42 No. 37261 GOVERNMENT GAZETTE, 24 JANUARY 2014 5.2.5.2 Spectrum for National Security Every national security structure needs to have permanent access to radio frequencies to meet vital security tasks. This is based on strategies, doctrines and different policies that national security structures adhere to. The nature of high mobility of security operations and their logistics support requires wide use, with high-speed capacities of voice, data and image communications, surveillance, reconnaissance and reporting systems playing a vital role in the command and control system. Many of these requirements can only be met with the use of radio systems. The equipment of national security communications adds and multiplies the power of forces. That is why the use of radio frequencies' spectrum is evaluated as one of the preliminary conditions for successful national security operations. Those parts of government that use the spectrum for public purposes have complained that they are treated like commercial operators due to the manner in which they are charged for the use of the spectrum. They complain that government has a Constitutional mandate to provide the services they provide and therefore their use of the spectrum should be considered within this context. 52.5.3 Will Spectrum Shortage be a Driver for a Wholesale Model? Licence shortages and a lack of available spectrum are two significant factors driving operators to find new ways of sharing networks based on cooperation with a third party. In many markets, licences for new technologies, such as LTE, are being launched. To use new spectrum in a way that is technically efficient, competitive, and of maximum consumer benefit, especially when it comes to LTE on the sought-after 800 and 700 MHz bands, no more than three operators tend to be granted the rights to use new bands to offer competitive services. This leaves some without the possibility of differentiating themselves from new services. Those excluded from the market in these situations are then forced to launch new technologies through shared networks. In markets such as Western Europe and India, regulators today tend to take a liberal view of the sharing of newly issued licences, stimulating increased competition - and thus facilitating the wholesale approach. To drive operational efficiency and obtain other benefits beyond cost savings, most of today's operators use some level of outsourcing. In the next step of the industrialization process the wholesale model operations and assets are shared among multiple players through a third party, resulting in greater savings and further increasing efficiencies. The Department of Communications earlier indicated the desire to establish a Spectrum Management Agency. The idea of a Spectrum Management Agency emanates from the Broadcasting White Paper. A review on this issue is required. 5.3 Overview of the Market 5.3.1 Fixed- Line There are two operators licensed to provide fixed line network and services. Four operators provide mobile communications services. Telkom is the incumbent that has undergone some restructuring in the form of a 30% buy-out of its share and listing in the Johannesburg and New York Exchanges. Neotel is the second national operator, licensed in 2001 although it 38 This gazette is also available free online at www.gpwonline.co.za