According to the Wikipedia definition, the game of chicken is a model of conflict for two players in game theory. The ideal outcome is for one player to yield (to avoid the worst outcome), but neither player wants to yield for fear of looking like a “chicken”.

Yet, if neither party yields, the outcome could be disastrous for both sides.

This is the game that Telkom and its regulator, Icasa, are playing ahead of a planned spectrum auction next month. The stakes could not be higher — for the parties involved, for the industry and for the country.

Telkom, which last month withdrew an urgent court application to interdict Icasa from proceeding with South Africa’s long-awaited auction of radio frequency spectrum for broadband services (possibly due to political pressure), has secured a date in April for its case against the regulator to be heard. The problem is, Icasa is working to a strict timetable that would see the auction take place in March, a month before the court case.

Icasa reiterated again on Tuesday that it plans to go ahead with the auction next month, in effect daring Telkom to try to stop it. Is this a rush of blood to the head, or does the regulator have a point?

Certainly, Telkom is rattling its sabre — and loudly so. It said in a statement on Tuesday, in which it announced the April court date set down by the acting judge president, that Icasa should “carefully consider the prudence of proceeding with the auction, mindful that the outcome of the hearing of part B of Telkom’s application (the part dealing with the merits of its case) may have a material impact on the process and outcomes of the auction”.

More threateningly, Telkom said it has “always reserved its rights to reinstate part A of its application (the urgent interdict) should this become necessary at any point”. In other words, if Telkom feels Icasa is prejudicing its interests, it will sue to bring the entire spectrum licensing process to a grinding halt. That would likely mean at least another 18 months in delays to spectrum licensing – unappealing to both the industry and to the political leaders, including President Cyril Ramaphosa, who are championing the process.

Unhappy

Telkom is unhappy with the way Icasa has managed the licensing process, and at face value it appears the company may have several legitimate reasons to be concerned – among them a lack of clarity around a proposed wholesale open-access network, or Woan, and the inability to access the “digital dividend” frequency bands that are being auctioned (they’re still being used by television broadcasters pending the completion of digital migration).

Icasa, meanwhile, is unquestionably under political pressure to get the auction done. Ramaphosa has made finishing digital migration and auctioning the spectrum key strategic objectives for 2022. Getting them done will strengthen him politically ahead of the ANC’s elective conference in December, where he is likely to face a leadership challenge from the kleptocratic wing of his fractured party.

Icasa also doesn’t want to lose face. Its current leadership team – under council chairman Keabetswe Modimoeng – is stronger than it has been in many years and it’s keen to prove itself. It’s also important that Icasa is not seen to bend to commercial interests the moment it is threatened by a large industry player, provided it is sure it’s doing things right and following the rules. That said, it has historically been a weak and poorly resourced regulator and has been on the losing side in court challenges in the past. It could lose the April court battle.

By pushing ahead with the spectrum auction in March, Icasa is potentially creating a mess for itself and the industry. Assuming Telkom doesn’t successfully interdict the auction ahead of time, and Icasa licenses the spectrum in March, what happens if Telkom wins its case on the merits in April?

Icasa will then have licensed the spectrum but could be under the instruction of the high court to go back to the drawing board on the licensing of the spectrum.

Will it then withdraw the spectrum it has assigned?

Can it do that without being sued into oblivion by well-resourced operators such as MTN and Vodacom that are desperate for access to permanently assigned new spectrum?

Will it take the matter on review to the supreme court (and the constitutional court), hoping that years of legal delays will ultimately make the case not matter anymore?

None of the above is a satisfactory conclusion to a process that is so critical to economic development in South Africa. This is not the way that regulatory matters should be resolved.

In this game of chicken, with neither side apparently prepared to yield, the potential for a disastrous outcome for the ICT industry – and for the country – is mounting by the day. — (c) 2022 NewsCentral Media