Spectrum auction delay is bad news for South Africa

Liquid Intelligent Technologies (LIT) has said that delaying the release of high-demand spectrum in South Africa further is “not great” for the country.

This comes after Telkom and Etv won an interdict against the Independent Communications Authority of South Africa (ICASA), causing it to halt its plans to auction off spectrum until the case can be heard by the High Court.

The CEO of Liquid Intelligent Technologies’ operations in South Africa, Deon Geyser, said that the company firmly believes that the spectrum assets government holds should be used by the telecommunications industry.

He also affirmed that LIT has applied for additional spectrum in response to the Invitation to Apply that ICASA issued last year.

“It is not easy to make sure everyone is happy with the [spectrum] application process,” Geyser acknowledged.

“To delay the spectrum auction process further… South Africa is already ten years behind the high-demand spectrum on 4G, you know. To delay that further is not great for the country.”

Legal challenges

Telkom launched its legal challenge against ICASA’s spectrum application process at the end of last year. The company said that if ICASA goes ahead with the auction as planned it will mess up South Africa’s telecommunications industry for 20 years.

It also warned that mobile data prices in South Africa will remain high if ICASA does not make changes to the spectrum auction.

Telkom’s two major complaints about the auction were as follows:

Firstly, several important spectrum bands in the 700MHz and 800MHz regions are not commercially viable as they are still in use by broadcasters.

Telkom wants assurances from the High Court that the government will be forced to migrate broadcasters out of those bands, as it will have no incentive to do so once it has pocketed the money from the auction.

Secondly, Telkom argued that ICASA went ahead with the process without first finishing its Mobile Broadband Service Market Inquiry. Telkom contends that this is unlawful and irrational.

The root of this argument is that Telkom does not believe ICASA is doing enough to break the dominance of Vodacom and MTN in the market.

In addition to the court case brought by Telkom, MTN has launched its own legal challenge against the structure of ICASA’s auction.

MTN objected to ICASA’s plan to exclude Vodacom and MTN from the first round of the auction, where certain lots of spectrum will be made available to smaller network operators.

ICASA termed this exclusive round the “Opt-In Scheme”.

A particular sore spot for MTN is the inclusion of frequencies in the 3,500MHz band as part of the opt-in round. This is because MTN said it needs spectrum in this band to advance its 5G roll-out in South Africa.

MTN warned that ICASA risked undermining its auction by allowing smaller operators to potentially pick up extremely valuable spectrum for much cheaper than the larger operators would have been willing to pay.

It also warned that if smaller operators snatched up all the 3,500MHz spectrum, the larger networks might not be interested in bidding on the scraps that remain.

Vodacom has filed a counter-application against MTN’s, saying that there was a way to continue with the auction as-is while also allaying MTN’s fears. Vodacom’s application will be heard together with MTN’s this month.

Delays expected

Telkom has asked for a court order which sets the digital migration deadline for 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.

Now read: This table shows what the 5G spectrum fight in South Africa is about

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Spectrum auction delay is bad news for South Africa