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MTN, Telkom accused of bullying over spectrum litigation

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Reacting to recent court cases by MTN and Telkom over spectrum, some analysts believe the telcos are bullying the regulator and are not happy with the reserved allocation for small and medium enterprises (SMEs).

According to the analysts, big telcos, for the first time, look like they are on the back foot and because they have the resources and means to challenge the process, they are doing so.

This week, MTN became the latest mobile operator to drag telecoms regulator the Independent Communications Authority of South Africa (ICASA) to court over the spectrum auction process earmarked for March.

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.

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

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.

Commenting on whether ICASA can be faulted on the planned auction, independent telecoms analyst Spiwe Chireka says: “In this case, I believe the big players, for the first time ever, look like they are on the back foot. And because they have the resources and means to challenge it – they do.

“But when we look at it really closely…Is it such a bad idea for the smaller players to own the spectrum? What does it say in our faith as a country in the ‘smaller guy’? Big telcos should walk the talk of supporting the smaller guy by allowing the auction to run its course and lead by example on how to work with the smaller guy.”

According to Chireka, at some point, the larger telcos need to realise that disruption is coming in the form of network resource ownership and “the sooner they start learning to work with smaller players the better.

“I would say – start innovating around models to share/obtain spectrum from the unusual suspects and not spend too much time trying to compel the courts to rule in your favour, which ironically is unfair to other players in the market.

“ICASA has a mandate to ensure equitable access to this very limited resource because we just don’t have enough spectrum to meet everyone’s needs and balance that out with the regulator’s mandate to not only service the needs of larger players.”

The Progressive Blacks in ICT (PBICT) says it is “very alarmed by the behaviour of some telcos that are taking ICASA to task for creating an environment where for the first time in the history of South Africa, the policy actually favours black people and the poor in particular”.

PBICT represents 3 000 black-owned SMMEs and black professionals in the ICT sector.

“We do not understand why the hype for 5G spectrum is such a burning issue and why they want to hog the spectrum only for themselves. Over the last decade, they have built empires now they want to close the gate,” comments Leon Rolls, PBICT president.

“We are also equally surprised at the elite privileged black consortium joining the party. The question on our mind is why? These people had the opportunity to transform the sector and create opportunities for our people and the poor in particular. Some were even given funding and licences, and others worked as director-generals and CEOs but filled their pockets only. Now they want to use this process to fill the other pocket.”

Muzi Makhaye, chairman of the ICT SMME Chamber, says: “Possible delays will adversely affect SMMEs more than the parties who are in court. Notably, these are the same parties who are known to have previously frustrated, hijacked, derailed and faked the transformation of the telecoms economy in favour of black people generally, and ICT SMMEs particularly, for more than two decades. We hope these parties shall alter their ways and attitude while time allows.”

However, Makhaye believes the court case may have some merit.

“Based on the court papers, there are matters in there that warrant court intervention. Things do not go to court because there is something wrong or someone wrong. In these cases specific clarity of interpretation is sought by the parties from the court. I would not concur that court challenges are not necessary; people must just read those affidavits. Courts are critical constituent parties in our democracy; anyone has a right to approach courts if they so determine.”

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