Latest Technology in the ICT sector, with Minister in attendance

Meeting report

Minister Siyabonga Cwele, Telecommunications and Postal Services, announced that the Department had a new Director-General. The Department was also currently reviewing its structure and was eager to hear from the experts and their entities about the future of ICT in SA and the way in which they proposed to overcome the significant challenges in the sector. The Minister would be departing early to attend another meeting.

Research ICT Africa: Inclusive Development & Digital Transformation in Africa

Adjunct Professor Alison Gillwald, Executive Director: Research ICT Africa, spoke to inclusive development and digital transformation in Africa and the challenges of evidence based policy formulation to safeguard public interest outcomes in an increasingly globalised and complex environment. She emphasized the changing environment, regulation, investment and innovation along with wider issues of the affordability of data in SA.

The presentation spoke to new forms of access, the importance of open data and performance indices in SA. SA scored lowest in affordability of data - even compared to other African countries it was still lagging behind. Discussion was then held on inclusion and exclusion in ICT in terms of physical access, supply, availability and price. The ICT ecosystem was characterized by exponential technological development and there was an increasing dependency on connectivity for positive social and economic national outcomes. There were also unintended outcomes of instrumental regulation for one objective (competition) which may reduce negative outcomes in another (e.g. innovation or investment). There needed to be a move away from regulation of static linear value chains to adaptive and flexible regulation that did not stifle the product, pricing and user innovation.  Furthermore competition regulation needed to be complemented by understanding the dynamic complementary relationship between different elements in the ICT ecosystem.

Prof Gillwald then turned to changed market conditions in terms of best practice and old measurement instruments no longer being appropriate especially for predominantly prepaid mobile market in Africa. The introduction of low end smartphones were driving data demand and this meant that there was declining revenue from traditional services and thus data opportunities and revenues were growing. There were multiple new business models emerging from data competition in an attempt to retain and attract new customers.  

The presentation outlined underperformance in the ICT sector in SA owing to insufficient investment, innovation and inefficiently high or low prices. Some of the factors affecting this insufficient investment and innovation were regulatory in nature - either they were too strict or too lax. Other factors were political - veto players were capable of blocking change and innovation.  Furthermore, institutional capacity/capability constraints can account for underperformance. This underperformance can be overcome but only after considerable costs.

In terms of pricing, voice usage was declining and data represented an increasing percentage of overall revenues. Mobile data was also the basis for Over-the-Top (OTT) services - subscribers usually have a data package to make use of OTT services such as Skype or WhatsApp. Cell C had jumped on the popularity of OTT specifically.

Research ICT Africa was researching how to gauge the quality of broadband in resource constrained environments. Research was conducted with partners including M Lab, Princeton University, Queen Mary, Cambridge and, on a regional basis, AFRINIC. In terms of supply side solutions, creating enabling an environment for next generation networks and services with positive consumer welfare outcomes was essential. In terms of risks and recommendations of and for open source networking:

-Open access should only be considered in dominant markets - need for market review to establish abuse of dominance across integrated value chain

-High bureaucratic skill and institutional capacities required for market restructuring – structural separation/open access network

-Simple and competitive allocation of resources (spectrum auction with room for correction – spectrum trading)

-Beware opportunity costs of delays/risk of failure

-A mandatory open access wireless network would threaten the incentive to invest by siphoning off high demand spectrum.

-The risk of prioritizing urban areas by mobile operators can be mitigated by enforcing prior rural coverage through spectrum assignment conditions.

-Commercial networks voluntarily adopt open access principles when traffic aggregation was prioritised at the correct price point.

-By acting as the anchor tenant in underserved area, government can incentivise private investment with its long-term demand aggregation guarantees.

Adj Prof Gillwald mentioned that pro-poor strategies needed to shift from purely supply side strategies to demand stimulation:

-Ensuring affordability through effective regulation and public access innovation

-Build e-skills base for effective social and economic inclusion

-Trusted environment for e-transactions, e-gov (mobile apps)

CSIR Meraka Institute: Quality Policy-Relevant Research

Dr Ntsibane Ntlatlapa, Competency Area Manager: CSIR, began by speaking to the CSIR mandate, trends in communication technologies, context for its research programme, its telecommunications research programme and the policy impact of its research programme.

In terms of communication technologies and trends, the presentation spoke to 5G, the need for a set definition of what constituted 5G and what did not, given that the CSIR had had service providers, in the past, who falsely declared that they provided 4G when they did not.  The presentation spoke to the EU H2020 ICT programme and within this the new generation of components and smart systems such as smart cyber-physical systems. advanced computing and cloud computing were also highlighted and within that customised low energy computing, future internet, 5G research and validation and software technologies.

