Africa's mobile operators are contending with capital and operational demands, pressure from shareholders for higher returns and a lack of sufficient spectrum to address the needs of evolving technology, all of which is creating conflict with regulators over the quality of service.
Regulators in sub-Saharan Africa's leading economies such as Ghana, Nigeria, South Africa, Kenya, Ivory Coast and Uganda, among others, have raised issues over the quality of service provided by mobile operators, insisting that it does not meet the 80 percent satisfaction threshold usually stipulated in the license.
Kenya is the latest country to issue threats of license cancellation if the 80 percent minimum is not met. In a report released earlier this month by the Communications Commission of Kenya, none of the operators had met the threshold. Telkom Kenya had the highest quality-of-service score of 62.5 percent; Airtel Kenya, Essar Kenya and Safaricom Kenya managed 50 percent.
In most countries, operators have deployed 2G networks for voice, have begun deploying 3G (and subsequent improved iterations like HSPA+), and are now moving into 4G for pure data, fixed wireless and fixed fiber market segments, which demands more capital and operational expenditure.
"It is often difficult just to focus on improving or maintaining high quality of the network and services delivered, as other aspects may suffer. For example, if most of the budget is spent on maintaining quality, network expansion may suffer, or new service development may suffer, or investor returns will suffer," said Dobek Pater, managing director at Africa Analysis.
One of the major issues raised is the unavailability of spectrum to push new services and the formulae used in allocation of GSM spectrum. In Kenya, the GSM band is divided equally among the four players, yet Safaricom has the largest market share, an issue raised with the regulator on several occasions.
"The regulator has exercised the principle of equality in spectrum which means that irrespective of the subscriber numbers we all have access to the same share of spectrum in terms of quantum of allocation. It is our position that a new spectrum policy needs to be developed by the Ministry and regulator to take into account the current market scenario, the increased emphasis on QoS and the need for Kenya to embrace new technologies like 4G," said Nzioka Waita, Safaricom corporate affairs director.
The CCK has insisted that it is possible for operators to meet the QoS threshold with the available spectrum and proper management of radio equipment and traffic.
"Networks around the world are able to support higher subscriber base with the spectrum equivalent to what we have issued to operators and to also support other users such as Mobile Virtual Network Operators (MVNOs)," said Francis Wangusi, CCK director general.
The regulator seems to be taking the spectrum debate back to the operators, saying that in rapidly developing countries, modern networks are modular and capable of expansion, without investing in new networks from scratch, rather just adding modules.
"With good radio network and traffic management planning, the spectrum assigned to the mobile operators should be sufficient to support even a higher number of subscribers," added Wangusi.
South Africa has also dealt with the spectrum challenges, with operators being forced to re-farm their existing 3G spectrum in order to roll out 4G in the country. The Independent Communications Authority of South Africa (ICASA) has not licensed any new spectrum in the past few years.
"Vodacom, MTN and Cell C have begun to re-farm their existing 3G spectrum (1800MHz and 2100MHz) in order to build out 4G networks. Effectively, the operators are now squeezing two networks (3G and 4G) into the spectrum that was used for 3G only in the past, which means that voice and data quality on the 3G network may be suffering as a result," Pater of Africa Analysis added.
Most of the networks are privately owned and shareholder returns compete with the desire to spread the network in rural and economically unattractive places, where there is no service. In Kenya, the Universal Service Fund is expected to help operators move into new areas, but its operation has been hampered by disagreements with the operators over how it should be run.
"As currently constituted, USF is managed and operated by the regulator. However, we continue to engage with the Ministry Of Information and Communication and with the regulator towards a framework that provides direct subsidies to operators who have delivered services in remote areas. This could come in the form of spectrum waivers or direct subsidy to rollout of services like fiber in remote and commercially unviable areas," Safaricom's Waita said.
Safaricom is due for license renewal in June, and it is unlikely that the regulator will raise major issues, given that the company is the largest contributor to the Kenyan exchequer, employs a sizable number of telecom experts and has invested in network rollout to the farthest parts of the country.