Time for a 4G reality check

Within the space of a week, all of SA’s four cellular operators have outlined plans to build fourth-generation (4G) mobile broadband networks based on long-term evolution (LTE) technology. But it’s more a marketing effort for now and consumers shouldn’t get too excited. By Duncan McLeod.

LTE promises incredible things from mobile technology: download and upload speeds far in excess of anything Telkom is able to offer today over its fixed-line network. Imagine downloading a high-definition movie onto your phone or tablet in a matter of minutes. It’s coming, thanks to 4G/LTE.

MTN, Vodacom and Cell C have all said they will launch commercial LTE services in 2012, albeit with limited coverage for now. MTN and Vodacom will provide access to parts of Johannesburg, Durban and Pretoria this year; Cell C isn’t saying where its LTE towers will be built for “competitive reasons”. Telkom, through mobile arm 8ta, won’t offer commercial services in 2012, but will launch a public LTE trial in November and runs tests on it until the end of January.

For many consumers, frustrated with the often-poky Internet connections offered over current 2G/3G technology, this must sound like manna from heaven. Except, it isn’t. Not yet, anyway. The announcements by the operators are really just bluster for now. None can afford not to be seen to be building a 4G network of some description, but none has the radio frequency spectrum — arguably with the exception of 8ta, which has other, more serious challenges — to roll out a national network that will offer top-quality LTE broadband.

Therein lies the most serious problem. Because government has been tardy in formulating a policy on the spectrum that operators will need to build national networks, they’re being forced, at least for now, to reallocate chunks of spectrum they’ve already been assigned. This isn’t ideal because reassigning spectrum is difficult without undermining the quality of their legacy voice networks.

The never-ending delays in migrating broadcasters onto digital technology — in the process freeing up vast swathes of spectrum for wireless broadband — is also not helping. It now appears unlikely the “digital dividend” band around 800MHz, which is crucial for taking 4G services into rural areas, will be freed up much before mid-2015.

It may appear counterintuitive given that the technology is wireless, but LTE also requires an extensive national fibre-optic wireline network if consumers are going to reap the benefits of 4G technology. Because of the significantly higher speeds on offer to consumers, cellphone operators have to connect their 4G base stations to fibre, which provides much speedier links into their core networks and onto the Internet. Without it, the LTE experience will be subpar. Yet SA’s national fibre backbone is not fully developed, despite huge investments in recent years by companies such as FibreCo and Dark Fibre Africa. The infrastructure will become ubiquitous eventually, but that’s still years away.

Then there’s the issue of costs. If each of SA’s mobile networks duplicates infrastructure, as they did when they built their 2G and 3G networks, then costs for consumers of 4G services in SA will be high. Both Cell C CEO Alan Knott-Craig and Convergence Partners chairman Andile Ngcaba are advocating the idea of one national wholesale network, with operators sharing the cost of its construction and then competing at a retail level. It’s an intriguing idea.

On paper, it appears to make sense. Costs will be reduced and consumers will benefit. However, it’s an idea that needs to be interrogated carefully to ensure there isn’t the opportunity for collusion. Ultimately, competition is the best determinant of prices. That’s difficult when there’s only one wholesale player.

In the meantime, expect the operators to bombard the market with extensive marketing about their LTE networks, especially in the run-up to Christmas. But also know it’s more swagger than substance, at least for now.  — (c) 2012 NewsCentral Media

• Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail