The Independent Communications Authority of SA (ICASA) has extended the closing date for the submission of applications for the radio frequency spectrum auction, from 25 June to 20 July.
The auction refers to an invitation from the regulator, in May, to apply for spectrum in the 2.6GHz and 3.5GHz bands.
The latter will be specifically allocated to metro rings at a local level. Municipalities will be given the option to apply for two licences per municipal area, each at 30MHz. The 2.6GHz band is what the telecoms providers will be after, specifically for the development of LTE or WiMax networks.
However, as part of the conditions to bid for licences, the applicants must have a 30% historically-disadvantaged shareholding and the reserve price for the auction will be R750 000 per licence.
Despite the conditions outlined by the regulator, concerns remain about gaps in the invitation to apply (ITA), which may undermine ICASA's objective of creating fair competition in the market.
Competitive concerns
Siyabonga Madyibi, regulatory director at Internet Solutions, argues that questions regarding who is allowed and not allowed to bid, as well as rules governing post-purchase, need to be answered if the regulator wishes to achieve its objective of creating competition in the market.
“It has always been communicated that if an organisation already has access to last mile spectrum, they should be precluded from participating in this process,” he says. The ITA released by ICASA is, however, not clear on this.
“Those organisations that already have spectrum in these two bands are definitely excluded, but the ITA does not clearly state that those who have access to other last-mile spectrum will be allowed to bid or not,” adds Madyibi.
There is also the question around indirect access to spectrum. “Our question is simply whether an entity that is a subsidiary of another entity that already has access to spectrum will be allowed to bid.” He further asks: “If they are included in the process and they are successful, will the parent company be allowed to use that spectrum?”
The transfer of spectrum, either through sale or sub-lease, is another gap in the ITA, notes Madyibi. “If a company is successful in their bid, are they allowed to transfer that spectrum to an entity that did not bid, either through sale or sub-lease?”
The concern here is that it will create the opportunity for successful bidders to then sell the spectrum to other parties at exorbitant prices.
Madyibi argues that SA runs the risk of artificially elevated prices unless the playing field is even, and this will not happen should companies with existing spectrum be allowed to participate.
He believes that, should these players be allowed to participate in the auction process, they will eliminate the chance for new entrants or smaller players to acquire spectrum. “Effectively, they will use this process to reinforce their positions of dominance by acquiring what is left of the much-needed last mile spectrum in SA.
“This will effectively marginalise licensees who have not previously had any access to last mile spectrum. The end result will be a market that is heavily tilted in favour of the incumbent operators and, at the end of the day, the biggest losers will be consumers who will suffer as there will never be real competition in this environment,” concludes Madyibi.
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