Spectrum auction on the horizon

Operators will want to start preparing to enter an auction where they can expect to bid for scarce spectrum.

Late yesterday afternoon, the Independent Communications Authority of SA (ICASA) announced it has put the auction process out to tender, despite a lack of regulation, or the publication of its long-awaited band plan that will dictate how spectrum will be allocated.

While ICASA does have a band plan, it is at the Department of Communications and is still awaiting gazetting in the government journal. ICASA cannot confirm when it expects the minister to publish the plan.

It is still unclear whether it will constitute regulations on spectrum; however, it is likely regulations will follow the publication of the plan.

ICASA's band plan includes a wide range of spectrum, but the industry is likely to be more interested in the 2.6GHz and 3.5GHz ranges. The ranges are considered scarce spectrum and many communications providers hope to get their hands on at least some of it.

While the two bands are now being auctioned under a “technology agnostic” policy, the spectrum was initially hyped as the perfect space for WiMax solutions.

The spectrum plan has been in the pipeline for years and the lack of regulation or allocation has cost several companies millions of rands, and put others out of the running to compete against the large telecoms and Internet service providers (ISPs).

In 2006, several local ISPs were given a temporary licence to implement WiMax test sites across the country. However, these licences expired in 2008 and local ISPs have been sitting on technology infrastructure it implemented almost three years ago.

MWeb was one of 11 local industry players to be awarded a test WiMax licence and implemented test sites in several areas around the country, including Soweto, which has been identified as an Internet dry site.

However, after an age of waiting, these companies gave up hope of competing against others that already have spectrum and were beginning to implement WiMax solutions.

MWeb is not the only company gunning for spectrum, as all the operators hope to get their hands on the valuable resource. iBurst, Sentech and Telkom are the most controversial bidders, since they all have spectrum. Sentech has long been lambasted for not using its huge allocation of 50MHz, in the 2.6MHz band, which was intended to boost its broadband offering that has subsequently failed.

The state-owned firm's hopes of gaining an allocation without having to bid against the bigger players have been dashed. It is one of the few organisations involved in the spectrum race that hopes not to see an auction, saying it is concerned the price will be raised too high through the bidding process.

While ICASA seems to have made a decision on the spectrum allocation, the lack of published regulations means the actual process is still unclear. The draft regulations published last year seem to have been less hotly contested than the initial set.

Both sets of regulation call for a beauty contest to pit operators against certain criteria before they can enter the auction. The initial set required the operators to have a 50% equity BEE stake, while the second lowered it to the standards set by the Department of Trade and Industry, at 30%.

Many of the larger operators will hold their breath to see what the actual BEE requirement will be, since many will not have the stake needed to enter the auction.

ICASA says the tender documents are available at the regulator's office, and hopeful auctioneers should attend a compulsory briefing next week.