Telkom sues Icasa over 'flawed' spectrum auction - TechCentral

Telkom sues Icasa over ‘flawed’ spectrum auction

Siyabonga Mahlangu

Telkom has filed papers in the high court in Pretoria seeking an interdict to stop communications regulator Icasa from proceeding, for now, with the spectrum licensing process.

Speaking to TechCentral on Tuesday, Telkom group executive for regulatory affairs and government relations Siyabonga Mahlangu said the company is approaching the court because it believes Icasa’s invitations to apply (ITAs) for spectrum and the planned wholesale open-access network (Woan) have fundamental flaws that could entrench the “dominance” of Vodacom and MTN.

Telkom wants temporary relief against Icasa, preventing the regulator from processing, assessing, or adjudicating applications under the ITAs, which are due for submission by no later than 28 December.

It then wants the high court to review and set aside Icasa’s decision to issue the two ITAs.

One of Telkom’s main arguments is that Icasa issued the ITAs knowing that the 700MHz and 800MHz bands – the so-called digital dividend bands used by analogue television broadcasters – are not yet available for use by telecommunications operators. Despite this, Icasa is pushing ahead with the licensing of these bands and will expect payment for them despite the inability by successful applicants to use them, Mahlangu said.

Unfair

“So, we will buy the spectrum, but we will not be able to get a return from it,” he said. “We can’t commercially exploit that spectrum (until broadcasting digital migration has been completed).”

This is unfair, especially to smaller operators whose balance sheets are not as strong as the two big incumbent players, Mahlangu said. He added that the most valuable lot of spectrum in the sub-1GHz bands will cost more than R1-billion. “It’s unfair, for a company of our size, to commit that kind of capital, which we could use to compete more effectively… At this stage, no one knows when that spectrum will be available (for use).”

Telkom is the only major operator in South Africa that doesn’t have access to sub-1GHz spectrum, which is useful for providing better in-building coverage and deploying infrastructure at lower cost. “Other operators will gain a competitive edge without us being able to plan our lives around sub-1GHz.”

He added that Icasa “cannot license something that is not available”.

Telkom will also challenge the ITAs on other grounds, including that Icasa “pre-empted the outcome of the mobile broadband services inquiry”, Mahlangu said.

“By licensing this spectrum without completing this inquiry, Icasa has removed spectrum as one of the levers it can use to promote competition in the sector. It is substituting that with a process that is not public. In our view, an internal process, called the competition assessment, cannot be a replacement of a public statutory process.”

He said Icasa’s design of the auction, as a result, will not promote optimal competition in the sector. “On the contrary, the way the auction is designed will result in competition being stifled and the entrenchment of the duopoly structure of the market.”

Furthermore, Mahlangu said it is Telkom’s view that Icasa “paid lip service, or at least attached insufficient weight, to a policy direction” on spectrum licensing and the Woan from communications minister Stella Ndabeni-Abrahams.

Specifically, the minister wanted Icasa to “prefer” the Woan in the licensing of spectrum, something Mahlangu does not believe the regulator has done. At the very least, he said, it needs to explain in detail its decision to give certain bands to the wholesale operator. He said the Woan will need greater regulatory support to succeed.

‘Couple of months’

Mahlangu said Icasa appears not to have done sufficient work around the potential impact that licensing 5G spectrum will have on the economy and the telecoms sector. Work that it has done must be made available to the public so it can be scrutinised, he said.

A worry is that if Telkom is successful in its application, it is likely to delay the spectrum licensing process beyond the deadline of 31 March 2021. But Mahlangu said a delay should not be longer than “a couple of months” and that Telkom, like other operators, is champing at the bit to get access to additional frequency bands. – © 2020 NewsCentral Media

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