Government puts spectrum framework on ice

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 02 May 2019
The communications ministry prolongs the wait for spectrum policy.
The communications ministry prolongs the wait for spectrum policy.

The industry will have to wait a little longer for the policy crafting the path towards mobile spectrum allocation, something pundits describe as a big blow, especially for telcos.

Since last year, the administration, including president Cyril Ramaphosa, has made numerous promises aimed at resolving the drawn-out issue of licensing high-demand radio frequency spectrum.

In his State of the Nation Address in February, Ramaphosa went as far as to vow that communications minister Stella Ndabeni-Abrahams would "shortly be issuing policy direction" to the Independent Communications Authority of SA (ICASA) for the licensing of spectrum.

The president's pronouncements were echoed by finance minister Tito Mboweni in his budget speech, with Ndabeni-Abrahams declaring the release of spectrum a matter of high priority. She went on to confirm the end of April as the date when the framework to license spectrum would be published.

However, this week, in a statement, addressing the recent public spat with ICASA, Ndabeni-Abrahams's department reveals the decision to hold back on the release of the finalised policy directive.

"Following extensive consultations in this regard, the minister deems it necessary to hold the policy direction on unassigned high-demand spectrum in abeyance for consideration in the sixth administration," it states.

The ministry's statement fails to divulge reasoning behind the minister's decision.

The long road

Commenting on this latest delay, Dr Charley Lewis, independent analyst, says it is "deeply disappointing", especially in light of the minister's promise and the fact that a draft policy direction was issued seven months ago by the minister's predecessor.

Mobile operators have for years been pleading for more spectrum in order to provide faster and more widespread high-speed data services.

The policy directive will pave the way for ICASA to fast-track 4G spectrum assignment. ICASA initially planned to license spectrum by the end of March. Further, government has identified a spectrum auction as one of the options to raise several billion rand for the economic stimulus and recovery plan.

Lewis explains: "It's inconceivable that it should take so long to finalise a policy direction in such a key area - one of only a few where the ECA [Electronic Communications Amendment Bill], accords the minister a specific policy-making role - unless some key change of direction is being mooted, since most of the policy-making spadework will have preceded the draft policy direction.

"We must remember that ICASA first began to consider the question of high-demand spectrum some 10 years ago, but then backed off from the process in order to await the necessary policy direction from the then minister. That policy direction never came. Finally, growing impatient, ICASA moved to auction off high-demand spectrum some three years ago, only to be stopped in its tracks by a ministerial court injunction. And now we have a further delay.

"It's clear that the link claimed between availability of spectrum and the price of services claimed by the operators does exist, and this is especially relevant in the light of the recent Competition Commission finding on data pricing in SA."

This latest turnaround puts a spanner in some of the strategies planned by the operators, notes Sabelo Dlamini, senior research and consulting manager at IDC.

According to Dlamini, operators will now lose two financial years because of delays in spectrum allocation and that will have a negative impact on their infrastructure plans. In addition, pressure is mounting to provide connectivity and affordable connectivity services to customers.

"The minister is new in this role, having assumed the office in November last year; therefore it was expected for the deadline not to be met. These delays may further be extended if a different minister gets appointed after the elections."

He goes on to say the decision to delay the spectrum policy direction may have been prompted by the minister getting to understand her role and the importance of spectrum allocation on the economy.

"We would like to think that the department is planning to have a holistic view on the spectrum allocation, so that when the spectrum is released, it will not only cover the 4G/LTE spectrum, it will also take into consideration the 5G spectrum."

Communications minister Stella Ndabeni-Abrahams.
Communications minister Stella Ndabeni-Abrahams.

Political uncertainty

For Marian Shinn, Democratic Alliance MP and telecoms and postal services shadow minister, bureaucracy and uncertainty over the Cabinet post may have prompted the minister to pause and consider the policy direction in the next administration.

"There is bargaining that will be done on the latter. The priority will be the merger of the two departments, the budget appropriations and strategic plans on the new department. While they may say they have been working on the process of the merger for some months and there will be few disruptions, this is wishful thinking as anyone who has been involved with mergers well knows."

She adds: "It's the inevitable government hiatus during election season and indicative of the uncertainty of who's going to be in which Cabinet posts after the election. The responsibility for the allocation of high-demand spectrum is a significant 'gift' for the next minister to dispense.

"There are significant government-connected players who tried to rush the ECA Bill through Parliament so they could set up the WOAN [wholesale open access network] and when that fell through, hoped they could achieve their enrichment ends through the spectrum policy direction and subsequent assignment. I understand there are significant tensions between the minister of communications and ICASA on the matter, which may end up in years-long legal wrangles again."

Fighting high data prices

Apart from adding funds to the fiscus, government deems licensing of high-demand spectrum as a necessary step to reduce the cost to communicate and drive universal services and access.

Mboweni famously referenced the #DataMustFall movement in his budget.

As the country's governing party, the ANC has also called for action on the #DataMustFall cause, saying high data costs mean the majority of citizens are unable to enjoy the benefits of the digital economy.

Dr Lewis highlights the delay is a setback for the fight against high data prices.

"The assignment of high-demand spectrum presents a number of challenges that need to be factored into the process. SA needs to consider whether to use the auction model currently so widely popular, or the administrative assignment process adopted by Japan, for example.

"The assignment process also needs to be designed so as to ensure the maximum public interest. We need to ensure spectrum doesn't simply land up on the books of those with the deepest pockets, the current SMP mobile licensees.

"Tying the award of spectrum to socially desirable objectives, [such as] universal access and service obligations to ensure the rollout of broadband to rural areas and the poor, in particular, as well as market diversification and BBBEE objectives, are key and complicates the design of the assignment process.

"But the detail of exactly how this is to be done is in any event an ICASA competence, and should not delay the finalisation of the draft policy direction."

Dlamini concludes by saying SA is way behind with 4G/LTE spectrum allocation, but luckily the operators came up with innovative solutions of spectrum re-farming to be able to provide 4G/LTE services to their customers.