Spectrum auction going back to the drawing board

The Independent Communications Authority of South Africa (Icasa) says it has unfortunately not been able to reach an out-of-court settlement with Telkom, E-tv, and MTN regarding their objections to its spectrum auction process.

This spectrum auction would see the assignment of high-demand spectrum licences, and the licensing for a national Wireless Open Access Network (WOAN).

Icasa announced that it has decided to consent to an order setting aside its decision to publish the Invitations To Apply (ITAs) to avoid long drawn-out litigation.

With ITAs set aside, Icasa said it must reconsider the licensing of the spectrum and the WOAN.

It said it hopes the auction of the high-demand spectrum can take place by the end of January 2022, provided the litigants in the High Court case accept the proposed consent order on 15 September.

Icasa planned to hold its long-awaited auction of high-demand spectrum by 31 March 2021.

The auction was delayed after Telkom obtained an interdict against Icasa which stopped it from taking place until the case was heard by the High Court in Pretoria.

Telkom said the spectrum auction in its current format will “mess up the industry for 20 years” and that there are “a number of grounds of review”.

This includes that the “digital dividend” spectrum in the 700MHz and 800MHz bands are not currently commercially viable because broadcasters are still using it.

Telkom also argued that Icasa has not considered the lack of competition in South Africa’s cellular market in its spectrum auction plans.

MTN’s issue with the auction was that Icasa planned to exclude “Tier 1 operators” from the first round. Vodacom and MTN would therefore not be able to bid on certain lots of spectrum.

MTN warned that this may cause it to lose out on the 5G spectrum it needs, and that it may choose not to participate in the rest of the auction if it can’t get the spectrum best suited to its network.

MTN also said that the smaller operators would pay far less for that spectrum than it would be willing to.

The disputes landed in court, and Icasa said it has for the past four months engaged extensively and intensively with the active litigants with to reach a settlement agreement so that the licensing process can proceed without further delays.

“Despite the parties’ best efforts, however, a comprehensive settlement has not been achieved at this stage,” Icasa stated.

Icasa said that the Minister of Communications and Digital Technologies has committed to completing the broadcasting digital migration process within five months from the date of the consent order.

If the digital migration is finally completed — more than 10 years after its original deadline — this will remove one of Telkom’s grievances.

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

“We noted with grave concern that some parties at the negotiations have sought to introduce matters that were not related to the issues in dispute,” said Icasa chair Keabetswe Modimoeng.

“We therefore urge all parties to confine themselves to the issues in dispute and the relief, which is sought in the papers filed of record, as venturing into other unrelated matters can only serve to derail the confirmation of the order to which Icasa consents.”

Modimoeng said that should the parties confine themselves to the matters currently on the table, with an appreciation that spectrum needs to be licensed urgently on a more permanent and transparent basis, the auction of the high-demand spectrum can take place by the end of January 2022.

He said that Icasa is not in a position to abandon the auction model as a method of assigning high-demand radio frequency spectrum.

“According to the International Telecommunication Union (ITU), auctions are commonly recognised as the best way of assigning key mobile spectrum,” said Modimoeng.

“The benefits of auctions are well known to regulators and the ICT industries globally. Among other benefits, auctions allow spectrum to be allocated to its highest value use and to the highest value set at a price that reflects opportunity costs.”

Modimoeng said that auctions are fair, open and transparent, and can be verified by third party accountants.

He said that Icasa is also willing to separate the auction of high demand spectrum and the licensing of the WOAN.

“In this regard, we urge litigants to allow the auction process to continue while free-to-air broadcasters and all other interested stakeholders can get another opportunity to consult on the construction of the WOAN, and how it can best suit various interest,” said Modimoeng.

He added that Icasa is encouraged by the posture taken by the newly appointed Minister of Communications and Digital Technologies, Khumbudzo Ntshavheni, to actively participate in efforts to bring this litigation to an end by committing to completing the broadcasting digital migration process and the processes related to it so that all perceived impediments to the licensing process are removed.

“The current spectrum litigation impasse is nothing short of a lose-lose situation for all, i.e., consumers, industry players and the Authority, as it serves to hamstring the growth of the sector and the full realisation of economic spinoffs and cost-benefits for consumers,” Modimoeng said.

Now read: “Digital load-shedding” warning

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Spectrum auction going back to the drawing board