For sale: One bus. Low mileage. Good chassis, suspension and body. New tyres. Great big diesel engine. Seats up to 80 with luggage at a squeeze. Ideal for long-distance, commuter of charter transport. Delivered to the highest bidder, as long as you can prove you're good for it. Voetstoots.
Seems like a reasonable advert, does it not? If you were in the market for a bus, for whatever purpose, it might interest you, no? Now try this:
For sale: One bus. Low mileage. Good chassis, suspension and body. Old tyres, and if you want new ones, you have to buy Firestones from my mate Mikey in Jules Street. Seats up to 80, but a sale is conditional upon undertaking never to carry fewer than 50% black passengers, or 15% of any other race group. Pencil to be kept in drivers' cabin for testing purposes. Must be used for both long-distance and urban routes covering a minimum of 4 000km per week. On all long distances, stops should not be further than 10km apart. Urban stops must be within 2km of each other. Highest bidder gets it, as long as you can prove that you are not good for the money. Successful transport companies excluded from consideration. All others must provide a business plan for the next five years to show intended operations. No resale permitted.
Absurd, is it not? Yet that is what invitations to apply for a licence, as issued by the Independent Communications Authority of South Africa (ICASA), look like.
Why is it that ICASA's spectrum auction is hung up on details of who gets to own it and how it will be used? Doesn't "auction" merely mean "a sale to the highest bidder"?
It is absurd that a regulator has to choose between two competing "fourth-generation broadband" technologies - WiMax and LTE. That is what market competition is for. Several companies compete, and those that offer the best combination of price, quality, convenience and delivery, win. That's how VHS beat Betamax: not because it offered better quality (it didn't, though most regular users wouldn't have noticed), but because it was cheaper to license, and offered tapes that were long enough for feature films. As a package, it was a better deal for consumers, so consumers chose it.
If a regulator had made that choice, it likely would have picked Betamax. If so, VCRs would have been far more expensive, thanks to an exclusive licence issued to Sony for Betamax, which would enable it to charge high royalty fees without the fear of competition. Moreover, the industry that VCR made possible (movie rentals) would have taken much longer to succeed, if it took off at all. More likely, we'd all be stuck with family outings to a cold drive-in once a month, or having to attend an expensive cinema of an evening for our filmed entertainment.
In the regulator's irrational idealism, lack of past success is the qualifier.
Ivo Vegter, ITWeb contributor
It is equally absurd to prefer to sell infrastructure such as spectrum to smaller companies, when the bigger, more established firms are in a far better position to exploit it. They have the capital, the experience, and the customer base, to pilot new, higher-speed data technologies. Granted, our network operators are only successful because they were the beneficiaries of limited licensing in the first place, but that's no reason to get silly about it now. In a rational market, past success convinces customers to trust a company in the future. In the regulator's irrational idealism, lack of past success is the qualifier, implying that the successful should be taken down a notch, and new opportunities be handed to the unsuccessful.
Dictating the use to which the successful bidder is required to put the technology is likewise far out of the regulator's ambit. It is not qualified - and cannot, by its very nature, be qualified - to determine whether covering a particular share of the population within a particular time window with a high-end, high-speed data network is reasonable, or whether less expensive alternatives may be better suited to some customers.
Only free actors in a free market can take the necessary risks to determine this. Those who guess right will profit, those who don't, won't. Only private capital, voluntarily staked by investors, is at risk. By contrast, if the regulator gets it wrong, we all lose, and progress is deferred.
If someone fails to use a slice of spectrum for which they paid, investors will likely take them to task, or someone else will offer them money for it. At the right price, it will find its way to where it can be used to best advantage.
It is pleasing to see that ICASA has become, at least in principle, a supporter of the idea of selling off tracts of spectrum. It should go further, and make it easily tradable. The market excels in the efficient allocation of scarce resources. Spectrum scarcity is an argument for creating a spectrum market, not against it. There is no reason why a limited resource like spectrum should not be bought and sold and leased just like land, which is equally limited. The only purpose of a regulator would then be to ensure that one spectrum owner does not infringe on the property rights of another.
Instead, ICASA is absurdly trying to act as the master developer, the central planner, the sole innovator. No wonder it can't get a simple auction off the ground.
Just sell the spectrum, already.
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