Seminar on Spectrum Management: Implications for effective Parliament oversight on policy and regulations

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Communications and Digital Technologies

19 June 2020
Chairperson: Mr B Maneli (ANC)
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Meeting Summary

Video: Portfolio Committee on Communications, 19 June 2020
Audio: Seminar on Spectrum Management: Implications for effective Parliament oversight on policy and regulations

The Portfolio Committee on Communications convened for a seminar on spectrum management and the implications for effective parliamentary oversight on policy and regulations. The seminar was presented by the Learning Information Networking Knowledge (LINK) Centre. The Centre first gave a detailed historical background and the progression of spectrum usage over the last few decades. This account also encompassed the technological advancements in the application of spectrum over the years, up until its current use by sectors such as government and the broadcasting industry.

Members appreciated the presentation, saying it was fascinating and that it was good to have some intellectual stimulation. They asked about the health risks associated with frequencies or cellphones.

The Link Centre then elaborately presented on spectrum in the South African context. The Centre said that Parliament must provide oversight on Ministers and regulators; it must also scrutinise legislation and the effects of the spectrum on health, market structures, process as well as national competitiveness, as with the Fourth Industrial Revolution.

Members asked about the exact legislative role of the matters raised by the entity during the presentations. When dealing with global peace, one uses the weapons one has to enforce it and the problem here was around advanced countries who dictated their agenda. Could this issue be fixed by South Africa assessing what it carried according to a global competitive perspective as an influencer? On a domestic level, there is an analogy which says “policy does not mean law and law does not influence regulations”.

The Members commented that investing in network infrastructure was expensive and those who invested at an advantage, as the state invested before it allowed competition. Where does it place SA in this event, particularly in terms of the transformation agenda of the country to bring those that have been previously disadvantaged on board in this sector?

The next presentation was about the current issues relating to spectrum, including the Fourth Industrial Revolution (4IR), COVID-19, 5G network development, high-demand spectrum, Wholesale Open Access Network (WOAN), 6G mobile and spectrum governance. The 4IR Commission was created by President Cyril Ramaphosa; it produced a draft diagnostic report in November 2019. The 5G network would require flexibility, responsiveness and understanding of markets and technologies, as well as accountability and transparency. The Independent Communications Authority of South Africa found that it had a lot spectrum which was due to expire three months after the termination of the state of disaster - which would be later than 30 November 2020.

South Africa must consider what it required from the 4IR and who would be lobbying for this. This also posed the question of whether the Global System for Mobile communication (GSM) networks, which all had a large amount of spectrum, had to be shut down; worked well with long distance, rural areas and low frequencies. GSM could also be used for 5G and 6G. Older customers may have to be persuaded to give up their GSM phones and move on to something more modern. There should also be a political decision to balance old and new uses and the interventions required to get people to make the switch. It must be noted that many cars had GSM in them and it should be considered how this would be replaced.

Members asked about the allocation of spectrum and SA’s alleged failure to allocate spectrum in the past – which led to it being slightly backward in comparison to other countries. Has this failure retarded SA’s growth and development as an industry? It was amazing how swiftly spectrum was allocated in light of the COVID-19 pandemic. Does the entity think that spectrum was allocated efficiently by the Independent Communications Authority of South Africa? Would the Link Centre recommend that the Authority continues with temporarily leasing mobile spectrum to networks?

Meeting report

Briefings by the Learning Information Network Knowledge Centre

Prof Ewan Sutherland, a Visiting Adjunct Professor at the Learning Information Networking Knowledge (LINK) Centre, University of the Witwatersrand, delivered all three presentations to the Committee.

Presentation one: Spectrum

Prof Sutherland recounted that in the early days of radio, the frequency range had been greatly reduced to have community radio stations with a low-power FM in a small area. This frequency could now be used many times over the country. There were a growing number of satellite frequencies but if the frequency were to be refocused, it could either be used in different parts of South Africa (SA) or in different countries.

He said that broadcasting had initially been analog and then moved to digital. Digital was very important as some were terrestrial and from the earth while others were satellite and in space. This caused a whole range of problems. The higher frequencies indicated more localised radio such as in communities and cities.

Digital audio broadcasting had now not been successful as the equipment was large, making change very challenging. Most mobile phones have an FM radio and to use it; a headset must be plugged in so that the cable of the headset could be used for an antenna. Television broadcasts also changed frequencies as they were initially in black and white and then moved on to colour. Different economies used cable distribution networks as it was difficult to reach a certain range and now had many more channels. Satellite distribution was sophisticated and reached various geographies such as MultiChoice DStv and On Digital Media. Screen technology and capacity to transmit the signal of television also showed improvement.

The launch of digital broadcasting in SA took place in 2008 and this gave a wider variety of choice as there were more channels and it was of better quality, but the economic catch was that it required new studios, transmitters and receivers which needed to become digital. He said that someone from the SABC had complained to him that the Football World Cup had been much easier in Germany because the country had access to adjoining countries with equipment, whereas SA could not draw on high quality, high resolution, outside digital broadcast, to cover the matches.

The set top boxes convert the digital signal to the analog signal to allow people to listen, but this was superseded by people streaming audio. This raised a challenging economic question of how to combine the two if people would stream audios.

In most homes one would find wireless or cordless technologies, and cordless was in the 900 megahertz band, which was an unregulated band. Remote controls used infrared light as opposed to radio. Wi-Fi was now commonplace and in homes it used a band that was lightly regulated and the equipment was regulated at very low power so that all available Wi-Fi networks could be seen, such as those in next door apartments. Increasingly, multiple devices were being run in homes and new spectrum for Wi-Fi needed to be found. Bluetooth also operated in the home, but this was over very short range. Contactless modes of charging mobile phones used variable frequencies as it was electromagnetic. Microwave ovens operated in the 2.8 Gigahertz band, but should not interfere as it was sealed in a box. Many things were networked – such as doorbells, lights, smart-locks for deliveries where a door could automatically be opened when the delivery person was recognized; bathroom scales connected to Wi-Fi to tell an application a person’s weight. Peleton and Hydrow allowed people to row together at a safe distance; this was a part of the Fourth Industrial Revolution (4IR) [See presentation slides for a list of networked appliances].

Since the onset of the COVID-19 pandemic Wi-Fi and internet access would be required a lot more. There had also been a move to more personal networks such as cordless earphones, earbuds, fitness trackers and health trackers which indicated blood pressure and sweat analysis. These devices could connect to smartphones which actually operate as computers, resulting in multiple radios and antennas as well as gyroscopes if one moves.  For example, a 4G smartphone would take two sim cards so that it could connect to different mobile networks; has five cameras, GPS , two Wi-Fi bands and four GSM bands which were only applicable in Africa. There were also 3G and 4G bands which meant that when the smartphone was taken to a different country, it would search for whichever network works best and could possible drop down from 4G to 2G or 3G to allow for communication and gives an indication of how sophisticated smartphones were.

A 5G smartphone had even more bands on it, including another Wi-Fi band. It contained a geomagnetic sensor which was actually a compass, as well as an antenna and a set of aerials in order to connect to multiple networks. This could also pick up networks in a store for contactless payments.

There were also spectrums used by government, like emergency services such as the police, military, ambulances and firefighters. Government had large amounts of spectrum and did not always indicate what this was used for. Civilian radar systems allowed one to use an application to see which aircrafts were flying over SA. Airports, aircrafts, seaports and the military all had radar systems for missiles or ships. There were commercial uses and military uses for radar systems which made it difficult to uncover.

Optical fibers ran into homes, but it was a bit more challenging to find satellite links which were located around the country. If, for example, a game park was being run in a rural area or a mine location, this would be at the end of a satellite connection. 

Over the generations such as in the 1980’s a connection was found to be screwed on in the back of a car and ran on the battery, and this produced analogue voice. The 2G network was introduced in 1993 and it was used for digital voice and text messaging. In 1996 prepaid was introduced. More of spectrum eventually required for a growing number of users. If there was more spectrum bandwidth, one could have more customers and build more sites. Another cell could be used and also split, but this would be costly. People were already talking about 6G and quite some work had been done on this.

[Refer to presentation slides for a graph on the Japanese Ministry]. The graph indicates that the data rate increased ten thousand times in thirty years.

The European Union had indicated a complex set of frequencies which was expected to be used in 5G. All the different bands would be used together for 5G and spectrum would be taken from broadcasters.

