Vodacom, MTN, Cell C, and Telkom must pay their spectrum tax

The Department of Telecommunications wants stricter controls on spectrum “refarming” to ensure that network operators pay the correct licensing fees.

This is according to its chief director for radio frequency spectrum, Dick Sono, who was speaking at AfricaCom 2018 in Cape Town.

Sono was speaking about how the department does not care what technologies network operators use — and that they are technology neutral.

Challenged on how they can claim to be technology neutral when the department is pushing for operators to get permission to refarm spectrum, Sono said they don’t actually care what technology is used – it’s about spectrum licensing fees.

Refarming refers to the practice of repurposing spectrum for a different technology or use. South Africa’s mobile operators relied on refarming to roll out LTE services, as the government had not assigned new spectrum suitable for the technology.

The Ministry of Telecommunications recently published a draft amendment to the Electronic Communications Act (ECA) which proposed new controls for refarming.

Refarming

Previously, operators could refarm the radio frequencies licensed to them at will.

Should the draft amendment to the ECA pass into law, however, spectrum licensees will have to get approval from industry regulator ICASA to refarm spectrum assigned to them.

ICASA is barred from approving spectrum refarming if it will have a negative impact on competition, but Sono’s answers did not address this aspect of the legislation.

Sono did state that cellular network providers are refarming spectrum all the time, but that they are not paying their fair share of the licence fees because they are not notifying ICASA of the change.

ICASA introduced a new system of spectrum licence fee calculations on 1 April 2012 it called Administrative Incentive Pricing (AIP).

AIP was introduced as a way to manage demand for scarce spectrum, using fees to dissuade operators from hoarding spectrum.

The system was successful in many respects, as unused spectrum was returned to ICASA to reassign.

This included valuable spectrum in the 2.6GHz and 3.5GHz bands licensed to Sentech, which lay completely unused for many years after the failure of its MyWireless broadband service.

However, not all wireless network providers are properly notifying ICASA when refarming causes a change in the AIP calculation, likely increasing the fee they need to pay.

As a result of this, the ministry wants all refarming to be approved by ICASA, Sono said.

Now read: Ramaphosa told Telecommunications Minister to speed up 4G and 5G spectrum

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Vodacom, MTN, Cell C, and Telkom must pay their spectrum tax