolving services and
the increasing uptake of services. This needs ongoing network investments.
Sustained investment is dependent on regulatory certainty and the profitability
of the company to attract investment. The low economic growth rate,
combined with the looming investment downgrade makes attracting
investment more difficult. Corruption and increasing regulatory costs further
make South African companies ability to attract investment more difficult,
especially when there are more stable alternatives available. All of this is
exacerbated by the fact that the margins in the electronic communications
sector is declining – the electronic communications market is no longer a high
value protected market.
7
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
22. Against this backdrop the mobile market and the mobile data market in
particular has been the focus of various regulatory initiatives over the past three
years.
Figure 1: Timeline of regulatory interventions in the mobile data market between 2016 – 2019
23. The above timeline demonstrates at least four significant interventions over the
past three years if the two interventions are combined. Remedies were layered
on previous remedies without a market review to impact of each remedy. We
note that the first attempt of a Regulatory Impact Assessment (RIA) is the
questionnaire published by the Authority in December 2019.
24. The Authority in its quarterly tariff assessment report, acknowledged that data
prices have been declining over the past 10 years.
2016 Revised End User and Subscriber Service Charter
– Introduced transparency measures
– Required systems development
2019 Amended Revised End User and Subscriber Service Charter
– Removed out-of-bundle rates and introduced the rollover of data
2016
Revised to
the End
User and
Subscriber
Service
Charter
2019
Amended
Revised End
User and
Subscriber
Service
Charter
2019
Amended
Revised End
User and
Subscriber
Service
Charter
2019
Competition
Commission
Mobile
Broadband
Data Inquiry
2019 ICASA
Discussion
Document on
the Mobile
Data Market
Inquiry
8
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
– Required systems development
– Loss of revenue from out-of-bundle rates and data rollover
2019 Competition Commission
– Price reductions on identified
2020 ICASA Discussion Mobile Data Inquiry
– Operators were given three months (initially two months later extended to
three months) to reduce the rates for pre-paid monthly 500MB bundles by
30-50%. While operators were given three months to reach an agreement
on tariff levels with the Commission – the Commission has indicated its
intention for immediate reductions in respect of this goal.
– Spectrum sharing in rural areas.
– Introduction of “lifeline” packages of free data daily for all pre-paid
subscribers -by agreement with operators and the Commission proposes
that ICASA include this remedy in the End User and Subscriber Service
Charter and spectrum licensing conditions;
– Free public Wi-Fi in low income areas, commuter locations and government
buildings among others.
– Zero-rating of services offered by public benefit organisations, to include
access to content in African languages.
– Reviews of roaming rates;
– Accounting separation
25. All of these are to be implemented in the short-term and will undoubtedly
change the market. Therefore, its essential that ICASA, the Competition
Commission or any other regulatory authority assess the changes to the market
before implementing any further regulatory measures.
26. The array of remedies introduced and that are being introduced impacts each
layer of the market at the wholesale level, retail and infrastructure levels. The
licensing of the Wireless Open Access Network (WOAN) in 2021 is intended to
introduce infrastructure competition while stimulating service-based
competition.
27. Each of the remedies introduced is likely to have an impact on the market, and
following the implementation of the Competition Commission’s remedies it is
difficult to envisage it would not have intrinsically impacted the market.
9
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
28. According to market analysts, Africa Analysis, indications are that the findings
of the Competition Commission’s report “will likely wipe out 30% to 40% of
network operators’ revenues given that the prepaid internet bundles actually
underpin data revenue growth.”
29. An unintended consequence is that Competition Commission’s remedies will
also be imposed on smaller operators and downstream.
Co-Jurisdiction
30. ICASA and the Competition Commission (the Commission) have different but
complimentary roles and powers where powers and projects may overlap. This
makes collaborative regulation or at the very least collaboration between
regulators essential. There appears to have a been breakdown in
collaboration despite ICASA and the Commission having recently updated its
MOU.
31. The apparent lack of alignment has resulted in one process being completion
which will undoubtedly change much of the underlying data for this process
and the Discussion Document before the end of this process.
