National treasury’s medium-term budget policy statement, published on Wednesday, has punted the idea of a spectrum auction to allocate scarce radio frequency spectrum, potentially putting finance minister Malusi Gigaba at odds with his colleague in telecommunications & postal services, Siyabonga Cwele.

In the statement, treasury said the delay in allocating spectrum has had the effect of constraining growth across the economy.

“Lack of radio frequency limits the ability of businesses to deploy new technologies and contributes to the high cost of broadband,” the statement said.

“A well-designed spectrum auction can promote transformation and improve competition as new participants enter the market. Universal service conditions can improve access for low-income households. And a competitive auction can sharply reduce data costs.”

It said the “bulk” of additional spectrum is ready to be allocated immediately “without requiring the migration of existing spectrum users to digital television”. Presumably, national treasury is referring to spectrum in the 2.6GHz band, which is used worldwide for 4G/LTE services, especially in urban areas.

Communications regulator Icasa is pushing ahead with plans to auction the spectrum, but Cwele is challenging this in court.

The telecoms minister does not favour a spectrum auction. Instead, he wants to reserve a big chunk of spectrum for a new wholesale open-access network, a plan that has been met with sharp criticism.

Billions in proceeds

On Tuesday, Democratic Alliance MP Marian Shinn, writing for TechCentral, urged Gigaba to announce the auction of so-called high-demand spectrum in his medium-term budget speech in parliament.

“In one sentence, he could announce that desperately needed high-demand spectrum would be auctioned as 2018 dawns and that the expected R25bn-40bn in proceeds would be used to roll out mobile broadband connectivity nationwide, switch off the analogue broadcasting signal and free up the Internet-based economy to accelerate South Africa’s international economic competitiveness, create jobs and enable e-government services,” Shinn wrote.