ICASA Spectrum Auction: As clear as mud

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

ICASA has also recently opened applications for 2.6 GHz and 3.5 GHz spectrum, and extended the initial application deadline of 25 June to 30 July 2010.

The regulator today announced that it is withdrawing its Invitation to Apply (ITA) for both 2.6 GHz and 3.5 GHz spectrum, saying that it needs to revisit these documents and procedures to iron out ‘some of the shortcomings’ in these documents.

The main issue highlighted by ICASA is working out how the spectrum will be handed out to serve the needs of both WiMax (TDD) and LTE (FDD) applicants.  In-band migration of Sentech and iBurst’s 2.6 GHz spectrum may also be needed to ensure that LTE providers can receive paired spectrum.

Some industry players welcomed the move by ICASA to improve on the current documentation to ensure a fair, transparent and efficient process, but many questions have been left hanging.

A spectrum beauty contest and auction process can take many forms, and the exact format of this process is typically dictated by the desired outcome. 

In South Africa it is not clear whether the aim with this scarce spectrum allocation process is to introduce new competition to the market, to ensure the most effective use of the spectrum or to make as much money for the state through the auction process.

When confronted with this question ICASA Councilor Marcia Socikwa said that the aim is ‘transparency’, and would not be drawn into any discussions about the matter.

Another contentious issue is the 30% Historically Disadvantaged shareholding requirement.  Currently all applicants must have a minimum of 30% direct ownership by historically disadvantaged groups, a requirement which Socikwa said is here to stay.

When quizzed as to whether companies will be allowed to use ‘special purpose vehicles’ like dormant companies to satisfy this requirement, Socikwa lashed out at the lack of transformation in the IT and telecoms industry and described the use of dormant companies which she said is used as ‘fronting’.

But when pressed on whether special purpose vehicle applications will actually be allowed by ICASA, Socikwa once again could not provide an answer.  This non-committal attitude from ICASA drew sharp criticism from many industry players, who are saying that it is exactly this lack of clarity which delayed the spectrum allocation process for the better part of four years.

Good news for industry players is that ICASA intends to revisit its network roll-out obligation on new spectrum licensees of 50% population coverage within two years.  Industry players made it clear that this is not an achievable goal, especially considering the stringent environmental approvals and the time needed to get backhaul capacity to towers.

This latest delay may help create more comprehensive processes for handing out 2.6 GHz and 3.5 GHz spectrum, but for many observers it is merely another delay which has become the trademark of the South African regulator.

ICASA spectrum plans << GIve your views on this process and requirements

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ICASA Spectrum Auction: As clear as mud