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ICASA fails to reach out of court settlement with spectrum litigants

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The Independent Communications Authority of South Africa (ICASA) says it has not yet reached a settlement agreement with the operators that took it to court to challenge the process of the auctioning of the much-needed spectrum.

In a statement today, the telecoms regulator says it has, unfortunately, not yet been able to reach an out of court settlement with the litigants in the High Court matter, in terms of which its decisions to invite applications for high-demand spectrum licences and for a licence to operate a wholesale open access network (WOAN) are challenged.

ICASA has, over the past four months, engaged extensively and intensively with the active litigants, with the intention to reach a settlement agreement so that the licensing process can proceed without further delays, says the regulator.

It notes that despite the parties’ best efforts, a comprehensive settlement has not been achieved at this stage.

ICASA was set to auction the long-awaited high-demand spectrum by 31 March 2021.

However, it was dealt a blow when MTN, Telkom and Etv took the regulator to court, challenging some aspects of the auction process.

Telkom filed its legal dispute for a number of reasons, including that the way the auction is structured will entrench the dominance of its rivals MTN and Vodacom.

Broadcaster Etv joined Telkom in its legal bid. Its argument is centred on ICASA’s plan to auction spectrum in the 700MHz and 800MHz frequency bands, where spectrum in these bands is still being used by TV broadcasters.

MTN dragged ICASA to the North Gauteng High Court in January, challenging the way in which the regulator intends to license the 3.5GHz spectrum, which it said would result in tier one operators being side-lined in the auction.

In June, the regulator indicated the ongoing settlement negotiations on spectrum litigation were unfolding well and with a very encouraging outlook.

This after president Cyril Ramaphosa called for mediation in the legal impasse that has held back the country’s spectrum auction process.

South Africa’s allocation of high-demand spectrum has been up in the air for a number of years, with the last significant spectrum awarded 16 years ago.

It is expected that the freed-up spectrum will reduce the cost of data and increase access to the internet. Additionally, for government, a spectrum auction means a boost to the fiscus.

ICASA chairperson Dr Keabetswe Modimoeng.
ICASA chairperson Dr Keabetswe Modimoeng.

One step forward, two steps back

In its statement today, ICASA says it has now decided to consent to an order setting aside its decision to publish the invitations to apply in order to avoid a long-drawn-out litigation, the effect of which would only be to delay further the licensing of high-demand spectrum and the WOAN.

It explains this means the licensing of high-demand spectrum and the WOAN will now be reconsidered by the authority, taking into consideration the issues raised by the litigants – such as the completion of the broadcasting digital migration process and the assessment of competition in the ICT sector.

“To this end, the authority has filed its proposed consent order with the High Court, and all the litigants could accept the proposed consent order or file papers opposing ICASA’s proposed consent order.

“The matter is set down for the 15th of September 2021, at which any arguments against ICASA’s consent order will be heard,” says the regulator.

It points out that the minister of communications and digital technologies has since committed to completing the broadcasting digital migration process and related processes within five months from the date on which the order (to which the minister also consents) is made.

This will remove one of the perceived impediments to the process of licensing high-demand spectrum and the WOAN, says ICASA.

ICASA chairperson Dr Keabetswe Modimoeng expressed his concerns in respect of new issues that were raised by the litigants during negotiations.

“We noted with grave concern that some parties at the negotiations have sought to introduce matters that were not related to the issues in dispute,” he says.

“We, therefore, urge all parties to confine themselves to the issues in dispute and the relief, which is sought in the papers filed of record, as venturing into other unrelated matters can only serve to derail the confirmation of the order to which ICASA consents.”

Modimoeng further says that should parties confine themselves to the matters currently on the table, with an appreciation that spectrum needs to be licensed urgently, on a more permanent and transparent basis – the auction of high-demand spectrum can take place by the end of January 2022.

Lose-lose impasse

ICASA says it is not in a position to abandon the auction model as a method of assigning high-demand radio frequency spectrum.

“According to the International Telecommunication Union, auctions are commonly recognised as the best way of assigning key mobile spectrum. The benefits of auctions are well known to regulators and the ICT industries globally,” Modimoeng says.

“Among other benefits, auctions allow spectrum to be allocated to its highest value use and to the highest value set at a price that reflects opportunity costs. They are fair, open and transparent, and can be verified by third-party accountants.”

Furthermore, and among other things, some of the key objectives of the Radio Frequency Spectrum Regulations of 2015 include establishing transparent, fair and efficient procedures and processes for radio frequency spectrum licence applications, as well as providing procedures and criteria for awarding radio frequency spectrum licences for competing applications, or instances whereby there is insufficient spectrum available to accommodate the demand in terms of section 31(3) of the Electronic Communications Act, ICASA notes.

Modimoeng says the authority is also willing to separate the auction of high-demand spectrum and the licensing of the WOAN.

“In this regard, we urge litigants to allow the auction process to continue while free-to-air broadcasters and all other interested stakeholders can get another opportunity to consult on the construction of the WOAN, and how it can best suit various interests.”

The chairperson confirms the authority is encouraged by the posture taken by the newly-appointed minister of communications and digital technologies to actively participate in efforts to bring this litigation to an end by committing to completing the broadcasting digital migration process and the processes related to it so that all perceived impediments to the licensing process are removed.

“The current spectrum litigation impasse is nothing short of a lose-lose situation for all; ie, consumers, industry players and the authority, as it serves to hamstring the growth of the sector and the full realisation of economic spinoffs and cost-benefits for consumers,” concludes Modimoeng.

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