MTN given clear competitive benefit: Cell C
By awarding MTN with additional frequency spectrum, the Independent Communications Authority of South Africa (Icasa) has given the operator a clear competitive benefit, a spokesperson for Cell C told MyBroadband.
“Icasa did not follow due process in relation to a scarce resource as it accepted an application from MTN without making it clear that the 5MHz was available to all parties on a ‘first come first served’ basis,” Cell C said.
“Had they done so we would have considered it seriously.”
Cell C’s objection centres around 5 Megahertz (MHz) of bandwidth that was quietly assigned to MTN despite the challenges to the yellow network’s spectrum application that were lodged with Icasa.
Vodacom, Neotel, and Smile Communications – along with Cell C – all registered objections with Icasa.
The objections from the operators had a lot in common: questioning the process Icasa followed and arguing that the regulator didn’t provide enough time to respond.
Not enough time
“The Government Gazette Notice of the application provides only seven days for comments,” Vodacom wrote in its response to Icasa, adding that Icasa did not circulate the gazette as it normally did, nor was it published on the Icasa website.
Vodacom said it only became aware of Icasa’s notice that MTN had applied for the spectrum on 13 June 2013, one day before the closing date.
“In future the Authority should provide at least two weeks for interested parties to comment on such important matters,” Vodacom said.
Incorrect procedure for high-demand spectrum
When asked about the process it followed to assign the spectrum to MTN, Icasa gave the impression that MTN’s application was the routine kind that operators put in from time-to-time for additional backhaul capacity.
MTN intends to use the spectrum for its “non-line-of-sight small-cell backhaul solution,” said Icasa.
As such, it used the first-come, first-served criteria to award the spectrum to MTN.
However, both Cell C and Vodacom contend that the spectrum MTN received between 2,010MHz and 2,015MHz was far more important than Icasa is making it out to be.
“The Authority has determined that this is a high demand spectrum band where demand exceeds supply and imposed a 50% premium on the normal spectrum fees calculated in terms of the spectrum fees regulation of 2010,” Vodacom said in its letter to Icasa.
“Vodacom submits that the Authority must invite applications for this spectrum in terms of section 31(3) of the Electronic Communications Act and regulation 7(2) of the Radio Frequency Spectrum Regulation 2011.”
Cell C highlighted that it was curious the spectrum MTN applied for falls snugly between its and Telkom’s existing allocation in the band.
This is particularly interesting since MTN and Telkom announced they have entered into a Heads of Agreement to conclude “network management services and reciprocal roaming” deals.
Under these agreements MTN will take over financial and operational responsibility for the rollout and operation of Telkom’s radio access network. The two operators will then be able to roam on one another’s networks.
Cell C taking action
“Icasa’s decision to allocate in spite of all of our arguments against this, and without providing reasons as they are required to under the [Promotion of Administrative Justice Act], is concerning,” a Cell C spokesperson said.
“Furthermore, there do not appear to be any associated universal service obligations with this allocation either,” said Cell C.
Cell C said it had asked Icasa to provide its reasons for deciding to grant MTN’s request for the spectrum, and added that it would also be raising its objections with the Competition Commission.
“Furthermore, this additional 5MHz now results in MTN having 20MHz of 2100MHz spectrum, whereas Cell C only has 15MHz,” the operator said.
“If this allocation is upheld, then obviously Cell C should be granted further and wider asymmetry to compensate it for additional spectrum disadvantages.”
Asymmetry and the MTR controversy
Cell C is referring to the asymmetry in call termination rates, which lets it and Telkom Mobile charge Vodacom and MTN more to connect calls to their networks than MTN and Vodacom charge them.
Towards the start of 2014 Icasa caused a stir when it announced new call termination regulations that would see Cell C and Telkom Mobile enjoy increased asymmetry over the next three years.
The new regulations landed Icasa in the High Court, where the judge ruled in favour of MTN and Vodacom’s arguments that the regulator had not followed the correct processes in setting up the new regulations.
Icasa had to go back to the drawing board on the regulations, with the court giving it until the end of September to follow the correct procedure.
In essence, Cell C is arguing that if MTN is being given an advantage spectrum-wise, it should be compensated in asymmetry.
Related MTN spectrum and asymmetry news
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