32. The MOU between the Authority and the Commission includes the following
areas for collaboration:
– Facilitate effective coordination for market definition for electronic
communications, broadcasting and postal services;
– Define collaborative roles for each institution in areas of co-jurisdiction; and
– Facilitate information sharing and research between the regulators on
matters of mutual interest.
33. It may instead be more prudent for the Authority to reassess its process and
monitor the implementation and impact of the remedies and then determine
whether any further action is necessary and if so, what is required.
Effects of multiple regulatory processes
10
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
34. In each instance the Authority had implemented a regulatory intervention no
market review was done to assess the impact of the intervention before
imposing further regulatory measures. This is not ideal and the SACF therefore
welcomes the Regulatory Impact Assessment (RIA) that the Authority has
commenced.
35. Upon publication of the Competition Commission’s Data Services Market
Inquiry, the share prices of all listed operators fell by a combined R20 billion.
While, share prices have recovered, measures that impact the market severely
threatens revenue and the companies’ ability attract investments, institutional
investors like pension funds – the consequences are far reaching.
Benchmarking
36. In paragraph 49 of the Discussion Document the Authority states that “prices
are not disastrously high but neither are they as low as they could be,
particularly in comparison to South Africa’s peers in the BRICs countries.”
37. When benchmarking it is important that comparisons are based on similar
parameters such as:
– Market size;
– Access to resources;
– Ownership structures such as state owned or private ownership;
– Quality of service; and
– Scope of coverage.
38. The benchmarking included in the Discussion Document demonstrates that
South African data pricing is largely located at the midpoint of the graphs
despite the scarcity of spectrum. During the Competition Commission hearings
the CEOs of incumbents committed to reducing data prices once high
demand spectrum had been licensed. However, that of course was
contingent upon spectrum being licensed efficiently in blocks that are
adequate to promote efficient rollouts.
39. The Competition Commission found that data prices of some operators are
more expensive than other African countries such as Ghana and Zambia and
11
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
this is in contrast to ICASA’s findings whose report into mobile broadband
services in SA concluded that data costs in SA were neither significantly high or
low in relation to other comparable countries. This leads to policy uncertainties
and this may hinder investment in the mobile broadband sector.
40. The SACF agrees that the Authority’s must use section 67(4) of the ECA which
requires ICASA to prescribe regulations delineating those relevant markets in
which regulatory intervention may be considered necessary.
Section 67(4)(a) of the ECA requires that:
“The Authority must, following an inquiry, prescribe regulations defining the relevant
markets and market segments and impose appropriate and sufficient procompetitive licence conditions on licensees where there is ineffective
competition, and if any licensee has significant market power in such markets or
market segments. The regulations must, among other things—
(a) define relevant wholesale and retail markets or market segments”
41. In determining the relevant market, substitutability is arguably one of the most
critical elements to consider, alternative products and services do not have to
be perfect substitutes but a reasonable substitute. A key constraint in the
mobile market is the lengthy delays in the licensing of critical high demand
spectrum.
42. Fibre and products like Rain’s 5G are substitutes, albeit not perfect substitutes.
Fibre offers higher speeds and more stable data, which is also impacted less
significantly by power outages.
43. We have noted the growing proliferation of fibre rollouts nationally although to
date rollouts have been more focused on urban areas, which is not dissimilar
to the rollout of communications services globally, as demonstrated by the
Market gap and access gap model.
Question 1
In your opinion, is the above approach to market definition adopted by the
Authority appropriate in defining the relevant markets? Motivate your response by
providing reasons and any supporting evidence or data, as far as possible.
12
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
44. The fibre market is expanding and more recently is expanding beyond the
traditional urban areas with Vumatel rolling out in Soweto. This will be a prepaid solution. The introduction of pre-paid services in the mobile market
changed the take-up of mobile services, accordingly this is a new key
development to be watched. Barriers to entry into the fibre market are
relatively low allowing a wider proliferation of the players in the market.
However, one of the key constraints is the burgeoning excessive permitting
costs.