The presented noted the National Development Plan (NDP) and key priorities identified in Chapter Five.  One of the priorities was to adjust market structure and remove legal constraints to enable full competition services. Another priority was to implement a service and technology neutral flexible licensing regime to allow flexible use of resources in dynamic and innovative sectors especially for spectrum that should be made available urgently for next generation services. The third priority was free spectrum for efficient use, to drive down costs and stimulate innovation. Spectrum can be allocated with set asides or obligations to overcome historical legacies and inequalities in the sector but this should not delay its competitive allocation. There was a need to identify alternatives to infrastructure competition through structural separation of the national backbone from the services offered by the historical incumbent to create a common carrier with open access policies to ensure access by service competitors.

Dr Ntlatlapa then spoke about how the CSIR’s research programme would address the priorities listed above. Steps included:

- dynamic spectrum management techniques to address spectrum priorities by developing technologies to increase efficiency in spectrum management.

-research into advanced networks and services models, experimenting with models to enable low-cost implementation and efficient management of shared broadband infrastructure.  

-broadband network and spectrum usage - collect, store, process and analyse data on broadband network infrastructure and spectrum usage to enable better planning and monitoring of the extensions of the broadband infrastructure as well as to lower the cost of provisioning of broadband services.  

-modelling of broadband infrastructure roll-out. The CSIR  wanted to develop models for optimal mixes of fibre and wireless technology roll-out at a national and provincial level, in accordance with SA Connect’s targets.

The presentation addressed the issue of whether spectrum was really scarce or whether there needed to be rethink of what it meant when it was said that spectrum was scarce.   reference was made to the US and statistical data, current technological developments in spectrum management and advanced networks and services models. Future communication networks needed to support multiple services that currently required separate networks, e.g. in many areas, there were several M-2-M networks broadcasting, broadband and emergency networks.

Dr Ntlatlapa said certain policy and regulatory intervention was required. Possible policy and regulatory solutions included:

-regulating infrastructure sharing to encourage more virtual network providers including mandatory sharing of ducts in cities

-maintaining the net neutrality policy - in future broadcasting may not need its own infrastructure but be offered as one application on top of shared infrastructure

-introduce rapid deployment regulations

Introduction to BMI-TechKnowledge

Mr Denis Smit, Managing Director, BMI – TechKnowledge, began his presentation by outlining that BMI-Technologies had been in the business for 27 years, had over 2 500 projects completed and was unique in the industry because it had both private sector and public sector experience, had a combination of research, consulting, engineering and financial skills, covered both IT and Telecoms and had competencies in many areas including the market, technical (multiple network layers), modelling (technical and financial), policy and regulatory, spatial analysis, business and financial and CSAT and brand audits. BMI-TechKnowledge had a number of clients in differing sectors including within the largest ICT sector in southern Africa from government to the private sector, infrastructure and software. Clients included Mackenzie and Company, Deloitte, KPMG and other consulting companies.  He then briefly went through who the team at BMI-Techknowledge and gave a broad overview of the budget of ICT in SA.  He said that ICT in SA had spent R226 billion in 2015 (excluding wholesale) – this made up 6% of SA’s GDP. In giving the Committee a general idea of the current state of telecoms in SA, the country had nearly 90 million SIM cards in use and there were 34 million adults who had cellphones - that was 89% of the adults in the country, and that more than half of the phones in use currently are smartphones (51%). Even give an overview of broadband developments and trends in which he explained a graph that was from 2006 to 2016. What this graph showed was the following.  he said that the shop price decrease for DSL he said that the average price for mobile data was around R50 per gigabyte. He  went on further to explain in more detail mobile broadband developments such as 3G & LTE.  He said that the average smartphone usage, that is megabytes per month, in 2016 was at around 600 megabytes and was up from below 100 megabytes in 2011. Event spoke about Vodacom population coverage percentages and he divided this into GSM, 3G/HSPA+ and LTE. He said that GSM coverage was ubiquitous, that 3G/HSPA+ was largely the same and he said that LTE coverage had increased rapidly from 2012 to 2016 going from 0% to 70% of population. He didn't spoke about how the Telecoms sector in South Africa was tough business and that currently there was not much money being made at all. He said that private was spending a lot of money in fact he said that private spent R124 billion between 2011 and 2015.  He said that this was important information as it showed the need for government and private sector cooperation, as without it the goals of SA connect could not achieved and this would have dire consequences for an already near stagnant South African economy.

