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Spectrum allocation in jeopardy as Telkom seeks court interdict

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Siyabonga Mahlangu, Telkom group executive of regulatory affairs and government relations.
Siyabonga Mahlangu, Telkom group executive of regulatory affairs and government relations.

The much-awaited spectrum allocation is in jeopardy following the decision by Telkom to interdict the Independent Communications Authority of SA (ICASA) from proceeding with the auction pencilled for March next year.

The telephony group yesterday filed an urgent court application saying it considers the regulator’s decisions to be irregular and unlawful.

In October, ICASA 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 (WOAN).

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

The telecoms regulator had a month earlier pushed back the auctioning of the much-needed spectrum to the end of March next year, instead of December as earlier indicated.

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

Flawed process

However, Telkom now 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 703-733 MHz paired with 758-788 MHz (the 700 MHz) and the 791-821 MHz paired with 832-862 MHz (the 800 MHz) 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 papers filed at the South Gauteng High Court, Telkom group executive for regulatory affairs and government relations Siyabonga Mahlangu, says: “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.”

He continues: “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 ITAs process. Another variable that impacts on the successful completion of the migration process is that funding is required from National Treasury.”

The 700MHz and 800MHz questions

Mahlangu says Telkom has been advised and “respectfully submits that the decision by the authority to include the 700MHz and 800MHz frequencies in the auction process as part of the options described in the auction lots is unlawful on the clear premise that the authority has no power or authority to assign and therefore license radio frequency spectrum which is not yet available for use by any licensee that may succeed in the auction process”.

Telkom argues that ICASA’s statutory power to assign any radio frequency and therefore grant requisite licences for use of such spectrum is expressly set out in sections 30 and 31 of the Electronic Communications Act (ECA).

“Properly interpreted, these provisions of the ECA empower the authority to only issue licences for radio frequency spectrum that is available for use by a successful bidder.

“It is common cause that the 700MHz and 800MHz frequency bands that have been included in the auction lots are not yet available for use by any party who may successfully bid for any or all of such frequencies. The authority and the minister accept that as a fact. Those frequencies are currently occupied by television broadcasters, and are used for their broadcasting purposes.”

Mahlangu says while the process of migrating the broadcasting services from the 700MHz and 800MHz has begun, it has not yet been finalised and it remains unclear when it will be finalised, although the Department of Communications and Digital Technologies has informally communicated the target day as December 2021; the minister’s published performance agreement puts the date as 2023.

The court application by Telkom comes at a time the spectrum discussion has now shifted from important to critical, according to analysts, who have been urging the regulator to urgently license new spectrum, as mobile networks quality would deteriorate significantly without access to additional capacity.

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