Don't rush ECA Bill through Parliament, says Vodacom

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According to Vodacom, the ECA Bill requires that several licence conditions be included in the assignment of high demand spectrum.
According to Vodacom, the ECA Bill requires that several licence conditions be included in the assignment of high demand spectrum.

SA's biggest mobile network operator, Vodacom is of the view that the Electronic Communications Amendment Bill (ECA Bill) should not be rushed through Parliament.

This as Parliament scheduled public hearings for the ECA Bill, which seeks to implement and give effect to the policy objectives set out in the National Integrated ICT Policy White Paper, published in late 2016.

The Bill contains provisions such as spectrum allocation, the proposed wholesale open access network (WOAN) and rapid deployment policy.

In its written submission, Vodacom says it supports the government's objectives to increase broadband coverage, promote affordable broadband and innovation and transform the sector.

However, it argues that these objectives can and should be achieved through promoting investment and network competition within the best practice regulatory framework in the current Act and not through the changes contemplated in the Bill.

Right direction

The operator notes that the policy direction is moving in the right direction. It envisages the establishment of the WOAN and the licensing of the unassigned high demand spectrum (HDS) under the existing Act.

"We agree with much of what is broadly contemplated by the policy direction. Our assessment is that the majority of the goals set out in the White Paper can be achieved under the existing Act. This will promote an investor-friendly environment, without detracting from the transformation and universal access objectives, and enable the timely and efficient roll-out of much-needed broadband network and new technologies, for the benefit of consumers and the whole South African economy."

Vodacom argues that if the licensing of unassigned high demand spectrum proceeds under the existing Act and the Authority assigns the high demand spectrum to the WOAN and the other operators, then the aspects of the Bill related to these matters would become irrelevant and may be deleted or rendered consistent with the process achieved by the invitation to apply (ITA) contemplated in the policy direction.

"In these submissions, however, we address the Bill generally without taking into account the fact that it may, in several respects, become irrelevant depending on the progress of the ITA contemplated in the proposed policy direction."

Thus, the telco points out that there is no pressing need for the Bill and it should not be rushed through Parliament in its current form.

It urges government to pause and carefully consider the far-reaching (and we say significantly adverse) implications of the Bill for the sector and consumers.

"We recommend that the policy direction process, with the fine-tuning that we suggest in our submissions, continues as quickly as possible."

Vodacom says it accepts a competitive WOAN, which should be capable of succeeding on its own merits, standing on its own two feet in the market and adapting to technological changes going forward.

"We are concerned with provisions in the Bill that may unnecessarily preclude the involvement of substantial operators at a participation level. Vodacom wishes to have the opportunity to fully participate in the WOAN and contribute towards its success.

"We accept there should be a capacity commitment from mobile operators that provides an anchor tenancy to support the WOAN's ability to raise finance. We also consider there should be a discounted price paid by the WOAN for spectrum or the ability to pay off the spectrum price over time, as well as no requirement, or an exemption, for the WOAN to comply with universal coverage obligations. In our view, these are the only incentives for the WOAN that are required," the telco says.

Independence at stake

On radio spectrum, Vodacom submits that the Bill includes radical changes to the existing Act in terms of erosion of independence of the Authority and the imposition of inappropriate conditions on the licensing of high demand spectrum.

The Bill also presumes a fundamental change to the way spectrum licences are renewed, it says.

"We are alarmed by the proposed erosion of the independence of the Authority under the Bill. This is particularly apparent in the area of radio spectrum, including in the assignment of high demand spectrum and the processes for assigning high demand spectrum under the Bill."

It believes the processes for assigning high demand spectrum should be undertaken by the Authority and not the minister.

"We also disagree with other abrogation's and erosions of the independence of the authority, including the minister taking over the authority's roles in approval of universal service access and obligations and the authority now being bound by the minister's policy directives as opposed to taking policy directives into consideration. The authority's role in administering Chapter 10 should also not be undermined by the changes in the Bill."

According to Vodacom, the Bill requires that several licence conditions be included in the assignment of high demand spectrum.

It points out that the Bill includes a requirement to provide facilities leasing of networks and facilities in favour of the WOAN.

"In our view, the WOAN should be subject to the same facilities leasing rules as any other operator. There is already a competitive market for facilities leasing of mobile facilities and the existing regime under the Act enables the WOAN to acquire facilities leasing on non-discriminatory terms."

It notes that this will enable the WOAN to quickly establish coverage in those areas where there are facilities and where it is reasonable to do so. The condition that requires facilities leasing of networks and facilities in favour of the WOAN should be removed from the Bill, Vodacom says.

"While we accept the spectrum licence conditions may include a minimum capacity commitment as an incentive for the WOAN, we don't accept that it makes sense that each HDS licensee is obliged to acquire 30% of the capacity of the WOAN.

"If each HDS licensee acquires 30% of the WOAN's capacity, this would mean that there will be little WOAN capacity available for MVNOs and smaller operators and there could only be three, rather than four, HDS licensees. Vodacom proposes that the HDS licensees collectively commit to 30% capacity of the WOAN."

Non-discriminatory prices

The operator is of the view that the HDS licensees' licence conditions should specify that their commitment is to acquire capacity from the WOAN at fair, reasonable and non-discriminatory prices, which must be consistent with wholesale prices that are available in the market for comparable wholesale services.

"We disagree with the spectrum licence condition that HDS licensees comply with the universal access and universal service obligations in rural and under-serviced areas before other areas," it notes, pointing out that this would be highly inefficient and inconsistent with the Act's object of ensuring efficient use of the radio frequency spectrum, because licensees could not be allowed to use the high demand spectrum in areas where there is the highest capacity constraints.

"It would also reduce the value of the spectrum and the auction proceeds. We accept there should be universal access and universal service obligations in rural and under-serviced areas, but HDS licensees should be able to use the high demand spectrum in other areas as well."

See also