Telecoms31.05.2010

2.6 GHz spectrum battle: Potential winners and losers

The Independent Communications Authority of South Africa (ICASA) released regulations on how it will grant radio frequency spectrum licences for competing applications or instances where there is insufficient spectrum available to accommodate demand.

The rules

These highly anticipated spectrum regulations lay down the ground rules on which criteria a company must fulfill to apply for spectrum and which process will be followed to select the companies receiving scarce spectrum.

In its regulations ICASA states that an applicant will automatically be disqualified if, among other things:

  1. It possesses an ownership or financial interest in another application within the same application process
  2. It already possesses spectrum in the range it applies for (unless it has not been given the maximum bandwidth per applicant)
  3. Has less than 30% (thirty percent) direct ownership by Historically Disadvantaged Individuals (HDI)
  4. Tries to collude with other applicants

After the spectrum applications have been filtered to ensure that they meet the minimum requirements laid down by ICASA, a standard ascending-price closed-bid auction where applicants bid against each other will start.

Bidding will start at R750,000 for 2.6 GHz spectrum, and the highest bidders will receive spectrum after this process is complete.

ICASA further requires 2.6 GHz licensees to achieve a population coverage of 50% within two years of being granted spectrum, something which may scare away many smaller operators.  Without significant investment it is impossible to achieve this rollout target.

Potential winners

Vodacom, MTN, Cell C, Neotel and Telkom are all keen to get their hands on 2.6 GHz spectrum.  While Vodacom, MTN, Telkom and Cell C will most likely be looking at rolling out LTE networks in this spectrum range, Neotel may look at a WiMax deployment rather than LTE.

According to BMI-T director Brian Neilson Internet Solutions and MWEB can also be expected to make a play for 2.6 GHz spectrum, and Altech may throw its hat into ring as well.  These companies, unlike the mobile operators, will most likely use the spectrum for WiMax rather than LTE.

WBS/iBurst, which currently has 15 MHz of 2.6 GHz spectrum, is likely to get access to either 20 MHz or 30 MHz of spectrum.  Sentech has 50 MHz of 2.6 GHz spectrum which it is also likely to retain.

Both the auction and the 50% coverage criteria favor companies with deep pockets and existing infrastructure, and according to BMI-T’s Dr. Martyn Roetter the larger operators have an advantage of capital and resources.

There is however the sticky issue of a 30% direct ownership by Historically Disadvantaged Individuals in companies applying for spectrum, a criterion which many of the large telecoms companies don’t have.

Roetter however says that these companies will most likely employ ‘Special Purpose Vehicles (SPV’s)’ to side step this condition.  “They will make a plan,” said Roetter.

2.6 GHz spectrum battle << comments and views

Show comments

Latest news

More news

Trending news

Sign up to the MyBroadband newsletter