The Independent Communications Authority of SA (Icasa) has set out the details of the highly anticipated auction of spectrum to be used for providing new wireless broadband services.

The spectrum in question, the valuable frequency in the 2,6GHz and 3,5GHz bands, will be auctioned off to the highest bidders in a process not unlike the auctions for 3G spectrum that took place in Europe a decade ago.

Mobile operators and Internet service providers are particularly keen to get their hands on spectrum in the 2,6GHz band so they can begin providing third- and fourth-generation wireless broadband.

In two separate invitations to apply, published in the Government Gazette on Friday, Icasa has revealed the 2,6GHz auction will attract a refundable reserve price of R750 000 and the 3,5GHz auction will attract a price of R250 000. In both auctions, a nonrefundable application fee of R70 000 will apply.

Bids must be submitted by 4pm on 25 June and bidders must have 30% of their equity in the hands of “historically disadvantaged individuals” or face disqualification from the process.

The available licences will be awarded in a four-stage process. In the first stage, bids will be interrogated to ensure they qualify. Then there’ll be the auctions, followed by an assessment of the winning bidders’ business plans, and finally the granting of licences. Icasa has appointed an independent spectrum auctioneer to manage the process.

The authority says it will use an “ascending-price closed-bid” auction. Participants will bid against one another, with each subsequent bid higher than the previous bid.

An auctioneer and/or Icasa will announce the prices and pronounce the highest bids. The auction will end when participants are not willing to bid further.

The winning bidders are expected to pay the amount then owing to Icasa within 10 working days.

In the 2,6GHz band, which is to be used for national coverage, winning bidders will have to guarantee that they will cover 50% of the country’s population within two years of their licences being granted.

This will form part of the licence terms and conditions, Icasa says.

The maximum spectrum that companies may bid for in the 2,6GHz band is 30MHz.

The 3,5GHz band will be used for providing regional broadband wireless access in district and metropolitan municipalities. Two licences, each of 30MHz, are up for grabs in this band.

Successful bidders in 3,5GHz must achieve 50% population coverage in the municipal areas they’ve bid for within two years. — Duncan McLeod, TechCentral