Telkom digs in, sale hopes dim
Sipho Maseko, CEO of Telkom, says it can't be blamed if the long-awaited auction of broadband spectrum does not happen this year.Telkom's legal challenges to the allocation process torpedoed an auction that should have been held in March this year, and will likely delay another due in August.The Independent Communications Authority of SA (Icasa) has accused it of holding up the allocation of spectrum desperately needed for the country's economic revival to protect its own commercial interests to the detriment of the general population."It's a very simplistic assertion that we are delaying this process for self-serving reasons," says Maseko."The facts are that we've been sounding the alarm for 18 months about what we consider to be an appropriate and due process that needs to be followed by Icasa as a chapter 9 institution to ensure that spectrum gets allocated."All of us may want spectrum. But Icasa has to do things in such a way that it is legal and constitutional, and in accordance with their founding act."Telkom, SA's third-largest mobile operator, prevented Icasa's planned March auction of about R8bn worth of broadband spectrum when it filed court papers to halt the sale.Maseko says the regulatory process was flawed and would further entrench the dominance of MTN and Vodacom.Its case is scheduled for a hearing in the high court in Pretoria from July 26-30, which would leave little chance of an auction this year for an industry denied new spectrum for at least 15 years.Icasa says there is no constitutional basis for the court to grant the interdict Telkom is seeking, and few specialists in telecommunications law give Telkom much chance of succeeding in its court action.Be that as it may, and of course he disagrees, Maseko says it is important that Icasa does a proper economic assessment so that when it releases spectrum it releases it into an economic context that has been assessed."That's all we are asking."He says it need only delay the process for a few months, but Icasa says if Telkom's application succeeds it will be years.Maseko says Icasa's failure to do its job properly is to blame."If Icasa had consulted the industry properly in the first place, things would never have reached this point."If they'd issued a draft Invitation to Apply (ITA) for spectrum there would have been feedback from the industry "and this show would long have been on the road". He says Icasa issued the ITAs knowing that two of the key "digital dividend" bands it intends auctioning, 700MHz and 800MHz, are not available because they're still occupied by the SABC and other broadcasters for analogue television.Telkom - the only major player without access to frequencies below 1GHz - says it would be forced to pay more than R1bn for access to these bands without being able to use them for years.This would put pressure on Telkom's balance sheet and leave it in a weaker position relative to Vodacom and MTN."The sub-1Gig is not commercially available," says Maseko. "If you're looking to auction something that somebody will pay billions for, and it is not commercially available, that is a fatal flaw in the process."He doesn't see these frequencies being available any time soon."None of the previous four deadlines to migrate the broadcasters have been met."He wants Icasa to suspend payment for this much-needed spectrum until digital migration is completed.To accuse Telkom of putting its own commercial interests ahead of what is good for the country is "nonsensical", he says."We're the only chaps who do not have low-band frequency spectrum. We have never had it. All the capital investment we've had to make we've had to make on the basis of much higher frequencies that cost us even more money. So if anyone really needs low-band frequency, it's us."He says that when designing the auction Icasa should have held an inquiry to ensure that spectrum is allocated in a way that promotes competition rather than "entrenching" the dominance of MTN and Vodacom.Icasa says it commissioned advice on competition matters.Maseko says the Competition Commission released a report last year on mobile broadband prices in which it said Icasa must use spectrum as a tool to ensure greater competition."Icasa ignored that. They issued an ITA before they'd completed their own competition assessment," says Maseko.He says the regulator also ignored Telkom when it advised Icasa "how to sequence this to ensure they run a fail-safe process that will not be challenged". Icasa says that delaying the auction will only entrench the "duopoly" Telkom says it wants to end."Because you're in a hurry and you're late, you don't necessarily jump onto the plane that is taking off, which may not be going to the place where you're going to," says Maseko."Icasa is a regulator, not an actor, and it is very important that its role be unimpeachable. Not just in 2021 but 10, 20 years from now."This means it must be consistent, fair and transparent, he says.MTN also intends going to court in July.It says the auction designed by Icasa favours smaller operators, leaving no spectrum in the 3.5GHz band - which is key for 5G - for the bigger players, which alone have the resources to build 5G networks of national scope, which would benefit everyone.Maseko says 3.5GHz is not the only 5G frequency. There are also the low frequency bands, which Telkom, unlike MTN and Vodacom, does not have.He says Telkom is not hellbent on going to court but is open to mediation."We've met with Icasa a couple of times in the last three weeks and provided very practical solutions that will help the process and not delay it."So how long will it be before the spectrum that SA's economic recovery depends on is auctioned?"I'm hoping we can get a mediation by the end of July, which will put paid to the need for any legal actions going forward," says Maseko."I think we and Icasa have found each other. I think there is good energy in our conversations. "I think we were clear where our red line was, and they were clear where their red line is, and we've been able to find each other in between."