Safaricom gets headstart in scramble for frequencies

Saturday April 11 2015

Safaricom limited chief executive officer Bob Collymore and chief technology officer Thibaud Rerolle during the launch of the 4G LTE technology on December 4, 2014. Experts say if the trials reflect what will happen in the commercialisation stage, the ground for 4G rollout is tilted in favour of the market leader. PHOTO | SALATON NJAU |

Kenya’s communications regulator is on the spot over claims of bias in the allocation of frequencies for trials of faster data transmission to the country’s biggest telcos, Safaricom and Airtel.

Allocation of the Fourth Generation (4G) spectrum on a full-time basis is expected to be hotly contested later this year with each telco looking to get an edge in offering value-added products at faster speeds through the technology.

Kenya is the second country in East Africa to pilot 4G after Rwanda which launched it last year. The rollout is expected to foster faster Internet speeds.

But industry players have already started raising eyebrows after the Communications Authority gave Safaricom stronger frequency for trials of the 4G service than its rivals.

The 1800 MHz range allocated to Airtel is expensive to maintain because it requires installation of more base stations to transmit the same quality as the 800 MHz at Safaricom’s disposal. A new base station would cost Ksh15 million ($163,000), regardless of the frequency type. 4G is set for commercialisation early next month.

READ: Airtel invests in upgrade of Kenya network


Safaricom’s rivals fear that it will get a fast-mover advantage by offering better quality at minimal cost to its customers. This would entrench the company’s leading position in the market.

“The provision of the 800 MHz band tips the scales in favour of the dominant player in the market — Safaricom,” said Vincent Lobry, chief executive of Orange Telkom (Kenya) in an e-mail to The EastAfrican.

“The industry seeks to know which mechanism the regulator will use to allocate these frequencies to other players in the market.”

Correspondence seen by The EastAfrican shows the terms of trials between Safaricom and Airtel differ.

Safaricom was issued with a trial LTE/4G licence on February 9, 2015 in the 800 MHz band for a period of three months pending licence issuance while Airtel was issued with a licence on February 10 in the 1800 MHz band for a period of 12 months “after which the Authority will review and make a decision on whether to issue a full licence.”

Orange Telkom Kenya already has a technology-neutral licence, which allows it to launch any telecommunication services, including 4G, but it has to acquire the bandwidth and capacity compatible with the technology.

Sources said there could be a plan to allocate Safaricom the biggest chunk of the 700-800 MHz band following an agreement with the Ministry of Interior and Co-ordination of National Government that will see Safaricom roll out a national surveillance, communication and control system for Nairobi and Mombasa.

READ: Delayed 4G rollout could lock out telcos eyeing digital TV market

Trial stage

The original plan for the 4G rollout was to allocate the spectrum to a consortium of operators and equipment suppliers rather than to one operator, but this seems not to have worked as the telcos have to apply for the allocation in a trial stage, after which the CA determines whether they are qualified for commercialisation.

In a letter to the CA, Airtel proposed the multi-operator core network (MOCN) approach, where each network operator has its own core network from a shared infrastructure.

If there are existing base stations for the 4G network deployment, they should be shared depending on the terms of agreement between the two operators.

“We propose that commercial launch be allowed to sharing operator after three  months of completing sharing agreement,” said Airtel in the letter, which has been seen by The EastAfrican.

This means that if Airtel were to be allowed to share the 800MHz band with Safaricom, after three months Airtel would get its own allocation without going through an individual trial phase.

According to Safaricom officials, the spectrum allocation formula should be revised from time to time to reflect the changes in each player’s subscriber base, among other factors.

“Operators who show a more efficient usage of frequency spectrum per customer should be given access to more spectrum or greater spectrum payment concessions to encourage efficient use of the scarce resource,” said Nzioka Waita, Safaricom’s corporate affairs director.

Although the two ranges of 800 MHz and 1800 MHz remain the most attractive LTE (Long-Term Evolution) spectrum due to the large number of devices that subscribers can use, the 800 MHz offers better indoors coverage.

The rising population and buildings in urban areas are posing a barrier to effective communication, with operators seeking to deploy the most efficient band to match the challenge.

“The 800 MHz LTE is the best network spectrum and it needs to be shared to ensure one party does not get the benefit of the fast mover advantage,” said Airtel’s  letter.

Experts say if the trials reflect what will be allocated in the commercialisation stage, the ground for the 4G rollout is already tilted in favour of Safaricom.

“It could cost Airtel up to four times to roll out infrastructure for the same coverage,” said Meoli Kashorda, executive director of the Kenya Education Network.