He said that Wi-Fi was a fairly familiar concept to many people, but the original band was not enough and so a second band was allocated for it; a third band was on the way. The US had approved it and others would follow. This was because so many people were using multiple devices in that space. There were severe limits to the power that could be used so as not to cause interference beyond one’s own premises or campus. Fairly large amounts of mobile data were carried on Wi-Fi. The speed of Wi-Fi6 had now been increased to nine gigabytes per second. He commented that this was very impressive.

New spectrum meant considering the use of higher frequencies and, in turn, this meant shorter distances which engineers referred to as densification of networks. This meant that there would be more masts and antennas in urban areas as well as greater costs. Signals were stopped by walls and windows and large blocks of spectrum were considered to handle large data values and ultra-high television definition. There were also non-line-of-sight transmissions. In high frequencies there was very little coverage – as low as under a kilometer.  A lower frequency could cover rural areas much better and it could go through walls to provide good coverage in urban suburban areas, but there would be much less spectrum and it would be somewhat slower.

People had claimed that 5G was responsible for the COVID0-19 pandemic and the World Health Organization in Geneva declared that it was not the cause. Electromagnetic radiation could not be the cause.

In the past, spectrum had typically been assigned based on options which could be auctioned in a number of ways. He pointed out that this was not an African perspective. Relatively few options had been conducted in Africa, but there was one that was moderately successful in Nigeria known as Beauty Contests. Some countries were not fond of it because it was susceptible to litigation. He highlighted that in SA, in the year 2000, the loser brought a legal case which was settled out of court. This raised the question of how spectrum should be assigned to particular players. The challenge government and Parliament faced was that these were global industries and technological advances were bound to take place as it was driven by large-scale investment. A UK member of parliament had commented that Huawei had 80 000 researchers in its laboratories in China, which gave an idea of the capacity that China had to produce 5G and 6G in ten years’ time. The network capacities would increase and were embedded in everyday life. When people went into spaces which had other devices including their own, these all use multiple frequency bands and these trends were not easy to control. Some trends must be considered to adjust and move into a particular direction to scrutinise who benefited and who was being held back. These trends were driven from Silicon Valley.

Dr Lucienne Abrahams, Director of the Link Centre, asked if Members had any questions.

Discussion

Mr C Mackenzie (DA) asked about the health risks associated with frequencies or cellphones. He referred to an example of being on a call and holding the phone to his left ear but being unable to clearly hear the person on the other end. When the phone is moved to the right ear the call becomes clearer. He said he understood that the phone uses the body as an aerial and asked if this was correct. He asked Prof. Sutherland to expand on this. He commended Prof Sutherland on his presentation, saying that he made complex topics easy to understand.

Prof Sutherland said that he used to be a part of a Committee in Denmark with a colleague whose job entailed designing antennas. He then explained that cell phones had multiple antennas built into them in different frequency bands. This could be an issue with consumers and those who designed the antennas would get upset over this as they would like to increase the size of the antennas. The design of the phone was intended to work with different frequency bands.

Ms P Van Damme (DA) thanked Prof Sutherland for his presentation, saying that it was fascinating and that it was good to have some intellectual stimulation. Some Members were constantly receiving communication from the public about 5G and she thought it was important that Parliament put the public at ease using the information from the presentation in order to provide clarity that there 5G posed no real danger; these were conspiracy theories.

Mr Mackenzie asked about 6G and if Prof Sutherland anticipated that the same kinds of costs would be associated with the transition from 4G to 5G and to 6G.

Prof Sutherland indicated that there were very substantial costs but consultations about 5G were ongoing. A lot of this could be attributed to the market place and how people responded to 5G. There were many people expecting to make a great deal of money through the migration from 5G and 6G. This would cost the operatives a lot of money to install but it would bring good economic benefits and change the way business was done – e-commerce, ordering online, teaching online as well as doing e-government. Mines were dangerous, warm and unpleasant places to work in and technology should thus be used to build automated equipment that would do the mining without having many workers in the mine.

Mr Mackenzie asked if the development of 6G would be a virtuous cycle of development.

Prof Sutherland responded that no technology was like this and that there were always downsides to technology. There would be challenges to 4G, 5G and 6G networks in ensuring their availability to the poor in rural areas and in get businesses to use it. User data from WhatsApp or Instagram is collected by Facebook and used to customise adverts to be targeted to the user. At one point there had been large revenues for text messaging in South Africa (SA) but these revenues were now collapsing. If one paid a Netflix subscription, it used the money to commission new programmes; this was also done in SA. This meant that there would be a shift from the SABC to Netflix. There would be benefits and challenges to existing business models. People should be thinking about this.

