Don't mess this up, Icasa - TechCentral

Don’t mess this up, Icasa

Could communications regulator Icasa miss its self-imposed deadline of licensing 4G- and 5G-suitable spectrum by the end of the year? There is now a real concern this could happen.

Such a scenario would be terrible news for South Africa’s telecommunications industry and for consumers, delaying the roll-out of additional mobile broadband coverage and keeping prices higher for longer as operators are forced to continue building denser coverage to compensate for their lack of access to additional bandwidth.

The reason for the concern is a statement released by the regulator last week in which it attempted to explain why it had not issued an invitation to apply (ITA) for spectrum licences in various frequency bands by the end of June, as had been expected. The market had also been anticipating an ITA for a wholesale open-access network, or Woan, an operator the government wants to create (it will be privately owned) to provide more competition to Vodacom and MTN, which are seen as too dominant by the state.

Icasa said in its statement that it has made “extensive progress” with both ITAs, but that given the “complexity of the process, there are additional considerations the authority must apply itself to”. This led to Icasa “slightly” delaying publication of the ITAs, said acting council chair Dimakatso Qocha.

But I have it on good authority that the reason for the delay is more worrying than Icasa let on in its media statement – that the departure of several councillors, including two who were working closely on the spectrum licensing plan (Paris Mashile and Peter Zimri), has unsettled things. A third councillor, Nomonde Gongxeka-Seopa, also a key player in the ITA process, has resigned and leaves the regulator this week.

Woan feasibility

Some councillors have apparently raised questions about the feasibility of the Woan. This is not surprising given there are few examples of successful Woan models elsewhere in the world.

I am told that some councillors raised the possibility of licensing the Woan separately to the planned spectrum auction, but that this raised the heckles of communications minister Stella Ndabeni-Abrahams, who insisted that the two processes happen simultaneously over fears a delay in licensing the Woan would entrench the dominance of the major industry players.

I am also told that Icasa sought legal advice on whether a clause dealing with “offtake” arrangements between the Woan and other spectrum licensees could be removed from the ITA. The minister’s policy direction to Icasa on spectrum licensing specifically requires that operators, including MTN and Vodacom, which receive spectrum in the planned auction, agree to buy 30% of the Woan’s capacity to ensure its viability. This is part of an arrangement Vodacom and MTN reached with the former minister, Siyabonga Cwele. But some at Icasa are worried that this requirement could prove onerous for smaller spectrum licensees. The minister apparently threatened, in a private meeting with Icasa, to litigate if the offtake arrangement doesn’t form part of the ITA for the auction.

The author, Duncan McLeod, argues that Icasa is in a difficult position over the minister’s call for a 30% offtake arrangement for the wholesale open-access network

The legal advice provided to Icasa said the authority does not have to include the 30% offtake requirement in the ITA and that, legally speaking, the regulator can disregard it. There is, I hear, disagreement about the best course of action, with some councillors not wanting to pick a fight with the minister and others insisting Icasa take its own, independent decision on the offtakes.

So, Icasa is in a difficult position. It must do what it believes is in the best interest of the industry, not just the Woan, but it must also make sure it doesn’t regulate for failure. If it’s certain the Woan won’t fly, would it be irresponsible to license it anyway? Perhaps. Icasa can provide regulatory support, but that support mustn’t cause harm to the rest of the industry. Ultimately, the Woan will have to survive on the strength of its business plan.

These developments are causing frustration, with some people at Icasa having the view that, after all the work that has been done during lockdown to ensure Icasa doesn’t drop the ball on the timelines set, there is no justification for a delay in publishing the ITA for the auction.

The worry is this delay, even if it’s of short duration, could — with less than six months of 2020 remaining — push the spectrum auction date into next year. An auctioneer will probably need to be appointed by no later than September – that’s just two months away!

The telecoms industry has been waiting for more than a decade for the licensing of new radio frequency spectrum. The operators have been boxing clever in the interim, reallocating their 2G and 3G spectrum assignments to roll out 4G and using emergency temporary spectrum under the Covid-19 state of disaster to launch limited 5G services. But they are out of runway. They need new spectrum urgently. It would be a sad situation if internal disagreements at Icasa and undue interference by the minister lead to a further delay. South Africa, which will need all the help it can get to dig itself out the current economic calamity, simply cannot afford to score own goals right now.  — (c) 2020 NewsCentral Media

  • Duncan McLeod is founder and editor of TechCentral

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