SA’s third-largest mobile operator, Telkom, says a report commissioned by the Independent Communications Authority of SA (Icasa) supports and proves its case that the much-anticipated spectrum auction is being prematurely done.
Telkom and Icasa are at loggerheads over the upcoming issue of spectrum — the radio waves by which information is transmitted — which has not been allocated in SA for almost a decade. Icasa has outlined plans to auction R8bn worth of broadband spectrum by the end of March.
Telkom filed court papers in December to halt the upcoming spectrum auction, citing a flawed regulatory process that may further entrench the big two mobile network operators.
Since then, Icasa has questioned the legitimacy of Telkom’s case, saying the application is not urgent because the authority had already set out the proposed rules of the spectrum auction in 2019. The regulator says Telkom should have challenged the process, “seeking the relief sought” in this court application, “at that time”.
On February 4, Telkom lodged new papers opposing Icasa’s defence, saying the regulator’s own information proves its case.
In an affidavit filed with the high court, Telkom’s group executive for regulatory affairs, Siyabonga Mahlangu, said the authority’s “unlawful, unreasonable and irrational actions warrant this court’s interference”.
Telkom says Icasa is rushing to complete the allocation without addressing fundamental issues over digital migration and competition in the market.
Icasa had itself flagged the structure of the mobile market that led the regulator to conduct an investigation into mobile broadband services.
Hearings aimed at the possible implementation of regulations to further lower broadband prices were held in October with all operators participating.
Anticompetitive effects
The hearings followed the completion of a market inquiry in 2018 in which it was found that there may be a need to review the mobile broadband services segment.
In its answering affidavit, Icasa acknowledges that “the assessment of the anticompetitive effects of the spectrum arrangements is something which had not been concluded” by the time the invitation to apply for the auction was issued.
Telkom argues that it may be better for Icasa to complete the investigation before issuing new spectrum as this is a tool that could be used to even out competition. The telecoms provider is seeking to stop the spectrum allocation process until Icasa fixes issues that it says are flawed.
In its latest filing, Telkom supports its case with a report produced by Acacia Economics, a research firm hired by Icasa to assess the feasibility of issuing spectrum, which says a comprehensive competition analysis is “an important prerequisite for the determination of a fair economic value of five bands and the spectrum auction itself”.
Telkom also noted that the authority had been previously criticised for failing to conduct a competition assessment by interested parties during the consultations for the spectrum licensing plan published in November 2019.
After that consultation process with industry players, Telkom says it thought the regulator would have taken such criticisms more seriously, therefore it would have been premature for Telkom to lodge a case against Icasa before the final rules were published.
Telkom also says roaming agreements that Rain, Cell C and Liquid Telecom have with MTN and Vodacom give the two large operators access to more spectrum, which further entrenches their dominance.
The fixed-line operator referenced the Acacia Economics report, which says: “We also recommend the scrutinisation by the authority of the details of the current extant spectrum roaming arrangements, and their likely impact on competition in South Africa. This should be done before the finalisation of the rules of the auction.”
Since launching this court action, free-to-air broadcaster e.tv has joined Telkom in support of its case.
SA’s second-largest mobile operator, MTN, has lodged its own case with the high court in which it seeks to change how the auction will be conducted. MTN fears that a provision that precludes it and rival Vodacom from participating in certain rounds for 5G spectrum would leave very little on the table for them.
Icasa has said it would oppose MTN’s case.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.