Contradictory to overwhelming industry support for an auction to dish out scarce spectrum, MWeb says it is concerned the price would be too high.
The company presented to the Independent Communications Authority of SA (ICASA) this week during public hearings on the draft regulations on scarce spectrum. While most are looking at the 2.5GHz and 3.6GHz bands, the regulations will be implemented to deal with any spectrum which is considered scarce.
MWeb has for years been gunning for access to the 2.5GHz band to roll out a WiMax network, deploying a test WiMax network in late 2007. The test licence expired in April and MWeb's R10 million worth of equipment has been lying dormant since.
The company had successful roll-outs of networks running across the country, with around 1 000 trial customers.
Much has changed in the industry since then. MWeb now has the basic prerequisite ECNS licence, which allows it to establish its own network infrastructure, and the company will now be required to bid for spectrum.
Access to spectrum would be a boon for the business, since it would provide much needed competition in the Internet and telecoms space.
Money for nothing
During the company's presentation yesterday, Calvo Mawela, MWeb's GM for regulatory affairs, explained to the regulator that it did not support the notion of auctioning the coveted spectrum. “We are worried about the cost of an auction, because no reserve price has yet been set.”
He says the small operators may well be excluded from competing for the spectrum, even if they make it through the first round of the beauty parade, if the reserve price is set too high.
Mawela requested that, if ICASA went ahead with the auction, the annual licence fees be waived for the winning bidders. He explained that the reserve cost and the actual winning bid could count as annual fees.
Low or high?
Highlighting MWeb's issue, Open Spectrum Alliance representative and international spectrum guru Karen Wrege explained that internationally, when reserve prices were set too high, auctions inevitably failed.
Wrege also cautioned the regulator that setting the reserve price too low would allow any business, whether capable of rolling out a network or not, to have access to the spectrum.
She explained that finding a median for the reserve price is the hardest part of auctioning spectrum. However, Wrege said the best route would be to set a low enough reserve price to allow all competitors entrance and then let the market set the actual value of the spectrum.
“Participation in the auction, or how many companies apply to enter the auction, is the best judge of whether the reserve price is right. In the end, the market will set the price and value for the spectrum,” she said.
The hearings were held on Tuesday and yesterday to finalise comments on the department's decision document and draft regulations on scarce spectrum. The regulator hopes to have the final regulations out by December.
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