45. The Authority indicates that it considers the SSNIP (small but significant nontransitory increase in price) test as the appropriate tool to define market
boundaries. The Authority has followed process common in various jurisdictions
in using the SNNIP test.
46. While, the market definition is still fairly distinct the growing convergence of
services is likely to reduce the definition due to the dynamic nature of
telecommunications as a result of the rapid pace of change and innovation.
The ECA in section 67(4A)(b) recognises this and requires “a forward-looking
assessment” in determining whether a licensee has market power. More detail is
required.
47. In our general comments we have expressed our concerns over the
duplication between this process and that of the Competition Commission.
48. When considering the effectiveness of competition in the mobile broadband
services market, ICASA must recognize that as a result of the Competition
Commission’s Data Services Market Inquiry, the market where the findings and
remedies of this process will land will be significantly different than the market
in which the Inquiry began. As a result the significant market changes cannot
be ignored.
Question 2
Do you agree with the Authority’s approach to the evaluation of effective
competition? If not, motivate your response by providing comprehensive reasoning
thereof.
13
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
49. Sections 67 (11) and (12) of the ECA promotes collaboration between the
Competition Commission and ICASA. While, we do understand the approach,
we urge the Authority to reconsider this process due to the impact of the
advanced stage of the Competition Commission’s process which has largely
overtaken this process.
50. While, ICASA’s process to determine the effectiveness of competition in the
mobile broadband services market, it is imperative to consider the barriers to
entry and expansion. The prevailing barriers fall outside of the control of the
incumbents.
51. Section 67(4)(a)(b) of the ECA sets out the process to determine the
effectiveness of competition. The Authority correctly looked at barriers to entry,
market shares, which are an initial pointer to market dominance and significant
market power among the operators. However, this analysis cannot be
divorced from the Competition Commission’s process and the proposed which
once implemented will significantly change the market. Further to the that the
licensing of the WOAN will further impact the market, although how is difficult
to predict as this is a model that little or global lessons from which to draw.
52. Perhaps the concept of “of workable competition”,3 barriers and conduct that
limit the achievement of workable competition may be more applicable to the
mobile broadband market.
53. Workable competition refers to a market situation that does not fit the model
of perfect competition, but that has enough features of perfect competition
that government intervention is unnecessary and possibly even
counterproductive. This is what the Authority should aim, at a bare minimum,
to achieve in effective regulation of the sector. To achieve a state of “workable
competition”, it has been suggested that in any industry, there should be at
least 5 reasonably comparable rivals, none of the firms should have more than
a 40 percent market share, and entry by new competitors must be easy. Barriers
to achieving workable competition can be divided into demand side market
features, supply side market features, and firm conduct issues. Demand side
market features include switching costs, network effects of customer
information. Switching costs discourage customers from changing suppliers.4
3 Waverman, Leonard, Meloria Meschi, and Melvyn Fuss. 2005. “The Impact of Telecoms on Economic Growth
in Developing Countries.” The Vodafone Policy Paper Series, 3: 10-23. 4 Kahn, Alfred E. 1988. The Economics of Regulation: Principles and Institutions. Cambridge: The MIT Press
(Reissue Edition)
14
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
54. In the mobile broadband market, it is common for consumers to use, either fibre
or wireless. Operators offer alternatives and tout them as being veritable
substitutes. Some operators are investing in fibre networks, directly or through
investment partnerships. Where no fibre exists, a similar quality service is offered
using wireless, via LTE services. If these prices differ significantly, then switching
costs will inevitably be high.
55. Limited customer information means that customers must incur costs even to
consider whether to obtain service from a different service provider. Supply side
factors are those market features that make it costly for operators to provide
customers with competitive alternatives. These include sunk costs, licensing
restrictions, first mover advantages, incumbent control of essential facilities,
geographical availability of service. The Authority does mention sunk costs but
does not sufficiently take account of the other factors, such as the necessity of
constant network improvements and upgrades which may be attributed to
innovation and evolving technology. This necessarily means that investments in
the mobile industry are worked out within three years at the most. New
technology would have taken over thus the concept of sunk costs does not
apply as readily as it does in other industries.
