The independence of communications regulator Icasa is at stake in a tussle between the regulator and the department of telecommunications & postal services on how valuable spectrum will be assigned.
It is common cause that the release of spectrum in the 700MHz, 800MHz and 2,6GHz range is a major bottleneck in delivering more high-speed bandwidth to South Africans thirsty for access to ubiquitous broadband.
At parliament’s telecoms & postal services portfolio committee on the 16 February, Icasa and the department presented their contrary opinions on the issue.
It is apparent that the minister, Siyabonga Cwele, and the department’s acting director-general, Joe Mjwara, have little liking for the globally favoured spectrum auction process as a market mechanism to award this scarce resource.
While Icasa appears strongly to favour the spectrum auction method, Cwele and the department are deeply distrustful. The department cited a fear of “collusion” and a market “duopoly” among the established mobile telecoms companies as unacceptable risks inherent in the auction process.
Cwele said the ICT policy review’s white paper — into which the much-delayed spectrum policy has been relegated — would address the issue of giving the minister more direct influence over Icasa’s policy making. The Electronic Communications Act empowers the minister to give policy directives that Icasa must consider, but does not have to accept.
This is an ominous development as the department favours a closed-envelope — a so-called beauty contest — assignment of spectrum. Coupled with his desire for direct influence in policy making, this indicates that the minister and key members of his department have already made up their minds as to who should get the high-demand spectrum.
Cwele is seized with the need to “transform the sector to ensure meaningful black participation”, and apparently considers spectrum allocation in much the same way as the granting of concessionary mining licences as a means to achieve this goal.
Cwele’s dislike for the “duopoly” in the mobile market (how he arrives at this given the activities of Vodacom, MTN, Telkom, Cell C and Neotel remains mysterious) dominates his thinking, speaking of “transforming the ICT sector” and “increasing the participation of the black majority”. I suspect crony capitalism is playing a role here.
Perhaps the minister has forgotten the empowerment stake that made Irene Charnley one of Africa’s richest billionaires? Or the contribution made by the mobile operators, as part of their licence conditions, to the roll-out of broadband and mobile telephony not only in towns and cities, but in underserviced areas too? Or the part played by these companies, as part of their licence conditions, in connecting schools, clinics and other institutions to the Internet?
Specific dates and timelines bind the ICT objectives of South Africa Connect and the National Development Plan, yet government’s track record in meeting deadlines is less than impressive.
Not least of these is the International Telecommunication Union’s digital terrestrial television deadline of June 2015 to switch off analogue signals and switch on digital, which has finally begun in the Northern Cape — with dual illumination instead of a complete switch off, making the spectrum available for other purposes.
A spectrum auction can achieve a number of quick wins. The mechanism can be easily implemented without waiting for drawn-out policy approvals; spectrum can be quickly allocated speeding up network roll-out, especially LTE and on-the-horizon 5G; and valuable revenue can be secured for an increasingly cash-strapped fiscus.
While the amount of revenue raised via spectrum auction cannot be accurately predicted before the hammer falls, industry watchers place it at between R16bn and R25bn. This would be a major contribution to paying off our national debt.
While spectrum auctions do require some balance between effective use of the band, guarding against collusion or bid manipulation, revenue versus service obligations, and promoting competition by avoiding one or two companies owning too much spectrum, it is worth serious consideration.
Tellingly, the portfolio committee was told that South Africa has fallen behind in the ICT arena. Further prevarication and delays in pursuit of dubious objectives, including cronyism, can only set the country back further, increasing the digital divide and perpetuating inequality.
The ICT policy review white paper is due before cabinet in March. Then follows the publication of draft legislation and public participation. Icasa doesn’t expect to be able to start awarding spectrum before 2017/2018, but its CEO, Pakamile Pongwana, is keen to have the auction done and dusted before the end of 2016.
If the national treasury is keen to roll back South Africa’s debt and rapidly propel a developing South Africa into an expanding knowledge economy that rapidly grows jobs, the spectrum auction is the most profitable, corruption-free and effective way to go.
- Cameron MacKenzie is a Democratic Alliance MP and shadow deputy minister of telecoms & postal services