 

In the way of fibre developments he named some specific companies such as Neotel, link Africa, MTN and Vodacom and said that  cumulatively enough fibre cable had been laid in Africa to encircle the continent.  He said that although this was an achievement far more fibre needed to be laid. He went on to explain a slide to do with national connectivity and said that South Africa still had a very long way to go,  showing a map of South Africa and its connectivity. He said that certain Metro's and municipalities is had made significant progress in the way of connectivity and fibre installation, showing a slide of how much fibre had been installed in certain periods in certain metros and municipalities. He also spoke about a certain open access Wi-Fi areas in Metros and the immense social goods that resulted from such open access free Wi-Fi areas.  In the same breath, however, he also said that free Wi-Fi areas was incredibly hard to create funding models for and always almost cost the government and or rates payers a lot of money  to sustain.  Thus he encouraged  that more research be done into how one might create a funding model for free Wi-Fi areas that is sustainable. Dr Smit then went on to list all the provinces or municipalities in which his company had or were doing business in, making reference to Mpumalanga, KwaZulu-Natal, Gauteng, Limpopo and the Western Cape. He mentioned the current widespread roll-out of fibre optic cables  in South Africa.  Finally, he spoke about what it would take to realise the ambitions of SA connect and  in so doing he emphasized the need for cooperation between government and the private sector, as neither of the two can do it on their own and  cooperation between the two is vital if the  ambitions of SA connect are to be met.  In line with this he mentioned that the big six within the ICT sector were meeting with government this week to discuss the future of ICT in South Africa and this boded well for the ambitions of connect SA.Dr Smit went on to talk about some sample spatial data sets and analysis. He looked at the private sector demand, the public sector demand  and gave the geospatial analysis of this demand. His analysis showed that there was much work to be done still. After  after giving this analysis  and his conclusions he went on to speak about BMI- T and its spatial practice. They have developed a comprehensive spatial database of points. lines and polygons that define telecommunications infrastructure, users and related data across South Africa and Sub-Saharan Africa. BMI-T has A database with over 50000 kilometres of fibre route and 45000 end points in South Africa that are current and future uses of band with. He then  spoke about GIS and spatial analysis applications and what they include. They include: determination calibration of claimed population coverage and Geographic coverage. Determination calibration of fibre router lengths. Determination of overlap of fibre routes. Determination of coverage requirements. Design of broadband indices analysis of same eg. broadband deprivation index. Determination prioritisation of demand concentration eg. points and bandwidth per town and finally reasoned geographic apportionment of telecommunication resources and spend. He Returned to talking about SA connect and its Ambitions and said that currently there was a total of 39000 public  sector demand points in the country. He spoke about SA connect in matching technology to the location.  by the cement rural or Urban and which technology best suits either context.  He said that in rural areas wireless coverage is best and this could be fixed wireless eg. WASP or mobile eg. LTE or even satellite which is essentially ‘more wireless’.  he said that in Metro and urban areas copper and fibre coverage is best eg. xDSL and FTTx, which is ‘more fixed’.  hidden spoke about how BMI-T could bring together spatial analysis and engineering know how (along with private and government) to meet the targets of SA connect and SIP15. He  showed what a model of fibre networks would need to look like in order satisfy the requirements mentioned above and he also showed the optimal fibre routing to demonstrate the infrastructure gap in South Africa by contrasting the optimal model and the current fibre routing of SA.

Dr Smith then went on to talk about the SA connect research programme and its outputs one of which is  the GIS portal and its public access.  This GIS portal allows for customised online access to various data sets allows users to form their own views of the data. Furthermore, it has facilities which allow for online queries for attribute search location analysis, multiple background maps (eg. physical and Street layout etc) printing of customized outfits and it has password protected access.Dr Smit talked about the SA connect the multi-client research program and it's headlines. He talked about the report that was published in late November 2015 just the ahead of the second anniversary of the release of SA connect. Then spoke about the syndicated research programme that included a report which was based on extensive primary and secondary research and he said that hundreds of hours were invested in this. Subscribers to the report included various public sector and private sector clients. Deliverables included the 200 page report, an Excel model, access to the Dynamic Online Maps (GIS) which was mentioned before and also workshop sessions. It gained media interest with a summary findings of this report and these were published on their website.  Dr Smith then talked about FTTH (fibre-to-the-home) and the experience that BMI-T had with it.  he said that BM it was an ftth Council Africa member and research advisory since 2013. FTTH reports had been written by BMI-T in 2015, 2016 and 2017. He said that BMI-T had characterized and quantified the ‘land grab’ with regard to FTTH. He also said that BMI-T have been and are regular presenters at the FTTH council Africa conferences and  furthermore he said that BMI-T had done private sector due diligence work on FTTH operators in 2016.Dr Smit concluded with how BM it can assist the portfolio committee on Telecoms and postal services he said  that they could assist with fact checking. Real research based evidence - tempered with the reality of real-world direct Telecoms business and experience. He also said they could assist with insight into funding realities of rolling out broadband. Where is the money and how it can be leveraged more effectively? He also said that they can help with independent well informed opinion backed up by 27 years of experience in the ICT industry in South Africa and Sub-Saharan Africa.