56. The Discussion Document acknowledges the impact of operators being unable
to access high demand frequency spectrum. Operators have long highlighted
the fact that they have had to refarm spectrum, which is capital intensive, thus
enabling operators with deeper pockets the ability to create more extensive
networks.
57. The Authority could, in addition, have considered such factors as demand
elasticity, supply elasticity, how operators are pricing their services relative to
“caps” imposed in the form of pro-competitive remedies, relative cost
structures among different operators and the size of competitors as well as the
resources available to them.
58. The SACF considers that the goal of effective competition is the promotion of
economic efficiency. Economic efficiency incorporates three concepts of
Question 3
Are there other factors that the Authority should take into account when
determining whether there is effective competition in the identified relevant
markets?
15
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
efficiency: Allocative efficiency, technical efficiency, and dynamic efficiency.
Allocative efficiency is the situation where the economy’s resources are put to
their most valuable uses.
59. The Authority could have asked the following questions in considering the
effectiveness of the market:
– Do consumers have access to alternative sellers for the products they desire
(or for reasonable substitutes) at prices they are willing to pay?
– Do operators have access to consumers for their services and products
without undue hindrance or restraint from other operators?
– Are market prices determined by the interaction of consumers and firms.
– Is it certain that no single consumer or operator (or group of consumers or
operators) can determine, or unduly influence, the level of the price?
60. Additionally, the Authority needed to adopt a wider approach. It is apparent
that not all ineffective competition is caused by operators alone. The Authority
published details of the Licence Conversion Framework in the Government
Gazette No: 29687, published on 7 March 2007. To date, spectrum has not been
licensed to allow entrants market entry, as a result we will never know the
success or potential impact in the market had they been able to enter the
South African market as they were able to launch 4G networks in Nigeria,
Tanzania, DRC and Uganda.
61. Operators have re-farmed spectrum where possible in order to accommodate
growing data demands on their networks. The slow pace of spectrum release
also contributed in large measure to the assumed ineffectiveness of
competition, having led to increase in data prices.
62. There is a growing trend which demonstrates that mobile subscribers use
services such as WhatsApp for voice calling and text messaging. This
demonstrates the growing trend towards data services more than voice and
SMS across LSMs. However, voice and SMS remain important for Business to
Consumer (B2C) communications.
63. The SACF agrees, to an extent, with the Authority’s approach to aggregate the
retail market for voice, SMS and data services. However, caution may need to
Question 4: Do you agree with the Authority’s approach to aggregate the retail
market for mobile services, which includes voice, SMS and data services? If not,
motivate your response by providing comprehensive reasoning thereof.
16
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
be exercised in the assertion that consumers traditionally always buy the three
services together. This is not empirically proven. Operators may provide a
different view where depending on the contribution of data volumes, relative
to mobile voice and SMS may have increased over the course of time to a
state where data calls do, indeed act as viable substitutes for mobile voice
calls. In the absence of data to support this assertion, the SACF proposes that
in future, a separate data voice market be considered for analysis, unless the
Authority can conclusively prove that one cannot and does not purchase data
for calls, independent of SMS and voice minutes. In addition, the usefulness of
SMS in the evolution of mobile broadband is also called into question.
64. The SACF agrees to a large extent with the Authority’s view on the retail mobile
services market. However, in contrast to earlier studies carried out by the
Authority, in 2007, as a precursor to the regulation of mobile termination rates,
the Authority then demonstrated the network effect. This is what is referred to
in this Discussion Document where on-net tariffs could, in some instances, be
lower than the mobile termination rate. This would subtly encourage family and
friends to prefer one network. However, in this current study, the evidence to
point to this has not been apparent. As per our previous comment in respect
to the growing use of WhatsApp voice calls home networks matter less as the
service is network agnostic, i.e. the cost of the call is the same regardless of the
network. As the prevalence of Wi-Fi hotspots grows this will matter less,
particularly for vulnerable groups.
