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Free Market Foundation wants temporary spectrum to stay

Read time 4min 40sec

The Independent Communications Authority of South Africa (ICASA) should convert the COVID-19 emergency spectrum temporarily assigned to telcos into indefinitely assigned spectrum until the design of the auction has been determined and held.

This is the view of independent public benefit organisation Free Market Foundation, as the extended deadline of the temporary spectrum comes to a close on 31 May.

The organisation says it has made a submission to ICASA, requesting the telecommunications watchdog convert all spectrum currently assigned to mobile network operators (MNOs) on a temporary basis into privately owned, regular and fully tradeable spectrum.

The submission was in response to the regulator’s invitation to make representations on the issues which the authority should consider regarding the review of the ICT COVID-19 National Disaster Regulations.

In its submission, the FMF points out that spectrum is the lifeblood of the data industry – constitutional and legal obligations govern ICASA’s actions, and withdrawing temporary spectrum would violate these and may lead to protracted litigation.

“The temporary spectrum allocated demonstrated sound judgement and a good sense of proportion from ICASA in that it is the best available reflection of the true spectrum needs of South Africa’s mobile carriers. However,ICASA has announced a review of this temporary spectrum allocation with a view to it being returned.

“It appears ICASA believes the MNOs are making too much money by utilising this spectrum while not paying licence fees, forgetting that the networks had to rapidly invest in infrastructure to accommodate the new spectrum and that they have surpassed all expectations in keeping consumers and business linked into the economy via mobile networks,” says the FMF.

The FMF believes withdrawing the spectrum would have detrimental effects for telcos and local consumers.

The organisation further notes the current design of the auction process would mean the two main carriers – MTN and Vodacom − face the possibility of not gaining access to the vital band of 3.5MHz for at least 10 years and this will have a significant impact on the majority of South African consumers.

Xhea = Comprehensive review

ICASA assigned temporary emergency spectrum in April 2020, until three months after termination of the COVID-19 national state of disaster.

Six MNOs were granted emergency spectrum and were able, by creating partnerships and new investment, to ensure the data networks could supply customers with data to meet the surge in demand from lockdown and remote working.

ICASA considered applications for temporary spectrum in the following bands: 700MHz, 800MHz, 2 300MHz, 2 600MHz and 3 500MHz, as well as the use of television white spaces.

One of the critical measures was that temporary high-demand spectrum was released for the duration of the lockdown to ease network congestion, maintain good quality of broadband services for consumers, and enable service providers to lower cost of access.

ICASA has since extended the emergency spectrum regulations to 31 May 2021, when the long-awaited spectrum auction was to take place.

The authority previously stated that following the expiry of the temporary spectrum extension at the end of this month, it would embark on a comprehensive review of the ICT COVID-19 National Disaster Regulations, which include the radio frequency spectrum extensions, as well as the relaxation of compliance requirements in respect of local content for broadcasters, and type approval obligations.

As the deadline looms, the spectrum allocation has been delayed indefinitely, due to legal challenges from Telkom and MTN over the flawed design of the auction – this is to the detriment of consumers in terms of pricing, service and access to new technologies, notes the FMF.

In a virtual ICASA briefing on its 2021/22 annual performance plan last week, chairperson Dr Keabetswe Modimoeng issued a warning to telco industry players, saying they “should not see and should not even plan” their business models around the temporary spectrum they were assigned.

Modimoeng emphasised the assignment of temporary spectrum is something “very unprecedented” occasioned by an unprecedented disaster in our country and the world.

“The fair value of spectrum will be determined through a competitive process. This thing of giving spectrum temporarily and only collecting licence fees, it was an interim measure.”

Meanwhile, the FMF questions the spectrum allocation policy ,pointing out that ICASA has for years held back a significant amount of spectrum for the wireless open access network (WOAN) – intended to facilitate better competition and transformation in the industry.

It notes it has been 15 years since the two biggest network operators, Vodacom and MTN, which together provide 75% of data coverage, were allocated more spectrum andthat “insufficient competition will not necessarily result in market failure”, as purported by ICASA.

“A market with six operators sharing spectrum through voluntary roaming agreements avoided a spectrum crunch during the past 16 years and also during the COVID crisis. The industry has already created a WOAN and there is no need for an artificial allocation structure which creates the opportunity for rent-seeking and inefficient allocation of resources,” says FMF founder and president Leon Louw.

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