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Telkom welcomes court interdict against ICASA over spectrum auction

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 08 Mar 2021
Siyabonga Mahlangu, Telkom group executive of regulatory affairs and government relations.
Siyabonga Mahlangu, Telkom group executive of regulatory affairs and government relations.

Telkom has welcomed a court order that halted the spectrum auction process, urging telecoms regulator the Independent Communications Authority of SA (ICASA) to act “rationally and expeditiously”.

The North Gauteng High Court today ordered ICASA to suspend the auctioning of radio frequency spectrum licences pending a hearing of the issues raised opposing the process by operator Telkom.

ICASA was set to auction the spectrum by 31 March.

Operators have been waiting for this spectrum for over a decade in order for them to expand services like 5G, as well as to bring down mobile data prices. The fiscus will also get a boost from the planned auction.

The long wait for spectrum allocation has gone on for several years and the auction has been facing obstacles due to recent multiple court applications brought by MTN, Telkom and broadcaster Etv.

Reacting to the court ruling, Dr Siyabonga Mahlangu, Telkom group executive for regulatory affairs, says while “we wait for the court to hear the review, we implore ICASA to engage and explore a path to license spectrum lawfully, rationally and expeditiously.

“We hope ICASA will take this opportunity to reflect on the issues raised by Telkom and others.”

In December, Telkom filed an urgent court application, saying it considers the regulator’s decisions regarding the auction to be irregular and unlawful.

Two months earlier, ICASA had opened the invitation to apply (ITA) for the licensing of International Mobile Telecommunications (IMT) spectrum, also known as high-demand spectrum, and that of the wholesale open access network.

It noted the closing date for IMT applications was 28 December 2020, while that of the WOAN is 30 March 2021.

ICASA revealed the reserve prices for the spectrum ranging from R10 million to R1 billion, saying: “All good spectrum auction designs are also a balance between price discovery and the risk of collusion in the auction amongst the bidders, and setting the reserve prices provides a realistic starting point for price discovery.”

The cheapest is the 3 500MHz lot, with a reserve price per lot of R9.8 million, and the highest lot is 800MHz, with a reserve price of R1.1 billion per lot.

This development was seen as a breakthrough for the telecoms sector, which has, for years, been battling with ICASA over the allocation of these licences.

Flawed process

However, Telkom wants ICASA to halt the whole process to allow broader participation as well as address some of the concerns it raises.

According to Telkom, the first fundamental flaw made by ICASA is that the auction ITA involves the auction of portions of spectrum in the 703-733MHz paired with 758-788MHz (the 700MHz) and the 791-821MHz paired with 832-862MHz (the 800MHz) frequency bands, which it argues are not immediately available for use on a national basis by a licensee who may ultimately succeed in its bid during the auction process.

In the court papers filed at the North Gauteng High Court, Mahlangu, said: “As an obvious contender for such frequency bands during the auction process contemplated in the auction ITA, Telkom is concerned about the lawfulness and rationality of the authority’s decision to include the 700MHz and 800MHz frequencies in the auction.

“This is because the 700MHz and 800MHz frequencies are not yet available for use and are not likely to be available for use for a long period after the auction.

“Neither the authority nor the minister has formally committed to a date by which these frequencies will become available for use by any licensee. They have been unable to provide such clarity, notwithstanding the fact that Telkom and other interested parties have sought such clarity during their submissions flowing from the ITA process. Another variable that impacts on the successful completion of the migration process is that funding is required from National Treasury.”

MTN has also opposed the auction. SA’s second largest mobile operator dragged ICASA to court over the spectrum auction process.

The company filed an application in the Gauteng High Court to declare unlawful, and to review, correct or set aside two decisions made by ICASA which relate to the spectrum auction process.

For MTN, its concerns include having problems with ICASA’s decision to implement an auction structure that creates two categories of mobile operators, namely Tier 1 and Tier 2, and the use of an opt-in auction round in which Tier 1 operators will not be allowed to participate.

MTN’s biggest worry is that of alleged ambiguities surrounding the Tier 1 and Tier 2 classification, which ultimately leads to the exclusion of Tier 1 operators from participating in the opt-in round for portfolios 1 and 2.

MTN and Vodacom are the only operators classified as Tier 1 operators.