1. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 16 February 2016 1 Briefing on spectrum policy and processes moving forward Portfolio Committee

2. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 2 NDP 2030 To create an enabling ICT reality by 2030… “There is a clear and urgent need for a full policy review, which has not been done in the ICT sector…” A new policy framework will be needed to realise the vision of a fully connected society. A key issue will be to decide on the role of state infrastructure interventions which have to balance the priority goal of achieving affordable and truly universal Spectrum needed for next generation services NDP viewed spectrum allocation as perhaps the biggest regulatory bottleneck in the deployment of wireless technologies

3. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Radio Frequency Spectrum 3

4. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Spectrum is a limited resource 4

5. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development The Need for Regulation Radio-frequency spectrum is a limited finite resource- Governments must control, manage, allocate and regulate Spectrum contributes to socio-economic development Demand for spectrum exceeds the amount of spectrum available International compatibility Radio propagation does not respect international frontiers 5

6. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Growing Demand for Spectrum There is a growing demand for spectrum from different radiocommunication services throughout the radio- frequency spectrum. The higher the frequency, the smaller the coverage. The lower the frequency the higher the coverage Terrestrial broadcasting services generally make use of frequencies below 1 GHz to obtain large coverage areas. Mobile services are ideally suited to frequencies below 3 GHz. High capacity point-to-point (backhaul) services make use of frequencies above 3 GHz (3 GHz – 22 GHz) Satellite services use frequencies above 10 GHz although for large coverage areas frequencies at 4-6 GHz are used. (4 GHz – 22 GHz) 6

7. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development Growing Demand for Spectrum 7

8. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 8 Historical Developments 2011-12 Dec 2011 - Draft policy directions for “high demand spectrum” focused on 2.6GHz Feb 2012 - Gazette to allow further consultation on 800MHz & comments on the decisions of the WRC-12 regarding the allocation of the 700MHz to mobile broadband. Finalization of these policy directions however, was surpassed by the events at the WRC-12 which resolved to allocate the 700MHz for mobile broadband with the same status and usage rights as the existing broadcasting services. Following the analysis of comments from the respondents, outcomes of the WRC-12, Publication of National Development Plan in 2012, finalisation SA Connect in 2013, a review of these draft policy directions was required. 2013 Oct 2013 – Spectrum Workshop resolved that a policy direction on spectrum for broadband is required despite gaps in the 2010 Spectrum Policy Dec 2013 –SA Connect pronounces on wireless open access to address structural constraints in the market and ensure that competition, universal services and access are achieved 2014 2014 - Extensive Consultation with industry, Government Departments and the public on the green paper for the Integrated ICT Policy Review 2015 Mar 2015 - the Integrated ICT Policy Review Panel Report recommended that the 2010 Spectrum Policy should be reviewed to ensure that the use of spectrum a as public resource reflect public value

9. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 9 A technological revolution that will fundamentally alter the way we live, work, and relate to one another 4 th Industrial Revolution’s rapid pace of change and broad impacts - Government and regulator are being challenged to an unprecedented degree. While preserving the interest of consumer and public at large Government needs to do the following: o support innovation and technological development o continuously adapt to a new, fast-changing environment, Possibilities of billions of people connected by mobile devices multiplied by emerging technologies like, the Internet of Things (IoT), its applications, including machine-to- machine (M2M) networks o More and more spectrum needed to support the next generations networks 2015 World Radiocommunication Conference paved the way for 5 th Generations Networks which requires more spectrum 4 th Industrial Revolution & Future spectrum demand

10. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 10 WRC Outcomes 2007 Allocation of the 2nd digital dividend (800 MHz) to mobile for broadband utilization 2012 Allocation of the 2nd digital dividend (700 MHz) to mobile for broadband utilization 2012 -2015 South Africa participates in technical and regulatory of 700 MHz spectrum for utilization by mobile and protection of broadcasting from emission of mobile services 2015 WRC-15 fully allocate 700MHz to mobile after successful technical and regulatory studies More spectrum for broadband allocation 90MHz bandwidth between 1427-1518 MHz Protection of the Ultra High Frequency (470-694 MHz) for utilization by Digital Terrestrial TV Protected the S-band (2700-2900 MHz) which heavily used for Government services WRC- 19 Study more spectrum for 5 th Generation (5G) Networks to support IoT Spectrum to facilitate global or regional harmonized frequency bands to support railway radiocommunication systems between train and trackside Intelligent Transport Systems applications wireless access systems, including radio local area networks

11. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 11 Is the Current Spectrum Policy environment adequate to facilitate the realization of Government objectives?  As identified by the NDP, SA Connect and 2015 ICT Panel Review report Current Spectrum Policy does not assist in meeting Government objectives 2013 South Africa Connect 2015 ICT Policy Review Panel Recommendations Report 2012 NDP Identify mechanism to release high demand spectrum required for Broadband spectrum allocation as perhaps the biggest regulatory bottleneck in the deployment of wireless technologies unclear, ambiguous policy objectives & should be revised

12. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 12 Legislative Framework supporting the Spectrum policy review Empowers the Department to review this Policy after every ITU World Radiocommunication Conference or at any time as determined by the Minister The March 2015 Panel Report recommended the review of the 2010 spectrum policy in order to ensure that spectrum as a public resource must be focused on delivering maximum public value A Ministerial policy directive will consider as a priority on how best to ensure that the release of high demand spectrum fulfils policy objectives and how best the application of open access principles to the assignment of broadband spectrum will be achieved. Spectrum can be assigned with set aside or obligations to address historical legacies and inequalities in the sector but this should not delay its allocation National Development Plan National Broadband Policy – SA Connect 2010-National Spectrum Policy National Integrated ICT Policy Review Electronic Communication Act (Act 36 of 2006) Section 3 (1) mandates Minister to make policies on matters of national policy applicable to the ICT sector — (a) the radio frequency spectrum;

13. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 13 The current spectrum policy is not explicit in terms of application of spectrum management principles that embraces flexibility and a greater reliance on market forces in particular with respect to spectrum used for commercial purposes. Need to ensure that there is a regulatory environment conducive for the efficient assignment of spectrum among competing uses that is internationally harmonized to the greatest extent feasible Current policy objectives and rules are unclear, ambiguous, not measurable and not easily achievable Current policy not clear in terms of application of market driven approaches Spectrum Policy not aligned with the national broadband objectives especially with regards to universal access and services in rural areas. 2010 Spectrum Policy Shortcomings

14. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 14 Consumer access to high-quality broadband services is based on networks that are capable of supporting rapid growth in Internet traffic, at competitive prices. With the increasing reliance on mobile or wireless communications, there is more demand than ever for radio spectrum. The efficient assignment and subsequent use of high demand spectrum to meet this demand is vital and the cost of not doing so is high. In South Africa the biggest gap in the national broadband infrastructure is currently in the access network Of the access mechanisms, mobile coverage is the most extensive, but mobile broadband access is limited to lucrative urban areas and data costs are relatively high. Extending broadband access is dependent on assignment of high demand spectrum. It is also dependant on higher tower density, which requires additional investments by operators. Broadband and Spectrum Challenge

15. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 15 South Africa Connect identified the following issues relevant to spectrum to be addressed Identification of unused spectrum and its reassignment;Mechanisms to release high demand spectrum required for broadband extension Ensure affordable broadband is available nationally, to meet the diverse needs of public and private users, both formal and informal, consumers and citizens; Ensure policy and regulatory conditions that enable public and private sector players to invest in and in other ways contribute to reaching South Africa's broadband ambitions; Removal of all bottlenecks preventing migration of terrestrial broadcasters from analogue to digital in order to realise the digital dividend; Re-allocation and assignment of broadband spectrum taking into consideration job creation, small business development, national empowerment and the promotion of NDP goals; Approval of spectrum sharing between spectrum licensees and across services by ICASA in support of efficient use of spectrum and where it does not impact negatively on competition; Policy Gaps - SA Connect

16. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 16 The ICT Policy Review Panel identified gaps and made the following recommendation to address spectrum policy gaps: Spectrum as public resource must be focused on delivering public valueThere should be provision for spectrum for an open access network High demand spectrum should be set aside for an open network that will sell wholesale access to new and established operators Policy objectives should be, unambiguous, measurable, achievable, and realistic and time dependent Policy objectives should be aligned with the SA Connect national broadband policy especially with regards to universal access and service in rural areas. Policy Gaps - ICT Policy Review Panel

17. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 17 Problem Statement (Gaps in Spectrum Management)  The main policy issues identified and addressed in the spectrum policy are:  Unclear roles and responsibility between Minister & Regulator  General gaps in the current spectrum management regime with regard to: o the alignment between universal service objectives and the licensing of frequency spectrum resources, o the setting of spectrum fees, o Unclear framework on spectrum trading & spectrum sharing, o No frame on spectrum re-farming and migration  an exclusive spectrum regime which promotes economic growth for a few market players at the expense of broader socio-economic development, and therefore an inequitable assignment spectrum for broadband which is in “ high demand” FN1 : In the context of this policy, “high demand” spectrum refers where demand for radio spectrum resource exceeds supply, or radio spectrum is fully assigned.

18. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 18 Evolution in Mobile Networks 1G NMT, AMPS, TACS 2G GSMA 3G W/CDMA HSPA 4G/ LTE 5G Vodacom, MTN & Cell C Vodacom, MTN, Cell C, Neotel, Telkom, WBS ~1980~1990~2000 ~2010 ~2020 The foundation of mobile telephony Mobile telephony for everyone The foundation of mobile broadband The evolution of mobile broadband The Network for the networked society Available spectrum not sufficient to meet the growing demand in data traffic & service provide More and more spectrum required to support 4G and 5G

19. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 19 Current Environment Current spectrum holdings does not assist Government in correcting the market skew. The market has over 500 ECNS and ECS licenses however only 6 license holders have been awarded the “high” Demand spectrum. No clear regulatory regime to enable the other plus 500 ECS to utilize the infrastructure of the incumbents which is depend on spectrum Current approach to spectrum assignment (licensing) and resultant spectrum holding does not promote entry to the market – Status quo is not future proof & does not support technology advancements Unavailability of broadband infrastructure in rural areas and the cost of deploying parallel networks will lead to costly duplication. Providing Universal service and access in rural areas will take a long time as the provision of 3G has demonstrated. 3G despite its launch many years ago is not yet available everywhere. To balance competing interests we need to be aware that there are more interested parties than the telcos or mobile operators. The ISP, the OTT operators, the content industry, the broadcasting industry are all interested parties as LTE Advance will service all of them. The evolution of technology enables broadband mobility that is required by all service providers without the telcos playing a gate keeping role using spectrum holdings to disadvantage others competing with them for services

20. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 20 Exclusive - Spectrum Holdings The market has over 500 ECNS and ECS licenses however only 6 license holders have been awarded the spectrum There is definitely a skew and distortion in market Spectrum is currently not effectively utilized to promote competition

21. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 21 Unassigned Spectrum International practices - Some countries (Mexico, Australia, Rwanda etc.) have encouraged or mandated open access schemes to address these constraints. Wireless-open access envisaged in SA Connect could enable operators that do not have resources, an opportunity to participate in the mobile broadband business Release of spectrum should balance expansion objectives of incumbents and aspirations of new entrants (viz. ISP, the OTT operators, the content industry, the broadcasting industry etc.) Innovative ways are necessary to mitigate against the spectrum constraints

22. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 22  Reviewed the 2010 Spectrum policy and finalise the Spectrum Policy as part of the Integrated ICT White Paper Way forward to close the Spectrum Policy Gaps and facilitate the release of spectrum to achieve government’s objectives Set of New Policy objectives Provide a set of enabling guidelines or principles that support the revised objective(s) Balance the interests of incumbents and new entrants Alignment with National Broadband policy – in particular the open access regime; The revised Spectrum policy will amongst others seek to: In finalizing the spectrum policy, Government will ensure that the principles of equality and non-discrimination are upheld

23. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 23 Policy Objectives The policy will adopt the following enabling principles Ensure its efficient use so that the economic, cultural and social benefits that South Africans derive from its use are maximised; Set aside sufficient spectrum to support broadband deployments Support open access and the sharing of infrastructure to the greatest extent possible; Promote broadband coverage in rural areas and underserviced areas Ensure that as many users and potential users as possible can benefit from its assignment; Promote innovation in particular to the extent that it addresses national developmental challenges and goals.

24. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 24 Enabling Principles The policy will adopt the following enabling principles Maximization of the efficiency of spectrum used in South Africa Promotion of openness, transparency and non- discrimination Promotion of infrastructure sharing Application of ‘Use it or lose it’ principles to spectrum Predictability and certainty for policy makers, investors, users of the spectrum resource and consumers

25. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 25 Anticipated Outcomes The following are key anticipated outcomes Promote the effective and efficient management of spectrum to ensure agility, flexibility and adaptability in spectrum administration; Reduce bureaucracy and streamline processes for spectrum assignment Support the attainment of the national broadband targets set out in South Africa Connect, at the speeds and within the timeframes contemplated therein; Provide clarity on the treatment of spectrum in instances where demand exceeds supply; Set aside spectrum for use on an open access basis and through joint private sector investment in infrastructure; and Support the provision of, emergency services, safety and security and sector-specific operations to all South Africans

26. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 26 Identify policy Gaps (Done) Benchmark policy developments in other countries – (Done) Draft revised spectrum policy and input to ICT White Paper – (On-going) Finalization of spectrum policy as part of the ICT Policy White Paper (Mid Feb 2015) Consultation with Clusters (e.g. ESEID) as part of the ICT Policy White Paper (Mid Feb-Mid Mar 2016) Submission to Cabinet – (March 2016) Approved & Gazetted as part of the ICT White Paper ICASA Licensing Process (Implement licensing methods which advance National Objectives through spectrum) Process followed to finalise the Review of the Spectrum Policy and Release of the spectrum

27. Making South Africa a Global Leader in Harnessing ICTs for Socio-economic Development 27 Thank You