65. It is, therefore, difficult to support the assertion that larger networks may have
a competitive advantage in that respect. This is more so, given the declining
mobile termination rates which are steadily tending towards zero within the
next few years. This necessarily renders the on net / termination rate debate
less necessary.
66. While, South African data prices may not be the cheapest, it is important to
consider the “value” that these networks offer.
67. This value is derived consumer satisfaction resulting from high speeds and
excellent quality offered by the networks. South Africans have tended to
expect high download and upload speeds as standard to a point where speed
is no longer a competitive advantage since all networks have achieved the
barest minimum to allow speed-dependent services such as Streaming and
Question 5: Do you agree with the Authority’s preliminary view on retail mobile
services market? Please provide reasons for your response.
17
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
Video on Demand to flourish. This is evidenced by the fact that all four mobile
networks have, at some point or other, introduced consumer offerings that rely
on high speed data for access.
68. The SACF considers that this is remarkable given the highly publicised lack of
spectrum in the South African mobile broadband market. This should act as a
pointer to the policy makers and the Authority that the faster spectrum is made
available, the faster the market for broadband services would self-correct,
leading to efficiencies which trickle down to high service quality as well as
competitive pricing offers.
69. The SACF agrees with the Authority’s preliminary views on the spectrum market
that spectrum assignments are largely similar in respect of historic mobile and
fixed line operators. However, while lower IMT bands is key to extending
network into rural and enhanced indoor coverage areas, access to higher IMT
bands now presents less of a challenge due to the spectrum requirements of
data networks.
70. The Discussion Document includes the need for spectrum caps to maintain an
even spectrum allocation. This was included in ICASA’s Information
Memorandum (IM). The SACF commented on the implementation of spectrum
caps in our submission on the IM. However, it is critical that spectrum is assigned
in large enough blocks to enable cost-effective network rollouts to enable
price reductions promised by incumbents. Allocations that are too small will not
alleviate the spectrum constraints.
71. However, the Discussion Document does not address efficiencies in relation to
spectrum assignments in relation to the extent of network rollout or subscriber
numbers.
72. Vodafone Policy Paper5 published in 2014 on Spectrum Policy in Emerging
Markets supports our comments above. Below are the key findings from the
Policy Paper.
5 The Policy Paper Series Number 15 Spectrum policy in emerging markets
(https://www.vodafone.com/content/dam/vodcom/files/spectrumpolicy/Spectrum_Policy_in_Emerging_Markets.pdf
Question 6: Do you agree with the Authority’s preliminary view on spectrum
market? Please provide reasons for your response.
18
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
Key Findings
– Delaying the use of spectrum for mobile broadband networks comes at a
significant cost to the economy
– Policymakers must ensure that more spectrum is released quickly, in
sufficient quantities to avoid over-fragmentation, and at the right price
– Excluding existing operators from auctions, or other methods of assignment,
risks missing out on the economic and social gains that are achievable from
affordable mobile broadband access
– There are more effective policy levers to achieve additional economic and
social objectives
– Competition for spectrum between wireless networks is the best starting
point for achieving the benefits of affordable mobile broadband access
73. An operator in SA has around 14,000 towers in South Africa, covering 58-million
people compared with their Nigeria operation where the same number of
towers cover a population of close to 200 million as result of access to more
spectrum.
74. While, tower companies such as ATC have 14% of the site access market and
incumbents the balance perhaps more reflective of the historic context of the
market. The current trend appears to be a shift towards passive infrastructure
sharing including towers.
75. Independent tower companies do provide access fairly and transparently.
However, two key factors impacting network rollouts remains rapid
deployment and the impediments imposed by local municipalities and the
Universal Access and Service Fund (USAF) not being used to fund rollouts.

Question 7
Do you agree with the Authority’s preliminary view on site access market?
Please provide reasons for your response.
19
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
Rapid Deployment
76. Permitting is a critical element in infrastructure rollouts and is applicable to
permitting for base station rollouts as well as laying cable infrastructure. Before
rolling out infrastructure networks are required to apply for wayleaves to local
municipalities. The period for the processing of applications and the cost vary
significantly among local municipalities.
