Second try for spectrum auction

Bidding for the position of specialist spectrum auctioneer to facilitate the country's first spectrum auction has closed.

The Independent Communications Authority of SA (ICASA) is expected to make an announcement regarding the position by mid-October.

However, doubts remain as to whether the authority is being efficient in the process and whether it will make its deadline and issue a second invitation to apply (ITA) before the end of the financial year.

Of greater concern to industry analysts, however, is ICASA's ability to get the process right this time.

These concerns are rooted in ICASA's unexpected withdrawal of its first ITA for spectrum in the 2.6GHz and 3.5GHz band, in July, effectively canning SA's first high-frequency radio spectrum auction.

Potential bidders forked out hefty amounts to prepare for the bid, aiming to get their hands on sought-after spectrum, which is ideally located for high-speed broadband connectivity, specifically for LTE and WiMax technologies.

Speaking at a press conference, in Sandton, at the time, ICASA councillor Marcia Socikwa noted that since releasing the first ITA, the authority had been inundated by requests from the industry seeking clarity on the finer details of the licensing process.

As a result, the auction was called off in favour of a more consultative process, dependent on the appointment of an experienced spectrum auctioneer.

“While, in the past, WiMax was the clear favourite, recently published literature suggests market sentiment towards LTE has increased, suggesting that further consultation is necessary,” explained Socikwa.

At the time, ICASA committed to a more consultative process with the industry, saying the next ITA would be issued before the end of this financial year.

Although industry analysts remain doubtful as to whether the authority will make its own deadline, ICASA insists the process is on track and says it will commence with the auction before the end of the financial year.

“ICASA has not historically been very good with deadlines, which often tend to be mere guidelines than actual deadlines. The spectrum issue is one that must be dealt with in the interests of all parties and we can only hope that in this instance ICASA will act expeditiously,” says WWW Strategy MD Steven Ambrose.

Independent telecommunications analysts Richard Hurst concurs that the process will likely be a challenging one, as - to date - ICASA has been bogged down by inefficient processes regarding basic human resources processes, economic challenges and technical restraints.

Hurst maintains that the deadline is “do-able”, but the main concern of the authority should be that nothing falls through the cracks.

BMI-TechKnowledge MD Denis Smit argues that the deadline is only a secondary concern.

“The most critical thing is that ICASA gets it right. The deadline is secondary. We believe that ICASA has done the right thing by postponing the auction as it was badly flawed. By appointing global specialists, we are hopeful of a more balanced outcome,” he states.

These concerns stem from the authority's preceding reputation, which includes a lack of efficiency in finalising and implementing the necessary regulations to promote competition in the market.

“ICASA still appears to lack any real urgency in regulating the telecommunications environment, [but its] role is critical to the effective management of telecommunications in SA,” argues Ambrose.

“ICASA often appears to be focused on the procedural and bureaucratic operation of the regulator and far too little on effective regulation. It cannot be stressed too highly how important an independent, effective and efficient regulator is to the telecommunication sector in SA,” he continues.

Key regulations regarding issues, such as interconnection termination rates, local loop unbundling and spectrum allocation have either been stalled or have not yet reached conclusion within the statutory period prescribed.

While the authority has cited complexity of market definitions, contradictions within the law or the absence of technical or administrative capabilities, leaving these regulations in limbo means the ideal of a competitive market remains unattainable.

“A competent independent and efficient regulator is always a vital component of the telecommunication industry. The current lack of delivery and apparent efficiency at ICASA gives the regulator and, by extension, the country, a poor reputation,” argues Ambrose.

“Of more importance is that the lack of delivery creates an environment of uncertainty and this translates into lower investment and growth, as the last thing any business needs is uncertainty,” he continues.

Ambrose argues that the lack of decisiveness and delivery from ICASA militates against its mandate to level the playing field, and facilitate competition, and this allows incumbent operators to continue with uncompetitive practices to the detriment of all concerned.

But Hurst believes ICASA has been going through a learning phase and is confident the authority will begin to see the light at the end of tunnel.