Michael Jordaan answers tough questions about Rain’s spectrum fight

The fight over temporary spectrum has seen battle lines drawn between Vodacom, MTN, and Telkom on the one side and Icasa and Rain on the other.

In April 2020, Icasa temporarily assigned radio frequency spectrum at the start of South Africa’s Covid-19 national state of disaster.

The regulator has extended the duration of the temporary radio frequency spectrum assignment twice but now wants the spectrum back by 30 November 2020.

This decision did not go down well with the three largest mobile operators — Vodacom, MTN, and Telkom — which are using the spectrum to ensure there is no network congestion.

The three operators have launched legal action against the regulator’s decision, arguing that the temporary spectrum must remain in place for the duration of South Africa’s Covid-19 national state of disaster.

The operators added that they had seen unprecedented data traffic growth since the state of disaster began, impacting the quality of service on their networks.

Cell C and Liquid Intelligent Technologies SA also favour extending the use of temporary spectrum until an auction takes place.

Rain, however, does not share this view.

The operator has joined Icasa’s fight against Telkom, Vodacom, and MTN and has filed papers in the high court supporting the regulator’s decision to hand temporary spectrum back by 30 November.

Rain CEO Brandon Leigh said the temporary spectrum was allocated on an emergency basis, so no consideration was given to the long-term effects on the market.

Leigh said the perpetual licensing of temporary spectrum creates a disincentive for the recipients to support the spectrum auction as effectively they have already been awarded the spectrum they would otherwise need to buy at auction.

Rain director and shareholder Michael Jordaan have also weighed in on the debate, highlighting that the operators barely use their temporary spectrum.

“The 700MHz and 800MHz temporary spectrum assignment has been deployed to 5 MTN sites only. To my knowledge, MTN has about 12,000 sites in total,” said Jordaan.

“As such, MTN has deployed temporary sub-1 GHz spectrum at 0.08% of its sites. This is like planting a small vegetable patch and then claiming the sole rights to, but not using, a huge farm.”

“It is much better for consumers if the farm is fully cultivated. This requires the temporary spectrum to be returned and the auction to go ahead.”

The table below, which comes from MTN, shows the use of temporary spectrum.

Questions have been raised whether Rain’s support of Icasa’s decision to take back temporary spectrum is merely to protect its commercial interests.

Rain’s main revenue stream is charging Vodacom to roam on its network. Its 1,800MHz and 2,600MHz spectrum bands are used to enhance the capacity of Vodacom’s network.

The only reason Vodacom pays Rain to roam on its network is a lack of spectrum. The more spectrum Vodacom has, the less it uses Rain’s network, and the less money Rain gets.

It is, therefore, in Rain’s interest to ensure Vodacom does not keep the temporary spectrum.

MyBroadband asked Michael Jordaan about their stance on temporary spectrum and whether Rain is merely serving its commercial interests.

Why are you against mobile operators keeping the temporary spectrum until the auction takes place? It surely does not affect whether the auction takes place or not?

There is a high probability that the temporary spectrum arrangement, which was initiated for a very different purpose and term without taking the long-term effects on the telco industry, will effectively become permanent.

Large Telcos are both litigating against the spectrum auction taking place — which is the correct long-term solution — as well as litigating against the return of temporary spectrum.

“Temporary” was always meant to be “temporary”, awarded in “good faith” for “immediate use”. Now, 20 months later, it’s starting to look far more than temporary.

Why are you confident the spectrum auction will take place this time around when the government and ICASA failed to do it for the past decade?

Sadly, I am not confident at all, which is precisely why Icasa must be focused on the permanent licensing of spectrum, rather than having to defend itself against the large operators.

Litigation should be the last resort in a good faith situation. We welcome the Minister of Communication’s intervention to rather find an amicable solution.

There are other solutions possible, such as Icasa allowing spectrum pooling on a permanent or long-term spectrum arrangement basis. This is much better and more efficient for the industry and consumers, compared to squatting on certain bands of the temporary spectrum, which is what is happening now.

Spectrum has been wasted for over a decade while the government could not do what it should. Is it not better that the spectrum is at least used — and not wasted — while the government tries to get its ducks in a row?

In the short term it was very good that the temporary spectrum was made available with the intent to meet the expected additional demand brought about by the Covid-19 lockdown but now, 20 months later, it is having a negative impact on competition, as it benefits the large players because they were allocated much more spectrum under the temporary regime than what they would have been allocated under a permanent spectrum allocation process.

We are seeking a pro-competitive, pro-consumer, long term solution, which is why the spectrum auction must go ahead. Only once spectrum is properly allocated through a transparent, fair and pro-competitive process, will the industry have the confidence to invest in the infrastructure to fully leverage the spectrum and bring data costs down.

Is Rain not merely fighting for temporary spectrum to be given back because it is losing revenue from Vodacom roaming? Hence, is Rain not putting its own financial interests before that of the country and consumers?

No, the wholesale agreement between Rain and Vodacom is of a long-term nature and is not affected by the temporary spectrum allocation.

Now read: All mobile operators want to keep temporary spectrum — except one

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Michael Jordaan answers tough questions about Rain’s spectrum fight