Telkom’s spectrum auction challenge a weak delaying tactic – Vodacom CEO

Telkom’s legal challenge against ICASA’s high-demand frequency spectrum auction is a delaying tactic that is holding South Africa’s mobile network operators back from providing better and cheaper broadband access.

This is the view of Vodacom CEO, Shameel Joosub, who spoke to MyBroadband about the delay of ICASA’s spectrum auction which was set to take place by the end of March 2021.

“I think people are playing games. I think it’s important that we put this behind us and actually do what’s best for the country for a change,” Joosub said.

Access to more spectrum would help mobile operators to make data cheaper and free up additional capacity.

Through the spectrum auction, mobile operators will get access to 700MHz, 800MHz, 2,600MHz, and 3,500MHz bands. Vodacom, MTN, Telkom, Cell C, Rain, and Liquid Telecoms will participate in the auction.

Telkom has, however, stalled the process, arguing that ICASA’s auction process is flawed.

It said the 700MHz and 800MHz bands being auctioned are currently still used by TV broadcasters – like the SABC and E-tv – for terrestrial analogue transmissions.

For this reason, Telkom said these frequencies were not commercially viable, and asked the court to stop the auction from going ahead until its case on how the ICASA process was flawed is heard.

The high court has granted Telkom this interdict.

Telkom headline

Key to this debacle is the completion of South Africa’s digital migration process.

The country is currently switching off the analogue transmitters on a province-by-province basis, and is expected to be done with the process by March 2022.

After this, TV broadcasts will only be carried via digital transmission, which means they will occupy less spectrum.

Until then, mobile network operators will be unable to use the “digital dividend” within the 700MHz and 800MHz bands.

Joosub said the current spectrum starved environment required telecommunications companies to collaborate to support surging mobile data traffic on limited spectrum.

Examples of these are Vodacom’s roaming agreement with Rain, and its partnership with Liquid Telecoms.

“What’s disappointing is that telcos have had to run around trying to find arrangements to try and cope with the traffic,” Joosub said.

“Spectrum is key. Spectrum is the heart and the lifeline of any telco.”

He said that South Africa and Vodacom traditionally took a leading role in mobile network technologies.

“We were one of the first networks in the world to launch GSM. We were one of the first networks to roll out 3G,” Joosub said.

“Since then, it has headed downhill. With 4G, we had to make a plan, but with 5G it is more difficult,” Joosub said.

Joosub was referring to Vodacom and MTN re-farming spectrum to offer 4G services as they did not have access to LTE spectrum. This process came at a significant cost to the operators.

The only reason Vodacom was able to roll out 5G in a few areas in 2020 was the allocation of temporary spectrum as an emergency measure to alleviate network traffic during the lockdown. It also had to leverage its roaming agreement with Liquid Telecoms in this regard.

Joosub said 5G was crucial to providing greater connectivity, but South Africa would not see significant rollouts unless more spectrum became available.

Shameel Joosub
Vodacom Group CEO Shameel Joosub.

Joosub said Telkom’s argument that the spectrum auction could not go ahead based on the 700MHz and 800MHz bands currently being in use was weak.

While it’s true that this spectrum would not be available immediately, he said that in other countries spectrum had been licenced before a date by which it could be used.

This was the case during Joosub’s stint as Vodafone Spain CEO.

“When I was in Spain, they auctioned the spectrum ahead of time, but they gave a definitive date by which the spectrum would be available,” Joosub said.

“That is what our government is trying to do.”

This approach had a significant benefit as it allowed operators to plan, prepare, and build infrastructure to use the new spectrum.

“The day the spectrum becomes available, we flip the switch and turn it on,” Joosub said.

Senior telecoms executives have previously told MyBroadband that Telkom was purposefully delaying the auction to prevent Vodacom and MTN from getting more spectrum.

If Vodacom and MTN had access to more spectrum, they would be able to lower their mobile data prices. That would be bad news for Telkom.

Vodacom and MTN have greater network coverage than Telkom, and are able to offer better network quality and speeds.

Telkom relies heavily on pricing to remain competitive, and would therefore be at risk of losing customers if Vodacom and MTN dropped prices.

Now read: Strong Vodacom performance, with a profit of R27.6 billion during lockdown

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Telkom’s spectrum auction challenge a weak delaying tactic – Vodacom CEO