77. This potentially delays rollouts depending on the value turnaround times for the
processing of applications. The availability of networks and the quality of
service is dependent on a networks’ ability to rollout extensively.
78. Notably some municipalities have over the past few years have significantly
increased the cost for wayleave applications and added additional elements
to permitting. The consequence is that this increases the cost of rolling out
services and ultimately the cost to the consumer. This goes against
government’s drive to reduce the cost to communicate.
79. Rapid deployment becomes more critical as we move into a 5G environment
where network rollout is much more expansive.
Accessing the Universal Service Fund
80. The Universal Service ad Access Fund (USAF) was established to among other
things fund network rollouts to under-serviced areas which would allow for site
access sharing. The USAF has been used for this purpose on a very limited basis
despite electronic communications operators having contributed billions of
rands to the fund since its inception in 1997. This would reduce inefficiencies in
the duplication of infrastructure in areas would be best shared and promote
agnostic site ownership in these under-serviced areas.
Restricted Rollouts
81. We have noted that in some residential developments or shopping centres,
owners restrict infrastructure rollouts to a single operator to presumably extort
higher rents, this is anti-competitive and ought to be addressed by the
Authority.
Positioning
82. While, it is ideal for entrants to have prime placement on masts to expand
networks increasing the network footprint, it is impractical and a disincentive to
network rollouts to prescribe this, as the network owner will always have the
most optimal spot on the mast.
20
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
83. Again, much of this process and its relevance has been overtaken by the
conclusion of the Competition Commission’s Data Services Market Inquiry. The
report already proposes accounting separation. Should the recommendation
for accounting separation be implemented this process and discussion would
have been rendered redundant.
84. The SACF supports the Authority’s view that the roaming market is evolving and
that it would largely be best to monitor the developments before intervening.
The introduction of the WOAN in 2021 is intended to extend infrastructure on a
wholesale basis and should add competition to the roaming market and
promote services based competition.
85. The two tables below, adapted from a study carried out Analysis Mason, on
behalf of the Australian Regulator, points to the international convention that
national roaming is generally not regulated.6
Country Overview of national roaming regulations
New Zealand Light touch regulation due to SMP in the
wholesale market
United States Light touch regulation due to SMP and the
regional fragmentation of spectrum
Canada Cost-based price regulation due to SMP and the
regional fragmentation of spectrum
United Kingdom No current regulation, past regulation light touch
and based on fair and reasonable prices for the
new entrant
France No regulation; regulator has intervened to cease
commercial national roaming
Norway Margin-squeeze free price regulation due to SMP,
prices set by “cost-orientation”
6 International examples of national roaming and their relevance to the ACCC’s inquiry in Australia
Presentation for Optus Ian Streule, Andrew Kloeden
Question 8
Do you agree with the Authority’s preliminary view on the roaming market? Please
provide reasons for your response.
21
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
Italy Light touch regulation based on a new entrant
Germany No regulation due to the lack of SMP
Austria Light touch regulation based on a new entrant
Table: Global practice for regulating roaming
Source: Analysis Masson commissioned by the Australian Regulator
Source: Analysys Mason
86. The current model of commercially negotiated agreements have evolved to
where switching is evident based on the best available deal and increased
competition is likely to result in more favourable deals for new entrants. It would
be prudent for the Authority to limit interventions to disputes only.
87. We note the Authority’s proposal to introduce greater transparency. The SACF
must however, re-iterate it comments in respect to the Competition Inquiry.

Question 9
Do you agree with the Authority’s preliminary view on MVNO and APN services
market? Please provide reasons for your response.
22
SACF Response to ICASA’s Discussion Document on Mobile Broadband Services Inquiry
27 February 2020
88. The SACF agrees with the Authority’s preliminary view to monitor the market
prior to considering any interventions. Key to this discussion is that all operators
have the ability to have MVNOs on their networks, but do not suggests that if
MVN operators were discontent with the current service levels they would
move. We urge the Authority to limit interventions to disputes only.