Legal battles could mean big delays for spectrum auction

The legal battles over the Independent Communications Authority of South Africa (ICASA)’s proposed spectrum auction could cause the allocation of new spectrum to be delayed until after March 2022.

In a briefing to the parliamentary committee on communications, ICASA provided an update on the legal conflicts surrounding its proposed spectrum auction.

Of significance was the application brought by Telkom and partially supported by Etv, which argued that the assignment of spectrum in the 700MHz – 800MHz band cannot occur until the digital migration process is completed.

“In particular, Etv supports Telkom’s submission that it is irrational and unlawful for ICASA to auction spectrum in the 700MHz and 800MHz frequency bands where these spectrum bands are still being used by TV broadcasters and where there is no clarity as to when the digital migration process will be completed,” ICASA said.

Telkom is seeking a court order that digital migration be completed by 30 June 2021. However, President Cyril Ramaphosa subsequently stated during his State of the Nation address that the digital migration process will be completed by March 2022.

This means that if Telkom and Etv are successful in their litigation but the deadline for digital migration remains unchanged, the allocation of the 700MHz and 800MHz spectrum, which is a crucial part of the spectrum set to be auctioned, will only take place after March next year.

This would effectively delay the assignment of high-demand spectrum and the consequential reduction in mobile data prices.

ICASA is opposing Etv and Telkom’s application, the hearing for part of which took place last month with judgement being reserved.

Legal battleground

MTN has also filed an urgent review application against the auction process, arguing against ICASA’s tiering and opt-in schemes.

This case will be heard on 9 March 2021 and will be opposed by ICASA, which will file its answer during the week of 1 March 2021.

Vodacom has also stepped into the ring, filing a counter-application against MTN’s application. This will be heard together with MTN’s application this month.

“Vodacom’s application seeks a number of declaratory orders regarding the rules and principles which ought to apply to the Opt-In Round,” ICASA said.

“The purpose of Vodacom’s counter-application is for the Court to confirm the correct interpretation of the Opt-In Scheme.”

“It is Vodacom’s submission that the Opt-In Scheme is reasonably capable of bearing an interpretation that does not lead to the irrational outcome contemplated by MTN, hence its counter application, for the Court to adopt the correct interpretation which will avoid unlawfulness,” ICASA added.

ICASA is due to hold the auction for the licencing of 406MHz of IMT spectrum in the 700MHz, 800MHz, 2,600MHz, and 3,500MHz bands by 31 March 2021.

Effect on data prices

Telkom has said that it would rather the spectrum auction is delayed than conducted in its current form.

“Mobile data prices will remain high if the spectrum is released on these terms, because it is not the technical benefit that you get that will determine the prices, but it will be the level and extent of competition and market structure that will determine the retail prices,” Telkom Group Executive for Regulatory Affairs and Government Relations Siyabonga Mahlangu previously told MyBroadband.

He explained that Telkom’s application not only asks that the ITA be reviewed and set aside but also requests that the court direct that “certain things” must happen, which would help spur the process along.

According to Mahlangu, the Competition Commission’s Data Services Market Inquiry showed the cause of high mobile data prices to be the lack of effective competition and the duopolistic structure of the market.

“If you’re going to license spectrum in the ITA as they are, you’re going to perpetuate that distance again,” Mahlangu said.

“We should be able to still have the spectrum released this year. But the terms of that release must be the focus,” he said.

Despite this, President Ramaphosa’s statement that digital migration will be completed next year means that Telkom’s argument that spectrum in the bands used for analogue TV transmission should not be assigned results in the mobile network potentially advocating for the delay of up to a year for the allocation of a major portion of the high-demand spectrum.

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Legal battles could mean big delays for spectrum auction