Not unexpectedly, the debate over spectrum is back in full force, with mixed reactions from the announcement by the Department of Telecommunications and Postal Services (DTPS) that it intends taking legal action to review the actions by ICASA (Independent Communications Authority of SA) over its invitation to apply for the auctioning of spectrum.
According to the statement from the DTPS, the minister has studied the invitation to apply (ITA) issued by ICASA in Government Gazette No 438 on 15 July 2016 to auction the high demand radio frequency spectrum.
“After considering the ITA and on the advice of senior counsel, the minister intends taking legal action to review the actions of ICASA,” according to the statement.
It adds that the minister’s decision follows two meetings held with the regulator on 15 July and 19 July that failed to resolve the matter amicably.
“ICASA was furthermore not prepared to subject itself to the intergovernmental cooperation governance procedures,” it states.
“The position of government is that it is the custodian of spectrum which is a national and public resource and whose utilisation must benefit all the people of South Africa. There is presently no policy direction on spectrum that has been issued. The policy process is ongoing but as yet still incomplete.
“In taking its decision to go ahead and by publishing its Notice, ICASA has failed to adhere to the prescripts of the relevant policies, legislation and regulations, and in particular the provisions Electronic Communications.
“In addition, a request to ICASA by Government in September 2015 to halt this process after they published the Information Memorandum for International Mobile Telecommunications was ignored,” the statement adds.
“The Minister is concerned that ICASA’s invitation to apply for the auctioning of the spectrum was issued without consultation and prior notification to government as the policy-maker. A further concern is the haste with which ICASA is proceeding to dispose of the spectrum given that this spectrum will not be immediately available.”
The statement concludes: “The Minister is acting in good faith to ensure that interested parties who may wish to respond to ICASA’s ITA do not act precipitously by engaging in a process which may ultimately be found to be invalid and therefore suffer unintended consequences as a result thereof.”
ICASA has hit back, saying its ITA was legal, and it will decide on a course of action once legal papers have been filed.
Shadow minister of telecommunications and postal services, Marian Shinn, has urged the minister to abandon the legal action.
“The matter of how to allocate wireless broadband spectrum that is critical to the expansion of South Africa’s knowledge-based service delivery and economic growth, has been subjected to a decade of politically inspired delays within the governing ANC as it dithered on how it could control the potentially lucrative spectrum,” Shinn states.
“A week ago ICASA – in a spirited move to assert its mandated independence as a Chapter Nine Institution – issued a government gazetted invitation to ICT enterprises to lodge their interest in participating in spectrum auctions to take place in Johannesburg in January 2017.
“ICASA’s bold step to issue the invitation to prospective bidders came after 10 years of dithering on the spectrum policy by successive ANC communications ministers over how it was best to allocate the high-demand spectrum to ‘new’ entrants to the telecommunications sector.”
Shinn points out that, in February Minister Siyabonga Cwele made it clear to the parliamentary portfolio committee on Telecommunications and Postal Services that he preferred a closed-bid process. “This revealed his conflict with ICASA which told us that an auction was the most efficient and transparent method to assign spectrum,” she adds.
“The spectrum policy is unnecessarily bogged down in the ICT Policy White Paper review process that was started in 2012, and that is now entangled in a tug-of-war of competing factions in the ANC’s communications sub-committee after it was submitted to Cabinet in March.”
Shinn questions why successive communications ministers have delayed the issue of policy and the assignment of spectrum. “What is certain is that repeated delays by politicians are negatively impacting the empowerment, through ICTs, of all South Africans – particularly the marginalised communities – and is a major hindrance to the economic growth and job creation potential of South Africa.”
Others support the move by the minister, with Cell C’s chief legal officer Graham McKinnon pointing to concerns that ICASA had issued the ITA without obtaining buy-in from all stakeholders.
“If due process has not been followed, then Cell C supports the Minister’s efforts to ensure that this is done. Spectrum is an incredibly valuable national resource that urgently needs to be unlocked for the benefit of every South African and hence all the necessary boxes should have been ticked before issuing the ITA,” McKinnon states.
“In addition, upon a closer reading of the ITA, it seems that ICASA has not taken into account the future competitive landscape of the telecommunications industry in South Africa. The ITA contemplates two very attractive spectrum lots relative to other lots that, on an auction, would go to the bidders with the deepest pockets. This would favour and further entrench the current Vodacom/MTN duopoly.”
McKinnon stresses that consumers have benefited massively from competition in the mobile industry. “The recent study commissioned by National Treasury (and conducted by the University of Johannesburg’s Centre for Competition, Regulation and Economic Development) found that competition to MTN and Vodacom mainly driven by Cell C assisted by lower and asymmetrical termination rates, saved the South African consumer more than R47-billion between 2010 and 2015.
“In the context of last week’s forecast by the Governor of the South African Reserve Bank of zero percent growth for 2016, it is even more important that competition is stimulated as this drives economic growth and job creation.”
He points out that the ITA was issued as a final document. “In other words it does not seem to be capable of being amended to take into account the concerns of industry and other stakeholders.
“Apart from certain contradictions and inadequacies in the spectrum auction process detailed in the ITA, the uncertainty as to how the Lot A spectrum will be awarded and the actual date of availability of the 700 MHz and 800 MHz spectrum bands, makes it difficult for interested parties to properly evaluate their participation in the proposed auction.
“All of these factors suggest that the Minister may be correct in his assessment that ICASA has acted with undue haste and did not properly consult before issuing the ITA.”