Telkom up to its old tricks

Last month, Telkom launched a legal challenge against ICASA’s planned spectrum auction, which will give operators valuable radio frequency spectrum for their 4G and 5G networks.

Telkom argued that digital dividend spectrum is not currently commercially viable and that ICASA’s plans have not taken the lack of competition in South Africa’s cellular market into account.

Telkom executive Siyabonga Mahlangu warned that if the spectrum licensing process were to continue as is, ICASA would mess up the industry for 20 years.

The latest legal challenge is nothing new. Telkom has been using regulatory and legal challenges for the last 25 years to keep competition at bay.

In 1997, for example, Telkom tried to stop competition in the Internet market by claiming that Internet services in South Africa’s fall under its telecommunications monopoly.

When the regulator (Satra) ruled that no single entity would have control over the country’s Internet, Telkom approached the Pretoria High Court to challenge this ruling.

Telkom was ultimately unsuccessful in claiming a monopoly on Internet services, but it then proceeded to engage in various anti-competitive activities in the Internet services market.

The Competition Tribunal found that Telkom had leveraged its upstream monopoly in the facilities market to advantage its own subsidiary.

Telkom admitted to excessive pricing and engaging in “margin squeezing” against competitors, which resulted in a R200-million settlement agreement.

It is now once again trying to keep competition at bay by preventing operators from getting more spectrum.

Additional spectrum will make it easier for mobile networks to drop data prices and create a more competitive mobile data market.

Telkom’s main value proposition in the mobile market is lower data prices, and additional spectrum will erode this value proposition. It therefore wants to stop this from happening.

Expert opinion

World Wide Worx CEO Arthur Goldstuck told eNCA that ICASA’s spectrum allocation process document is far from flawless.

“It doesn’t truly open the way to competition, and it does not create an equal playing field either,” Goldstuck told ENCA.

“Telkom does have a point that we will be stuck with this spectrum allocation for the next 20 or 30 years, so it should be carefully considered.”

There is, however, a problem. Telkom and the government have held back the broadband industry in South Africa for 25 years.

“Wanting to protect the next 20 years while ignoring the ills of the last 25 years is a little disingenuous,” he said.

Goldstuck warned that while a revision of the current spectrum allocation process is possible, it could delay the handing out of spectrum for many years.

Now read: Telkom sues over 5G spectrum auction

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Telkom up to its old tricks