Presentation two: Spectrum in South Africa

Prof Sutherland referred to the Titanic ship which sank after knocking into an iceberg. The ship transmitted signals but nearby ships were not listening to the correct frequencies; this led them to coordinating spectrum. He said that nations had agreed on the framework for spectrums with a certain amount of variation between them, but this was being eroded because of the pressure to use equipment in certain bands.

Region one included a large variation which meant that the equipment was sold to a very large market and should be affordable. The World Radio Communications Conference in Geneva was actually a treaty. Another conference was set to be held in Egypt at the end of 2020 to set out the work for the conference in 2023. It would consider which spectrums were being used, which were being used well and what technologies were available. Erikson, Huawei and ZTE were present at the conference, including those who manufactured the semi-conductors. When smartphones were opened up, their parts were like commodities. For example, the smartphones contained a large chip for Android. These manufacturers wanted to lobby at a global level so that it would be difficult to diverge from the national level. They were also involved in lobbying at a regional level at the African Telecommunications Union. Groups absent from the conference included users, consumers and non-governmental organisations. This meant that consumers relied on government to represent its views.

Broadcasters and mobile operators had argued over who would get the spectrum. Mobile operators had argued that they should have the spectrum as they provided better value for citizens and the broadcasters were said to be old-fashioned and lying about their services. South Africa participated in some meetings at the World Radio Conference and then justified what it would use; this was set out in a national plan. The plan indicated what would be used by the military, broadcasting or telecommunications.

The Electronic Communications Amendment Bill of 2018, which was recently withdrawn, had spectrum provisions.

Before 1993, the state provided the telephone service and this was common in nearly all parts of the world except in Chile and Spain. The exception to the model was that the state provided such a service then it was opened up for competition. This was tricky for all players involved as government bureaucrats were no longer used, but managers had to take over and this generated wealth. The attraction of the Regulatory State Model was that the risk was taken by operators. This meant that government dealt with legislation and policy and the regulator dealt with more detailed work while operators engaged with the market. Operators also engage in lobbying and litigation. The alternative was for the state to go back to doing everything itself, but in this case there would be challenging decisions to be made on how much of the network must be built and how quickly this should be rolled out.

South Africa had borrowed a model from the UK using Vodacom and MTN as operators which had foreign investors. This model was successful. Meanwhile, discussions continued on how many operators were needed. The Minister at the time decided that only one was needed and Cell-C was selected in 2000. Cell-C was a Saudi-Arabia registered company belonging to a holding company in Lebanon which sold out to South African interests in 2018 and 2019. There was no simple answer to how many operators were needed in the market since it was opened up to competition. The Union of the Comoros resisted competition for many years and only allowed this a few years ago. Ethiopia still only has one operator, but has promised to introduce competition. A fourth operator came into the market, Telkom, which sold its stake in Vodacom in 2019.

The report from the Competition Commission on data prices and ‘Data Must Fall’ indicated that there was no effect on the market and that it did not increase coverage and reduce prices. This was criticism of Telkom and the regulator. Rain announced that it would expand to another 1 500 sites.

The Competition Commission was asked to review the mobile broadband prices and it produced a report, consultation and final report. The Commission reached an agreement with operators to reduce prices under the threat of legal action and this worked. It took a long time to discover why there was discrimination. This posed the question of what had gone wrong with third, fourth and fifth operator which did not meet the goals as set out by legislation, which was that services should be available and affordable. The definition of affordability remained unclear but the report also dealt with how spectrum policies were implemented. Operators had to use existing spectrum for 4G, which meant gradually eliminating 3G as it was assumed that people replaced their mobile phones every 12 to 18 months. Operators could see who used a certain device and use that information to create incentives to move to new phones.

