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Minister challenges ICASA spectrum auction

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 26 Jul 2016
Minister Siyabonga Cwele says ICASA ignored a request from government to halt the auction process back in September 2015.
Minister Siyabonga Cwele says ICASA ignored a request from government to halt the auction process back in September 2015.

The Department of Telecommunications and Postal Services (DTPS) is planning legal action to stop the Independent Communications Authority of South Africa (ICASA) from continuing with a planned spectrum auction.

DTPS minister Siyabonga Cwele said in a statement that he is concerned ICASA's public invitation to apply (ITA) for the high demand radio frequency spectrum "was issued without consultation and prior notification to government as the policy-maker".

"After considering the ITA and on the advice of senior counsel, the minister intends taking legal action to review the actions of ICASA," the statement reads.

On 15 July, ICASA issued an invitation to operators to apply for licences for spectrum in the 700MHz, 800MHz and 2.6GHz bands, to be used to provide mobile broadband wireless access services in SA. The regulator said the main aim of licensing spectrum is to ensure nationwide broadband access for all citizens by 2020 in line with the National Development Plan and SA Connect.

However, government now says that by publishing the ITA notice in the Government Gazette, ICASA "failed to adhere to the prescripts of the relevant policies, legislation and regulations, and in particular the provisions of electronic communications".

The minister's decision to take legal action follows two meetings held with the regulator on 15 and 19 July "that failed to resolve the matter amicably".

"ICASA was furthermore not prepared to subject itself to the intergovernmental cooperation governance procedures," the minister says.

In addition, Cwele says a request from government, in September 2015, for ICASA to halt its process "was ignored". This was after the regulator first published an 'information memorandum' that provided guidance to prospective applicants that wished to apply for licensing of the three bands of spectrum that can be used for next-generation mobile service.

"The position of government is that it is the custodian of spectrum, which is a national and public resource and whose utilisation must benefit all the people of South Africa."

Cwele says there is presently no policy direction on spectrum that has been issued. This as government's integrated ICT policy white paper is yet to be finalised.

"The policy process is ongoing but as yet still incomplete," he notes.

ICASA did not respond to requests for comment on the pending legal proceedings by the time of publication.

Unnecessary tension

Government's objection does not come as a complete surprise, after Cell C last week told ITWeb it was "concerned that ICASA has issued the ITA without a clear policy directive from government".

"We know for a fact that the Department of Telecommunications and Postal Services is in the process of finalising its policy in this regard and so by issuing the ITA before this is finalised, may create unnecessary tension," Cell C's chief legal officer, Graham Mackinnon, said at the time.

Mackinnon said releasing more spectrum to the market was "very important" because operators cannot effectively roll out next-generation technologies without this spectrum.

"However, it needs to be done with the buy-in of all stakeholders, obviously including government as spectrum is a national resource."

Another concern for Cell C was the minimum bidding price of R3 billion for the proposed spectrum lots, which it said "appears high especially as the spectrum lots are not equally valuable".

Meanwhile, peers Vodacom and MTN had mostly positive responses to the ITA but both said they would study its contents and raise questions with the regulator within the stipulated timelines.

Vodacom CEO Shameel Joosub called the announcement a "major progressive step for the economy, South Africa's telecommunications industry and the country as a whole".

MTN SA CEO Mteto Nyati said the licensing of frequency spectrum will benefit consumers who are demanding better quality and higher speeds, and "will allow operators to more rapidly roll out advanced broadband services and further stimulate broadband connectivity in South Africa".

Exercise caution

Cwele also warned that mobile operators looking to apply for licences should tread lightly in the complicated situation.

"The minister is acting in good faith to ensure that interested parties who may wish to respond to ICASA's ITA do not act precipitously by engaging in a process which may ultimately be found to be invalid and therefore suffer unintended consequences as a result thereof," the DTPS statement reads.

If the process was found to be invalid, it would be a blow to applicants, who are required to pay a non-refundable application fee of R3 million.

"The haste with which ICASA is proceeding to dispose of the spectrum" is another government concern, given that this spectrum will not be immediately available.

This also worried Cell C, which said on initial reading of the ITA, it felt the time-table "seems quite rushed".

The ITA was published in the Government Gazette on 15 July and interested parties have until 3 October to apply. Qualified bidders will be announced by 30 November and the auction process is planned to take place from 17 January 2017, with successful bidders likely announced on 31 January. The licences will then be issued by the end of March.

One of Vodacom's concerns was that the ITA "includes some tough asks in terms of speeds that need to be attained across SA by 2020". ICASA's stipulations for licensees include that they need to provide data services with an average uplink of 15Mbps and downlink user experience throughput of at least 30Mbps by 2020.

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