{"id":384524,"date":"2021-01-28T18:14:31","date_gmt":"2021-01-28T16:14:31","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=384524"},"modified":"2021-01-28T18:15:48","modified_gmt":"2021-01-28T16:15:48","slug":"strange-blunder-by-icasa-causes-spectrum-auction-mess","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/telecoms\/384524-strange-blunder-by-icasa-causes-spectrum-auction-mess.html","title":{"rendered":"Strange blunder by ICASA causes spectrum auction mess"},"content":{"rendered":"<p>The Independent Communications Authority of South Africa (ICASA) has messed up the definition of Tier-1 and Tier-2 operators in its current spectrum auction process, which has resulted in a <a href=\"https:\/\/mybroadband.co.za\/news\/cellular\/384388-mtn-launches-legal-action-to-fight-spectrum-auction-issues.html\"><strong>legal challenge from MTN<\/strong><\/a>.<\/p>\n<p>ICASA published its Invitation to Apply (ITA) notice on 2 October 2020 to invite applications for new spectrum in the IMT700, IMT800, IMT2600, and IMT3500 bands.<\/p>\n<p>These spectrum bands are suitable to provide national broadband wireless access services, including 4G and 5G.<\/p>\n<p>As part of its spectrum auction structure, ICASA created two categories of mobile operators &#8211; Tier-1 and Tier-2.<\/p>\n<p>The regulator then introduced an opt-in auction round in which Tier-1 operators will not be allowed to participate.<\/p>\n<p>The definitions for Tier-1 and Tier2 operators are therefore core to ICASA\u2019s spectrum auction and should be very clear and concise.<\/p>\n<p>This is, however, not the case.<\/p>\n<p>ICASA\u2019s ITA defined Tier-1 and Tier-2 operators as follows:<\/p>\n<ul>\n<li><strong>Tier-1 operator<\/strong> &#8211; A Wholesale National Operator that has a retail market share in excess of 45% in more than 10 municipalities.<\/li>\n<li><strong>Tier-2 operator<\/strong> &#8211; A Wholesale National Operator that has a retail market share below 45% in less than 10 municipalities.<\/li>\n<\/ul>\n<p>An inspection of these two definitions reveal that both these definitions refer to an operator with significant market power, instead of separating mobile operators.<\/p>\n<p>It is assumed that ICASA\u2019s intention is to split mobile operators into two groups \u2013 Tier-1, which has significant market power, and Tier-2, which does not significant market power.<\/p>\n<p>This is exactly what ICASA has done with the six applicants which were split into the groups below:<\/p>\n<ul>\n<li><strong>Tier-1<\/strong> \u2013 Vodacom and MTN<\/li>\n<li><strong>Tier-2<\/strong> \u2013 Telkom, Cell C, Rain, and Liquid Telecom<\/li>\n<\/ul>\n<p>There is a problem, though, as the mobile operators in Tier-2 do not adhere to the definition of this group.<\/p>\n<p>ICASA stated that there are 234 municipalities in South Africa, which means a Tier-2 operator must have a market share of above 45% in 224 municipalities.<\/p>\n<p>It is highly unlikely that any mobile operator, with possibly the exception of Vodacom, will qualify based on the Tier-2 definition.<\/p>\n<p>It is also clear that in reality Tier-1 defines a strong mobile operator, while Tier-2 defines an extremely strong mobile operator &#8211; which is ostensibly the opposite of what ICASA intended.<\/p>\n<p>Looking at a smaller mobile operator, like Rain, it is clear that it has less than 45% market share in all municipalities.<\/p>\n<p>Rain therefore does not have \u201ca retail market share in excess of 45% in more than 10 municipalities\u201d or \u201ca retail market share below 45% in less than 10 municipalities\u201d.<\/p>\n<p>These definitions are therefore non-sensical and may be a simple mathematical blunder.<\/p>\n<p>What ICASA should have said if it wanted to clearly define the two groups are:<\/p>\n<ul>\n<li><strong>Tier-1 operator<\/strong> &#8211; A Wholesale National Operator that has a retail market share in excess of 45% in more than 10 municipalities.<\/li>\n<li><strong>Tier-2 operator<\/strong> &#8211; A Wholesale National Operator that has a retail market share in excess of 45% in less than 10 municipalities.