The 4G network introduced a lot more mobile broadband but a lot of the offers were capped. Traffic was carried on Wi-Fi, as opposed to cellular networks. Migration to 5G would mean that operators needed a lot more spectrum and new spectrum in higher bands. There was no additional spectrum for 5G yet and operators were using existing spectrum. Rain covered 5G, but this was different to how it was covered in other countries. There had been a delay in signing additional spectrum. For complicated political reasons, Ethiopia would not offer competitive licenses. When it recently announced it would, many people were interested. Many countries were struggling with a reduction in the amount of operators which had introduced mergers where four operators were reduced to three. Most recently, SA was in discussions about the viability of Cell-C. If Cell-C went bankrupt, the spectrum would be transferred to the administrator. If there was consolidation, spectrum would be awarded to regulators. Awarding spectrum may be easy but building a network was expensive and time-consuming. People would want to install fiber, particularly if they were watching high definition videos, as this was what was required. The government had instructed SENTECH to build a large wireless network across SA but the company did not follow through with this as it never believed that the capital could be recovered. Government also needed to negotiate that spectrum from neighbouring countries would not cause any interference and this was usually not very challenging as it tended to be for South African operators.

He said that spectrum was usually allocated to operators such as broadcasters (radio and television), mobile network operators, fixed operators, satellite operators, emergency services, other users such as airlines and the military. Astronomers were non-users in the sense that it was preferred that they do not broadcast and should rather use Meerkat and SKA. Astronomers tended to become upset when services come into their areas, but this was economically important.

Parliament must provide oversight on Ministers and regulators; it must also scrutinise legislation and the effects of the spectrum on health, market structures, process as well as national competitiveness, as with the 4IR. Prof. Sutherland said a colleague in Grahamstown had done research which showed that some people had mobile phones but could not afford data.

Part of the issue in SA was on network economics, as the same standard reduced the costs. The same technology was used everywhere in the world and this meant that GSM prices also dropped. As a result, there were cheaper handsets and equipment for operators. At a global level, unit prices would be much cheaper but large parts of the population would still not be able to afford smartphones. This posed the question of how to make sure that smartphones were affordable, given the high cost of some of the equipment. A number of countries attempted to issue licenses at a national level; an example was the US, which issued hundreds of local licenses.

Dr Abrahams asked if Members had any questions.

Discussion

Mr Mackenzie said that he had been privileged to serve on this Committee under the previous Administration and had seen treaties in negotiations at the WTR. He asked what Prof. Sutherland thought of SA’s performance within the WTR. He thought SA was doing well in presenting the issues faced by its market. Are there substantial differences between different nations in spectrum and spectrum assignment and where do these differences lie? Are there deadlock breaking mechanisms in the WTR and how do they function?

Prof. Sutherland responded on the difference between developed and developing countries, saying that a more useful distinction to draw was between manufacturing and non-manufacturing countries in telecommunications equipment. These countries consisted of East Asia, China, Japan, Taiwan, South Korea and the USA, although they did not do much of their own manufacturing but more the design of equipment. In European terms this would be Sweden, Finland and perhaps the Netherlands. The difference was that if a meeting about 5G was held in SA, operators would mostly be in attendance. If the same meeting was held in Tokyo many more handset manufacturers, such as Toshiba, would be in attendance and this would bring a different dynamic to the discussion. National participation of international government conferences was very challenging. SA had not ratified or signed many treaties but had signed the Budapest Convention and the African Union Convention. The instruments of ratification had not been sent to the secretariat.

Dr Praneel Ruplal, Executive of Engineering and Technology at ICASA, asked about the trend towards nationalisation in countries where there were four or more operators. What is your view on sustainability in SA? What can custodians do to ensure success, given the mistakes of other countries?

Prof Sutherland said that this question would be answered in his next presentation.

Dr Abrahams read a question from someone in a group chat identified only as Dixano. The person asked if Prof. Sutherland thought the introduction of 8ta, which became Telkom Mobile, was a mistake.

Prof Sutherland said that this was an interesting question as the launch of Telkom was a decision taken by 8ta. He said that he understood this decision as the company was bought out of Vodacom and did not get much money, as it was passed on to shareholders. He said if this was a mistake, the Independent Communications Authority of South Africa (ICASA) should take responsibility. The Competition Commission’s report showed that the ability of Cell-C or 8ta to make an impact in the market was limited. MTN and Vodacom were able to carry on regardless of the competitors, which suggested that something went wrong in the management of the company. Interventions should have been made to ensure that there was effective competition in the market. He said he thought Telkom was getting some money back from 8ta recently. This raised a question about Telkom if ICASA proceeded with an option. The amount of money made on Telkom Mobile was not such to suggest that making a large sum of money into an option would be a good investment. The Competition Commission had, to some extent, dealt with the question of pricing and its affordability, but if an auction were to be held, the market conditions would be such that they would justify Telkom for spending large amounts of money purchasing spectrum. Structural changes were required for the market to be successful.