Discussion

Mr C Mackenzie (DA) asked Professor Gillwald about insufficient data and how if it were sufficient where we would be on the indices. He then asked Mr Ntlatlapa about if he had the difference between low frequency spectrum and high frequency spectrum correct. He asked Dr Smit about public wifi and costing and recommended using advertising to fund public wifi.

Ms M Shinn (DA) asked how often policy research and recommendations actually resulted in government implementing those recommendations. She asked Dr Smit why the SA connect tender failed. She then asked what research informed the development of the WOAN. She asked CSIR about white spaces and whether they could give her an idea of what would happen if theoretically one could clear a stack immediately. She asked Dr. Smit what had caused the polarisation and what could be done to prevent it.

Ms N Ndogeni (ANC) asked CSIR whether there was a country that the CSIR could recommend as a country that uses its spectrum effectively and has surplus spectrum.

Mr K Siwela (ANC) asked about the sharing of the costs of laying fibre and sharing the infrastructure. He asked what should be done to create this sharing of hardware given the current regulations that impede this that are in place.

Ms L Van der Merwe (IFP) asked about how they could shift the epicentre of ICT to the municipal level and asked about the geographic size of SA and whether this is one of the largest obstacles impeding SA Connect.

Dr Ntatlapa said that the low frequency reaches further than the higher frequency and confirmed Mr Mackenzies understanding of it. He said broadcasters prefer low frequencies because of this. He spoke about the DTT and he said in Europe they had something called hybrid TV. He said that consumers default back to broadband to watch television. He said that technologies exist that enable networking sharing and that were the market does not ‘reach’ the government could step and provide the services or hardware/infrastructure.

Dr Johnson (CSIR telecommunications and Media) suggested that SIP 15 is an attempt to create the sharing and cooperation between private and government. He also said that they wanted to do more research into the best way to use the spectrum before they go public and give tenders and the like.

Dr Ntatlapa said that it would take between 3 and 5 years to clear the stack and use if for something else. He said that he did not know if it was about a lack of resources, but that he assumes that if there was more technicians and staff then this period would decrease. He said that as you are clearing a stack you could actually start using the space that has been freed up and he said that this technology is available. He said that wifi is very widely used, but that it has very little spectrum. He said that the US has also started using certain spectrums that the military has traditionally used, this is based on how certain spectrums are used in certain geographical areas and not in others and can thus be re-assigned in different geographical areas.

Dr Johnson said that lower frequencies are not always better because they create interference and that in urban areas you actually need higher frequency. He said that what is actually ‘best practice’ is to use lower frequencies to reach the rural areas.

Dr Ntatlapa said that there should be a change in the wording of the regulation around ICT services in chapter 5 of the NDP, as the current phrasing seems to emphasize competition not cooperation.

The DG of the department: said that the SA connect tender failed because they could not find a service provider that could hit the ground running and because of this they were told that there were no successful candidates found, but he said that they were still working on it and that it was priority. He said that the way the white paper is phrased means that the issue of network sharing is open for discussion and that this week the big six are meeting to discuss network sharing. He said that the issue was to end licenses for services and for spectrum simultaneously and tus free up both and stop certain businesses from exploiting consumers.

Dr Smit said that advertising models have actually not helped and that it is notoriously hard to develop funding models for it and monetize it. He said that regarding the polarization it has been that way for a while because government and private have different perspectives. He said that there are periods when this becomes even more intense and he said that there times when the two come together and find each other and he referenced what the DG of the department said about the big six’s meeting. He said that there is middle way to both create a WOAN and to open up spectrum. With regard to SA connect and funding he said that because there is very little ‘new money’ they need to use old money and use money from differing ministries and what the treasury grants them. He emphasized the importance of local funding  and that SA connect has a basic funding problem and that local (municipal) funding could remedy this problem.

Adj Prof Gillwald said that she was questioning the methodology of the world economic forum. She said that they did need access to the data regardless of the methodology though. She said that in law it is very open and consultative, but in practice research had not been informing policy. She said that regulating things like the content of this meeting was not wise because the environment is so dynamic and fluid. She recommended the release of the market review and said that three had been done, but that they had not been released. She said that making the wrong decision around open network sharing could put the South African economy back ten to fifteen years. She said that there are very successful commercial roll outs of fibre cable and that they are using open access. She said that people are connected, but the prices of data are too high for people to use it. She said that we need to look at the market failure and the institutional failure and notice which is more urgent and if both then the committee needed to address both.

Dr Smit said that there are elements of the white paper that are really good and he said that the committee should unbundle the rapid response guidelines within the white paper.

The Chairperson said thank you to the honourable members and the visiting members of the public and adjourned the meeting.