<\/li>\n<\/ul>\n<p>In fact, ICASA could have just defined a Tier-1 operator and then said a Tier-2 operator is one which is not a Tier-1 operator.<\/p>\n<p>As ICASA\u2019s Tier-1 and Tier-2 definitions currently stand, it leaves most spectrum applicants as undefined.<\/p>\n<h3 class=\"my-4\">MTN legal challenge<\/h3>\n<p>MTN tried to resolve this and other issues with ICASA, but the mobile operator said their request for clarification did not produce satisfactory results.<\/p>\n<p>ICASA said in response to questions from MTN that:<\/p>\n<blockquote><p>A number of licensees have significant market power in various municipalities, as measured using the dominance threshold applied in the Electronic Communications Act, 2005 (a 45% market share).<\/p>\n<p>Vodacom is dominant in 110 municipalities, MTN is dominant in 78 municipalities. MTN and Vodacom both have a share of 45% or more in 4 municipalities. Cell C has a market share of 45% in one local municipality and 41 municipalities do not have a dominant operator.<\/p><\/blockquote>\n<p>What is clear from ICASA\u2019s response is that Vodacom and MTN qualify as Tier-1 operators, but that it is unlikely that any operator qualifies as a Tier-2 operator.<\/p>\n<p>With ICASA stubbornly defending its failed definition, MTN launched legal action against the regulator despite the fact that it does not want to delay the spectrum auction.<\/p>\n<p>MTN has asked the Gauteng High Court to force ICASA to remove the Tier-1 and Tier-2 categorisation and the opt-in round from the auction process.<\/p>\n<p>In its founding affidavit, MTN highlighted that the definitions used to differentiate between Tier-1 and Tier-2 operators are impermissibly vague, arbitrary, and unreasonable.<\/p>\n<p>MTN pointed out that it is possible that a party could simultaneously fall within the ambit of both definitions.<\/p>\n<p>That would, for example, be the case if a national operator has a retail market share in excess of 45% in twelve municipalities and has a retail market share below 45% in eight other municipalities.<\/p>\n<p>ICASA was asked for feedback regarding this problem, but spokesperson Paseka Maleka said it could not comment at this stage.<\/p>\n<p>He did, however, add that ICASA will issue a formal communique in relation to the matter by the end of the week.<\/p>\n<h3 class=\"my-4\">ICASA Spectrum ITA<\/h3>\n<p>For easy reference, we embedded the ICASA\u2019s Invitation to Apply (ITA) notice published on 2 October 2020 below.<\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2021\/01\/ICASA-Spectrum-ITA.pdf\" width=\"640\" height=\"640\"><\/iframe><\/p>\n<h3 class=\"my-4\">Now read: <a href=\"https:\/\/mybroadband.co.za\/news\/cellular\/384388-mtn-launches-legal-action-to-fight-spectrum-auction-issues.html\">MTN launches legal action to fight spectrum auction issues<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"<p>The regulator has messed up a core part of its spectrum auction definitions, which has resulted in a legal challenge to resolve the issue.<\/p>\n","protected":false},"author":23,"featured_media":143190,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[355,35,533,42,43716,109,41],"class_list":["post-384524","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-telecoms","tag-cell-c","tag-headline","tag-icasa","tag-mtn","tag-rain","tag-telkom","tag-vodacom"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/384524"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/23"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=384524"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/384524\/revisions"}],"predecessor-version":[{"id":384526,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/384524\/revisions\/384526"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/143190"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=384524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=384524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=384524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}