Good news for mobile data prices in South Africa

The Independent Communications Authority of South Africa (ICASA) announced on Friday that expects to have a settlement agreement in place with Telkom and MTN by the end of August 2021 and get its long-overdue spectrum auction back on track.

This is good news for mobile data prices in South Africa, as mobile network operators have long said that gaining access to additional spectrum would allow them to improve coverage and reduce prices.

The price reductions will come about thanks to reduced costs, the networks have explained.

Currently adding capacity to their networks means building additional cellular sites at great cost. With more spectrum, they will be able to add capacity to their networks without having to build so many more towers in areas where they already have towers.

Telkom and MTN legally challenged ICASA’s planned auction for highly sought-after radio frequency spectrum, citing concerns over the process followed and design of the auction.

Partially state-owned telecommunications operator Telkom filed its legal challenge at the end of 2020. Its major complaint is that the spectrum it is interested in is still occupied by South African television broadcasters. E-tv later joined Telkom’s case against ICASA.

Telkom’s complaint stems from the fact that South Africa is yet to complete its migration from analogue to digital terrestrial television broadcasting, a process originally set to be completed in 2011.

One of the benefits of this digital migration is the release of the “digital dividend” — substantial portions of the radio frequency spectrum that have been earmarked for use in 4G and 5G networks.

Some of the spectrum ICASA has included in its auction is on these digital dividend bands, and Telkom argued that it could not bid on this spectrum it sorely needs knowing that it is still occupied.

After government gets its money from the auction, there is no further incentive for it to expedite the digital migration and it could end up paying for a spectrum resource it can’t use, Telkom said.

Telkom also raised procedural issues around ICASA’s spectrum auction and complained that the regulator isn’t doing enough to break the “duopoly” of Vodacom and MTN with the opportunity.

MTN, on the other hand, has taken issue with the fact that it and Vodacom are being excluded from the first round of the auction.

According to MTN, there has been a lack of clarity from ICASA about which blocks of radio frequency spectrum will be auctioned off in this exclusive round, and it is concerned about being locked out of bidding on the spectrum that it wants.

It should be noted that Telkom and MTN are fighting with the regulator over two different blocks of radio frequency spectrum.

The digital dividend spectrum that Telkom is interested is 800MHz or lower, while MTN is arguing over spectrum in the 3,500MHz range.

The two operators want these specific blocks of spectrum because they complement their existing holdings.

Dr Keabetswe Modimoeng, ICASA Executive Chair
Dr Keabetswe Modimoeng, ICASA Executive Chair

ICASA’s announcement comes after President Cyril Ramaphosa said on Thursday that he hoped the telecommunications operators and the regulator would have the dispute mediated rather than fight it out in court.

“We note and welcome the comments made by the President of the Republic on the current spectrum legal deadlock over the past week,” Modimoeng stated, adding that ICASA is close to an amicable settlement with the parties it is in litigation with.

ICASA said that as part of the settlement discussions, it is consolidating submissions with active litigants, and will outline a way forward in due course.

“In March 2021, the Authority issued communication in respect of its position on mediation and the considerations related to possible settlement discussions with active litigants,” stated ICASA.

“The considerations were informed by, amongst others, counsel’s advice to embark on an expeditious settlement negotiation process that would result in a binding outcome capable of being made an Order of Court. The option and decision to enter into settlement negotiations has now proven to be effective as well as efficient, and afforded litigants the latitude to express themselves, thereby engaging thoroughly on the matters at hand.”

Modimoeng said that as soon as a settlement is reached, ICASA will only need a few more weeks to set the spectrum auction in motion and to communicate the new closing date for the Wireless Open Access Network (WOAN) applications.

“The Authority would like to finally advise that, even though its current preoccupation is to find a speedy resolution through the ongoing negotiations between litigants, the formalities in respect of the appeal process occasioned by the judgement of 8 March 2021 are still continuing in parallel as previously communicated,” ICASA said.

“The outcome of the current settlement negotiations will, however, inform the future conduct of the appeal.”

Now read: Good news for mobile operators as temporary spectrum is extended

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Good news for mobile data prices in South Africa