A Member asked about the legislative role of the matters raised by Prof Sutherland in his presentations. When dealing with global peace, one uses the weapons one has to enforce it and the problem here was around advanced countries who dictated their agenda. Could this issue be fixed by SA assessing what it carried according to a global competitive perspective as an influencer? On a domestic level, there is an analogy which says “policy does not mean law and law does not influence regulations”. He said that on this aspect, government must ensure that issues such as non-discriminatory access and stability in a sector were dealt with. Sector problems were based squarely on the regulatory model. On infrastructure, the dominance of mobile operators was something that needed to be worked on because competition was important. Philosophically, could this be a problem?

Prof Sutherland said that in a sense, everyone was a user and the large global manufacturers were in relatively small numbers. There were five or six operators who constituted the handset market and the rest could only be innovative in ways such as developing applications. The world was globalised. President Donald Trump had reportedly refused to bring manufacturing back into the US and had so far persuaded a Taiwanese semi-conductor/manufacturer to build a new foundry in Arizona which would cost $24 billion over five years. South Africa must consider what it wanted to focus on and how to formulate its laws, policies and regulations to deliver this goal. The country must be flexible and consider how this would fit into an agricultural and mining economy and what its consequences were. He highlighted that technology was global and that it would keep changing. It would have been easier to deal with the dominance of the two large mobile operators ten years ago, but something must be done now.

The Chairperson asked about a market study conducted in 1999, which showed that there could only be four operators. Should a market study have been done in the new auction? Investing in infrastructure was expensive and those who invested early were at an advantage, as the state invested before it allowed competition. Where does it place SA in this event, particularly in terms of the transformation agenda of the country to bring those that have been previously disadvantaged on board in this sector?

Prof Sutherland said that the important question was on market structure. For political reasons Ethiopia decided that it would have a state-owned operator, but made complicated deals to have this structure and did not pick up customers the way other countries on the continent did. A market study could be done but the Competition Commission report made it very clear that MTN and Vodacom had been building their networks since 1993 and had geographical coverage and strong infrastructure which was upgraded over a number of years. He said he was unsure if any of this came from the state but had been replaced so many times over the years. Consider whether it would be realistic to have a third, fourth or fifth operator in the market. The Commission report also made it clear that it had been unsuccessful in getting two operators to change their prices. This posed the question of who might conceivably enter the market now. Would offering a spectrum license build a new market? There was not much interest from international groups and this could be changed by looking at the markets MTN entered abroad, such as Afghanistan and Yemen – which were difficult markets to break into. It would cost a lot of money to buy into the market and it must be considered if the money would ever be made back.

The transformation agenda was challenging to answer on how to change existing structures; it would be challenging to do so, especially if introducing a new market entrant. Recent market entries in countries were very difficult to find and Rakuten, a Japanese e-commerce company, was in the process of building a new pure 5G network in Japan. Allegedly, this would be costing the company much less than their competitors, but it was a high-tech player and it had entered the market reasonably successfully. India received a total of four billion in investment from companies. 

Mr Mackenzie said Prof Sutherland seemed to be quite critical of ICASA and asked if he was aware that ICASA was currently doing a market review and had been constrained as it lacked some power to conduct its study. The Competition Commission had a wider mandate to conduct its study and could deliver much quicker. He asked why Prof Sutherland was so critical of ICASA and if he thought it had failed SA’s market. Does the Ethiopian government own Ethiopia’s operator or is it privately owned? How does the cost of data or mobile communications in Ethiopia compare with countries of similar profiles, demographics and economics?

Prof Sutherland responded that he was aware that ICASA was doing a market review and the results seemed to present that ICASA would conduct a series of auctions. Third and fourth operators had not had much impact on the market and he did not think that this could entirely be attributed to the operatives. Something was wrong with the regulatory structure or regulations which resulted in the inability of Cell-C and Telkom to affect the market positions of the two larger operators. Either ICASA did not have the data of the market or the capacity to get it. The Electronic Communications Act of 2005 may had also prevented this from happening in a way that would have created a more balanced competitive market. If this were the case, ICASA should have approached Parliament.

