Operators will have to stump up at least R3bn each for access to spectrum to provide next-generation 4G/LTE services, according to an invitation to apply issued by communications regulator Icasa on Friday.

In an unexpected move — one that may have gone against the wishes of the department of telecommunications & postal services — Icasa issued the invitation to apply for so-called high-demand spectrum in the 700MHz, 800MHz and 2,6GHz bands, with four lots of spectrum being made available.

Icasa had only been expected to issue an invitation to apply for the spectrum after the telecoms department had finalised government’s integrated ICT policy white paper, which is not yet ready.

Operators, including Vodacom, Cell C, MTN and Telkom have been champing at the bit for access to new spectrum to allow them to extend 4G/LTE services to more South Africans. The operators are expected to welcome the latest development.

TechCentral can now reveals details of what the invitation to apply says.

Icasa will use an auction model to assign spectrum in the following bands:

2×30MHz in the 700MHz band (703MHz-733MHz/758-788MHz)
2×25MHz in the 800MHz band (796-801MHz/837-842MHz)
2×70MHz and 1×25MHz in the 2,6GHz band (2 500-2 570MHz/2 620-2 690MHz and 2 595-2 615MHz)

The spectrum will be awarded on a national basis covering the entire territory of South Africa. The spectrum available for award is packaged into four lots as illustrated below:

Bidders will be able to bid on four lots of spectrum – B, C, D and E. Lot A will be issued through a separate process.

An applicant will qualify to bid only on one of the four available lots and will be free to switch between lots during the auction.

A licence, once issued, will be valid for 15 years from the date of issue and will be renewable on an annual basis upon payment of the prescribed annual licence fee.

All licences will be technology-neutral and service-neutral.

Icasa is placing a spectrum cap on the amount of spectrum a bidder can bid for in each bid round in the auction.

The authority has attached a range of conditions to the awarding of the licences.

Firstly, they must provide data services across the country with an average uplink of at least 15Mbit/s and the downlink “user experience throughput” of at least 30Mbit/s to 100% of the population of South Africa by 2020.

They must submit documents to demonstrate progress in meeting the criteria of the uplink and throughput speed obligations.

This information must be provided at intervals of 12, 18, 24, 30 and 36 months following the date that the 700MHz and 800MHz spectrum is made available for network roll-out based on commissioning date by the licensees.

In addition, successful licensees must meet certain open-access obligations.

They are required to provide open access to a minimum of three mobile virtual network operators. The MVNOs must have more than 51% of ownership held by persons from historically disadvantaged groups.

Failure to meet the speed guarantees and the MVNO requirements will be regarded as a “serious breach of the licence conditions”, which could result in Icasa revoking the licences.

Spectrum licensing will take place in three stages: a qualification stage, followed by an auction stage, and finally a licensing stage.

In the first stage, parties are invited to submit applications, in which they must state on which lot categories (Lot B/C/D/E) they may wish to place bids during the award process.

The identities of all applicants will be announced.

The applications will then be assessed by Icasa, and applicants who meet the requirements will move on to the auction stage.

Bidders will be requested to submit bids for the lots that they would be prepared to acquire at reserve prices. The auction stage will take the form of an “SMRA” auction.

Icasa will announce successful applicants who can progress to the auction stage on 30 November 2016.