Scowl rather than smile in Icasa spectrum invite

31 July 2016 - 02:00 By Irene Charnley

On July 15, the Independent Communications Authority of South Africa invited applications for radio frequency spectrum in the 700MHz, 800MHz and 2.6GHz bands - which will allow mobile operators to provide high-speed mobile broadband. A licence to operate the scarce national resource of spectrum is vital for communications operators, since it will allow them to provide super-fast internet access with connection speeds several times higher than existing 3G.Such super-fast long-term evolution - also known as 4G LTE - is a game-changer in any economy.However, it would appear that Icasa's focus on socioeconomic development and empowerment has shifted.In the early days, Icasa created licensing conditions extremely favourable to new market entrants by, for example, allowing them to pay licence fees over time,This demonstrated an understanding of the importance of an investment-friendly regime to ensure the achievement of socioeconomic aims. At the time, similar licences internationally came at massive cost.Over the past 20 years, these terms have enabled those new market entrants to become significant companies with regional prowess and market power.story_article_left1But Icasa's punitive conditions in its current invitation to apply suggest that the communications regulator may have abandoned its initial lofty ideals.It appears they are intended to entrench the power of the companies that entered the market 20 years ago rather than facilitate the growth of the market through innovation, price competition and improved quality of service - best achieved through allowing new players into the market.Icasa's actions will not facilitate the entrance of new competitors into the market. Smile applied for such a licence in 2009 - when they were being awarded on a first-come, first-served basis. The company was not granted one.By setting a minimum bidding price of R3-billion per lot, Icasa is discriminating against new entrants. Only operators with significant market power are smiling - only they have access to this level of capital. Small wonder that they have hailed Icasa's invitation to apply.Icasa has an opportunity to again level the playing fields of South Africa's communications landscape.So why is it that, having given existing operators favourable terms through which they established themselves and grew their markets, the approach now is to entrench them?The punitive bidding terms in Icasa's invitation create a barrier to entry for newcomers - and, in the end, it's the consumer who will suffer through the lack of competition.Icasa's decision poses several questions.If the process has not been designed to benefit existing operators, why are such onerous barriers to entry being imposed? Why is Icasa issuing its invitation, which has implications for the next 15 years, at a time when the Department of Telecommunications and Postal Services is changing the framework to encourage a fairer, more competitive regime that will benefit consumers?Why is a player with impeccable credentials and excellent technical and operational 4G LTE expertise being precluded from the licensing process by arduous barriers to entry?As the pioneers of SuperFast mobile broadband in Africa - Smile operates 4G LTE networks in the 800MHz band in Nigeria, Tanzania and Uganda - the company understands the links between broadband penetration, job creation and development. It is a pity that we are being restricted from offering similar services to South Africa.In the short term, Icasa will be hailed by some for facilitating the government's vision of bridging the digital divide by providing access to high-speed broadband. In the long term, consumers will pay the price for its failure to serve the country through the spectrum licensing process.Charnley is CEO of Smile Group..

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