Dr Abrahams said that the questions were difficult and that she did not think Prof Sutherland was answering them satisfactorily; he was rather engaging in discussion with the Committee. She said the questions could continue to be discussed in future engagements and asked that he move on to the final presentation.

Presentation three: Current issues in Spectrum

The 4IR, COVID-19, 5G development, high-demand spectrum, Wholesale Open Access Network (WOAN), 6G mobile and spectrum governance were all current issues in spectrum. The 4IR Commission was created by President Cyril Ramaphosa; it produced a draft diagnostic report in November 2019. The 5G network would require flexibility, responsiveness and understanding of markets and technologies, as well as accountability and transparency. ICASA found that it had a lot spectrum which was due to expire three months after the termination of the state of disaster - which was no later than 30 November 2020. [Refer to presentation slides for a list of COVID-19 temporary allocations of spectrum]     

The 5G spectrum was moving quite rapidly. Smartphone operators were available and some work was being done on fixed wireless access, which would take it into a choice between broadband and fiberoptic broadband. Operators had already bought and installed network equipment and this was a lot more complex than 4G networks, as there were more manufacturers involved, more software tools and artificial intelligence. In the past, a number of manufacturers had been commissioned to build networks; this would now be more challenging. There was currently some growth in data consumption in countries such as Finland, where large forms of data were used and there was no download cap. This would not bring any new revenue to operators and would come from industrial applications like the internet as opposed to coming from people watching Netflix or using WhatsApp.

Globally, there were eighty operators. South Korea was very technology-focused and had a strong manufacturing base. It owned semiconductors, handsets, network equipment and had built almost a hundred thousand base stations, of which eighty thousand had been activated. Currently, a government enquiry was launched into the quality of services offered.

China was approaching a hundred million 5G customers and the question was whether they had 5G handsets or subscriptions. These were state-owned operators who purchased equipment domestically.

The US had been trying to eliminate Huawei from its domestic network. One of the US senators had given evidence to the House of Commons in London, saying that Huawei was an arm of the communist party. US operators were not allowed to purchase Huawei equipment due to cyber security threats. The US had also asked some of its allies to ban Huawei and threatened to bribe operators in Brazil not to purchase Huawei equipment. Huawei was also being blocked form purchasing semiconductors for its smartphones and network equipment. [Refer to presentation slides for a list of Spectrum assignments before COVID-19]

The high-demand spectrum was in demand with equipment that was readily available and was located in a band that would travel long distances. Mobile operators were able to go from 3G to 4G and 5G by reusing spectrum.

WOAN was an idea originating from New Zealand and was known as a spectrum part. The catch in building a wholesale open business network was that a network must be built and its capacity must be leased to service providers.

Rivada Networks in the US had been accused of adding additional charges on consumers. It had been questioned if the prospective service providers of WOAN would have the finances for national infrastructure. There was a legal window of only five years which might not be enough time to recover the money. Another question was whether ICASA had the capability to regulate WOAN and whether it had ever successfully regulated wholesale access.

South Africa must consider what it required from the 4IR and who would be lobbying for this; potential lobbyists included ICASA and DCDT. This also posed the question of whether GSM should be shut down. He highlighted that GSM had a large amount of spectrum; worked well with long distance, rural areas and low frequencies. GSM could also be used for 5G and 6G. On whether it was in the public interest to shut down GSM, he said that older customers may have to be persuaded to give up their GSM phones and move on to something more modern. There should also be a political decision to balance old and new uses and the interventions required to get people to make the switch. It must be noted that many cars had GSM in them and it should be considered how this would be replaced.

IMSI-grabbers were fake mobile stations which talked to mobile phones to obtain handset and SIM card numbers which could then be linked to RICA data to identify the owner of the phone. There were two RICA incidents. One incident took place during the State of the Nation Address by former President, Mr Jacob Zuma, in 2016; the second incident was in Irene Mall, where people were found with IMSI-grabbers. There were challenges posed by IMSI-grabbers from a parliamentary perspective because it raised questions on who oversaw the use of IMSI-grabbers. It was believed to be used by the police and intelligence services. A constitutional ruling by Judge Sutherland was yet to be heard.

Prof. Sutherland declared that he was not related to Roland Sutherland – the judge presiding over the case relating to this issue in the Gauteng High Court.

Parliamentary oversight included the work of the Minister, regulator, operators, broadcasters, markets and over-the-top (OTT) providers who were not based in SA. This included thinking about how to deliver on the aims of availability and affordability.

