Spectrum auction for South Africa’s cellular networks was “irredeemably flawed”

Telkom says that Icasa’s decision to have its Invitation to Apply for sought-after radio frequency spectrum set aside is an admission that the process was “irredeemably flawed”.

This comes after the Independent Communications Authority of South Africa (Icasa) announced yesterday that it could not reach an out-of-court settlement with Telkom, E-tv, and MTN regarding their objections to its spectrum auction process.

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

Radio frequency spectrum is the raw capacity used by wireless networks such as Vodacom, MTN, Telkom, Cell C, and Rain.

Icasa said it would consent to an order setting aside its decision to publish the ITAs to avoid long, drawn-out litigation.

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

Icasa said it would consider the issues raised by the litigants, such as the completion of the broadcasting digital migration process and the assessment of competition in the ICT sector.

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.

Telkom welcomed Icasa’s decision.

Telkom group chief executive Sipho Maseko said this would hopefully speed up a fair and equitable licensing process, which will benefit all South Africans.

“We have been anxious to resolve this matter as quickly as possible,” Maseko stated.

“However, in late 2020, our objections fell on deaf ears, and we had no choice but to approach the courts,” he said.

“ICASA’s decision is, in our view, the correct approach and an acknowledgement its auctioning process was deeply flawed and had the potential to harm competition.”

Maseko said that this is a step in the right direction but that many issues remain unresolved.

“We are committed to sincere and meaningful discussions with the regulator to resolve them and open a way to competitive and stable mobile sector,” said Maseko.

“We now call upon ICASA, the Minister and the industry at large to cooperate in making sure that a proper fresh start is embarked upon, that is fair and transparent, which will lead to all of the current market structure flaws to be adequately addressed.”

Shameel Joosub
Shameel Joosub, Vodacom CEO

Vodacom has heavily criticised Telkom’s obstruction of the spectrum auction process.

Vodacom CEO Shameel Joosub said Telkom does not want Vodacom and MTN to get more spectrum because it wants to maintain its competitive advantage.

Joosub said that Telkom has accused Vodacom and MTN of being a duopoly to limit their ability to get additional spectrum.

He argued that Telkom actually has an advantage over its competitors in the space in two key areas:

  1. Telkom has the biggest fibre network in South Africa
  2. Telkom has more spectrum than its competitors

Joosub explained that it is to Telkom’s advantage to delay the spectrum auction as long as possible.

Armed with more spectrum, Vodacom and MTN will cut data prices to make the most of their network investments. It will put pressure on Telkom to do the same, which will hurt its bottom line.

Khumbudzo Ntshavheni
Khumbudzo Ntshavheni, Minister of Communications and Digital Technologies

The Minister of Communications and Digital Technologies, Khumbudzo Ntshavheni, said that she noted Icasa’s announcement.

Ntshavheni said that it does not detract from the engagements she continues to hold with South Africa’s mobile network operators and other relevant parties to find an amicable solution towards an urgent release of the spectrum.

“Minister Ntshavheni is encouraged by the attitude of the various parties on processes that are beneficial towards our national interest,” a spokesperson for the Minister said.

“The release of the spectrum is one of the key reforms necessary to ignite economic growth and recovery, more especially after the Covid–19 pandemic has moved the daily operations of the economy to the digital space.”

MTN also said that it noted Icasa’s statement and is reviewing the content and its potential implications.

MTN has launched its own legal challenge against the spectrum auction process.

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.

Rain declined to comment until the outcome of the court hearing on 15 September, where Icasa will table its consenting to the order to have its ITAs set aside.

Vodacom and Cell C acknowledged our queries and said that they would provide feedback in due course.

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Spectrum auction for South Africa’s cellular networks was “irredeemably flawed”