All systems go for long-awaited spectrum auction

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 07 Mar 2022

Telecoms regulator the Independent Communications Authority of South Africa (ICASA) is ready for the much-anticipated and long-awaited auctioning of the International Mobile Telecommunications (IMT) spectrum – also referred to as high-demand spectrum − starting on 8 March.

This auction process follows the recent announcement of six qualified bidders for the auction.

Last month, ICASA announced Cell C, MTN, Vodacom, Telkom, Rain Networks and Liquid Intelligent Technologies had all passed the pre-qualification stage of the spectrum licensing process.

The telecoms regulator, in a statement today, says the radio frequency spectrum in the 700MHz, 800MHz, 2 600MHz and 3 500MHz bands is made available through this licensing process for the purposes of providing national broadband wireless access services to all South Africans.

The regulator’s move comes as telecommunications firm Telkom is challenging the spectrum auction process in the courts.

The court case pitting the telecoms regulator against Telkom over the spectrum auction process is set for April.

Telkom says it has serious difficulties with ICASA’s decision to again include sub-1GHz spectrum in the intended auction.

The telco argues this band is currently the subject of a legal challenge brought by broadcaster Etv in the digital migration process.

However, president Cyril Ramaphosa in his State of the Nation Address last month said ICASA will commence with the process of auctioning the high-frequency communications spectrum in March.

ICASA notes the importance of this licensing process lies mainly in the enhancement of competition in the mobile services sector, increasing broadband connectivity and coverage, as well as bridging the digital divide between urban and rural access to mobile broadband networks.

In accordance with the published truncated timetable for this licensing process, the authority successfully held a bidder seminar on 28 February.

According to ICASA, the purpose of the seminar was to familiarise all bidders with the auction process, as well as the necessary tools and applications needed to submit bids in line with the invitation to apply issued on 10 December 2021.

“We appreciate the way bidders participated in the seminar, and the extensive engagement in that regard. This is exemplary of the commitment and positive spirit we all require during this delicate period,” says ICASA chairperson Dr Keabetswe Modimoeng.

Furthermore, the authority says it conducted mock auctions with bidders from 1 to 3 March, to ensure bidders are comfortable with the bidding process and to reinforce the rules discussed in the bidder seminar.

ICASA chairperson Dr Keabetswe Modimoeng.
ICASA chairperson Dr Keabetswe Modimoeng.

Opt-in auction

The regulator says it will kick-off this official process with the “opt-in auction” on 8 March.

The opt-in auction consists of a single bidding round where eligible bidders may submit bids to achieve a minimum spectrum portfolio (MSP).

It points out that only Tier-2 operators are eligible to participate in the opt-in auction and to bid for packages that, if the bidder is successful, will ensure that when combined with its existing IMT spectrum holdings, the bidder has access to a MSP of 2x10MHz in sub-1GHz and 60MHz above 1GHz.

According to ICASA, only two bidders can win spectrum to achieve the MSP in the opt-in auction.

The four eligible bidders are Cell C, Liquid Telecoms, Rain Networks and Telkom.

Bidders will submit their bids in person between 10h00 to 12h00 on 8 March.

The round will close early if bids from all qualified bidders were received before the scheduled end of the bidding window.

Up to two authorised representatives of each qualified bidder (regardless of whether they are eligible to bid in the opt-in auction) will be allowed to observe and monitor the process, says ICASA. It adds that bid evaluation will be carried out in front of all authorised representatives and following the close of the bid submission window.

ICASA will make a public announcement at the end of the opt-in auction, including the winners, the amount of spectrum they won and the amount they will need to pay.

Main auction

The main auction will start on 10 March and will be conducted using an online auction platform, ICASA says.

It notes that all six qualified bidders will be eligible to bid for spectrum in this stage. Bidding is normally scheduled on business days between 09h00 and 17h00.

The regulator explains that as the main stage is conducted in multiple bidding rounds and will end when bidders do not submit any newer bids (or waivers), a public announcement will be made after the conclusion of the main stage, including the winners for each lot, as well as the amount they will need to pay.

Frequency assignment phase

Following the conclusion of the main stage, ICASA will conduct an in-person assignment phase with all qualified bidders.

ICASA notes this is an administrative process to determine the frequency assignment position of the lots won in the opt-in auction and the main stage.

There will be one clear business day between the conclusion of the main stage and the start of the frequency assignment phase.

According to ICASA, this phase will be concluded in a single day.

“Our public interest mandate requires of us to be thorough in our approach to licensing and regulatory interventions,” says Modimoeng.

“We continue to take the necessary care in this spectrum auction process to ensure there are no irreversible anti-competitive effects for the industry and the market. We therefore urge all bidders to work collaboratively with us for the benefit of all South Africans so that the assignment of the high-demand spectrum can make a meaningful contribution to the country – with economic spin-offs, and benefits to the citizens and the overall business environment.”

Lastly, the authority says the ICASA head office in Centurion is inaccessible to the public until further notice due to the ongoing spectrum auction process.