Dr Abrahams asked if Members had any questions.

Discussion

Dr Ruplal said he was aware that there had been issues with WOAN all over the world. Considering the issues around the world, what can SA do to preempt this and try to make it a success?

Prof Sutherland responded that a clear timeframe needed to be established.  A market analysis was going to be central to this task as it must be understood what WOAN was attempting to do and what had not worked in the past. Sufficient investment and infrastructure must be available to build a WOAN. The money must also be available for the work of service providers. In Japan, very sophisticated 5G network was built and this model was worth considering for the SA case. It was claimed that this Japanese project carried half the cost of a conventional network. It must also be considered why 8ta and Telkom was less of a success than it could have been as well as why SENTECH did not come up with a plan to get the National Treasury to invest in it. A lot of regulation would be required and it must be questioned whether the existing legal framework was enough to make a success of WOAN. If WOAN was unregulated and done on a commercial basis, although a plausible model, it would be surprising if this was successful. There was also a litigation risk. Wholesale models on a commercial basis had worked in some cases in some countries.

Dr Abrahams said that there was a form of modelling called Digital Twin Modelling. This model was mostly used in the engineering environment but it could be used in the digital environment. She said this idea should be explored and questions should be answered through modelling and scenario building which was part of market analysis.

Mr Christof Stork, Chief Scientist at Land Seismic Noise Specialists Inc., said the landscape had changed and both Rain and Liquid provided wholesale services tools. More operators could dedicate base stations to a virtual WOAN. It would not be commercially viable and would be costly and impossible to complete with large networks.

Dr Abrahams asked a question on behalf of a Member. He asked if the expansion of the 5G technology would spur the Rapid Urbanisation Movement, but also curtail the mobility phenomena that furthered mobile technology. Is this Nokia downfall syndrome emerging again?

Prof Sutherland replied that Nokia failed in handsets but was one of the world’s largest manufacturers in network equipment. There was no attempt by manufacturers to restrict this to urban settings. The intention was to transform it into international networks. Mobility was, in fact, increased.

Mr Mackenzie asked about the allocation of spectrum and Prof Sutherland’s earlier comment on SA’s failure to allocate spectrum in the past – which led to it being slightly backward in comparison to other countries. Has this failure retarded SA’s growth and development as an industry? He expressed his amazement at how swiftly spectrum was allocated in light of the COVID-19 pandemic. Do you think that spectrum was allocated efficiently by ICASA? Would you recommend that ICASA continues with temporarily leasing mobile spectrum to networks?

Huawei had, in the past, used back doors to access networks regardless of who owned it. This led to concerns around Huawei networks and the company said that these back doors were removed. Do you think this is a valid security concern?

On the transformation of WOAN, how can those who were historically excluded now be included into network ownership? It was believed that a block of high demand spectrum would be given to a WOAN company who would, in exchange for spectrum, be given access to existing networks. This meant the company would not need to build its own networks. Do you think WOAN could work on this basis?

Prof Sutherland responded that there should be negotiations with the National Treasury to maintain the spectrum. A virtual WOAN would be somewhat complicated. The introduction of income tax in the UK was undertaken as a temporary measure to roll the spectrum forward in the hope that the economy would pick up. A detailed analysis of the market should be done. If Huawei’s access was restricted to the test network then it was relatively safe. Software updates on mobile equipment were problematic as they posed a risk.

Mr Richard Makgotlho from ICASA asked about 5G development and the ITU process within the development of IMT 20 technologies which would ultimately lead to 5G. What advice would you give to encourage manufacturing of those systems?

Prof Sutherland said that manufacturing was done in enormous volumes in only a small number of cases. Semi-conductors were produced in a small number of places as there were high costs involved. The question to be asked on this was how it could be applied to agriculture, mining and e-commerce, creative industries and design. This was how jobs were generated and people were empowered. Changing the structure of Vodaphone or MTN was hard to imagine as MTN was in Afghanistan, Syria and Yemen, and if they did not want the same thing it would be challenging. The nationalisation route was not straightforward when dealing with a global company.

Dr Abrahams made closing remarks and thanked all in attendance at the meeting. She said the questions raised during the debate must be answered.

The Chairperson thanked Prof Sutherland and Dr Abrahams for their inputs in empowering the Committee to conduct its oversight.

The meeting was adjourned.

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