Spectrum wars fear over Icasa auction

Communications regulator Icasa is wrong to push ahead with a planned spectrum auction in the absence of government policy on the issue and should withdraw an invitation to operators to apply for access until that policy has been finalised.

That is the word from influential ICT industry figure Andile Ngcaba, who chairs Dimension Data Africa and Convergence Partners, and who was a director-general in the Department of Communications in both the Nelson Mandela and Thabo Mbeki administrations.

In an exclusive interview with Business Times, Ngcaba warned that unless the impasse between Icasa and Telecommunications and Postal Services Minister Siyabonga Cwele was resolved, the spectrum issue risked becoming an even bigger mess than South Africa's long-delayed and interrelated broadcasting digital migration project.

"This might go to the appeals court, to the Constitutional Court, to define whose role is what. This could result in delays of between three and five years," he said. Icasa was "entering a terrain" that was "very dangerous" for South Africa.

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Ngcaba said Icasa's plan would disenfranchise black people, not empower them, benefiting only entrenched industry interests - tier-one operators - at the expense of smaller players, including black investors and entrepreneurs. "It is wrong."

Spectrum licensing should be used to allow new entrepreneurs into the telecoms market, not to entrench the mobile network operators, he said.

"It shouldn't just be given to those who were there before."

He accused the regulator of failing to consult the industry adequately before issuing the invitation to apply. Because of this, it fell foul of the Promotion of Administrative Justice Act. Its failure to work with the government also meant it was ignoring requirements in the Electronic Communications Act and the Icasa Act.

He said South Africa had never licensed telecommunications spectrum, including 3G spectrum, through an auction because it did not make sense in a market where the affordability of telecoms was a key issue. That should not change now, he warned.

"When mobile started in South Africa, there was never an auction. People understood the nature of our country, which still has a huge digital divide. [Auctions] should only apply in countries that are developed and sophisticated."

He said Icasa should admit it erred by pressing ahead before the government had published a national integrated ICT policy white paper. It should cancel the invitation to apply, hold hearings at which it solicited the views of all interested role-players and not proceed until the government had finalised its policy on the matter. It should not see this backtracking as "defeat", but rather a "wise move".

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The regulator took the industry and the government by surprise last month when it invited interested telecoms licensees to apply to take part in the spectrum auction.

In terms of the invitation, it would make four lots of spectrum available at a reserve price of R3-billion per lot, for a total of R12-billion. The highly prized spectrum is ideal for operators wanting to build 4G/LTE mobile broadband networks of national scope. Icasa's move was welcomed by Vodacom and MTN.

Cwele said he had not been consulted by Icasa before it issued the invitation and this week followed through on a threat to challenge the move in the courts. In papers lodged at the High Court in Pretoria, the minister argued - through telecoms department acting director-general Joe Mjwara - that the invitation flew in the face of national policy plans.

In a founding affidavit, Mjwara said Icasa's requirements to participate in the auction would have the effect of "favouring a few rich and powerful [companies] to the prejudice of the rest of the role-players who are entitled to utilise spectrum".

If Icasa were allowed to go ahead, it would have the effect of "negating the balanced approach to spectrum access and open access prescribed as national policy objectives".

Mjwara argued that Icasa should not be allowed to "usurp" the constitutional functions of another state organ "under the guise of exercising its statutory regulatory and licensing powers".

In a document published earlier this year, the CEOs of MTN South Africa, Vodacom Group and Cell C - respectively Mteto Nyati, Shameel Joosub and Jose Dos Santos - expressed their fears that the government intended licensing the spectrum without an auction, to a new wholesale network consortium, with open-access obligations such as accounting separation, cost-based pricing and active infrastructure sharing imposed on all operators.

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But Ngcaba, who has voiced his support for open-access principles in licensing 4G spectrum, said it was wrong of Icasa simply to disregard the government and push ahead with the auction. He said it must work with the government, not against it, to seek consensus for the sake of the industry's development.

"They cannot pronounce on regulations without policy."

Icasa and the government should talk to each other in a constructive manner, said Ngcaba. If necessary, such meetings should be brokered by a senior, independent figure.

"Policymaking and regulation should be done in a co-operative environment. There is no way the courts can draw a line. That would be setting a precedent that we don't need as a market and as a country."

Ngcaba warned that if Icasa pushed ahead regardless, it would create a "predatory spectrum environment" and could ultimately lead to "spectrum wars". This would disadvantage end users, who would have to pay more for telecoms services.

duncan@techcentral.co.za