Icasa's new rule requiring licensees to pay for emergency Covid spectrum is invalid

In December 2020, Icasa announced that recipients of temporary emergency spectrum would have to pay for use. This was contrary to previous declaration that the spectrum would be free of charge to enable mobile network operators (MNOs) to manage the vast increase in data usage associated with lockdown. It appears that the MNOs have paid, however lawyer Gary Moore explains why Icasa's action is open to legal challenge.

The 2002 Disaster Management Act deals with mitigating the severity of disasters. It defines a disaster to include natural or other occurrences which cause or threaten death or disease or significant disruption, and are of a size exceeding the ability of those affected to cope using only their own resources.

The Act established a Disaster Management Centre, which, when an incident occurs, determines whether it should be regarded as a disaster and if so, assesses its size and classifies it as local, provincial or national. The Centre has classified the Covid-19 outbreak as a national disaster.

The Act says that the cooperative-governance minister can then declare a national state of disaster, if existing arrangements do not adequately provide for the national executive to deal effectively with the occurrence. The minister declared a national state of disaster in March 2020, and has renewed it monthly.

When a national state of disaster is declared, says the Act, the minister may make regulations to protect and help the public, and may authorise the issue of directions regarding the release of available government facilities and resources, as well as steps to contain and minimise the disaster's effects. 
In March and April 2020, the minister made regulations requiring government institutions to make resources available and authorising other ministers to issue directions to address the spread of Covid-19 and alleviate its effects.

Pursuant to the cooperative-governance minister's regulations, the communications minister issued directions requiring the Independent Communications Authority of South Africa (Icasa), for duration of the Covid-19 national disaster, to relax to the extent possible its regulations governing management and licensing of radio-frequency spectrum, to enable the temporary licensing of all available spectrum bands including unassigned high-demand spectrum, focusing on current licensees ability to use such spectrum expeditiously.

Icasa in April 2020 made regulations with the declared purpose of facilitating the response to the national disaster and post-disaster recovery and rehabilitation, and of implementing measures to alleviate and minimise the effects of the disaster, and ensure continuation of the provision of services. 

Icasa's regulations declare that — 
During the state of disaster, licensees may apply to Icasa to dispense with prescribed procedures for licensing radio-frequency spectrum, to enable them to deal with the anticipated rise in demand for network capacity or data services; the 700MHz, 800MHz, 2300MHz, 2600MHz, and 3500MHz spectrum bands were temporarily made available for assignment; such temporary assignment would be revoked on three months after termination of the national state of disaster, but would not be valid after 30 November 2020; and (importantly) prescribed fees, that would have been applicable to these spectrum bands temporarily made available, were waived.

The effect was that these high-demand spectrum bands were made available without fee, until the earlier of 30 November, or three months after termination of the state of disaster. 

Icasa said it was making high-demand spectrum available for duration of the Covid national state of disaster, but that this would not negate its processes underway for auctioning, and permanently assigning, this spectrum.

In September 2020, Icasa announced an unavoidable delay in its auctioning of this high-demand spectrum. The auction would be completed by the end of March 2021. Icasa would amend its State of Disaster Regulations to extend this spectrum's temporary availability to 31 March 2021.

Then, (surprisingly,) Icasa announced on 27 November 2020 that — 
Licensees with temporarily-assigned spectrum would have to pay fees to continue using it in the extended period to 31 March; Icasa had not required fee payments when it released this spectrum for temporary use to meet the high demand for services during high lockdown levels and the national state of disaster; but Icasa was aware that licensees generated revenue growth during this period; and Icasa therefore resolved to amend the regulations to require fee payment for use of this spectrum in the extended period.

The same day, Icasa amended its Covid-19 State of Disaster Regulations to require licensees to pay fees for temporarily-assigned spectrum bands for the period 1 December 2020 to 31 March 2021 (prorated in terms of the 2010 Spectrum Licence Fees Regulations), and failure to pay by 15 December would result in the temporary licence becoming invalid.

Icasa has the power to amend its Covid-19 State of Disaster regulations. The statute governing interpretation of laws declares that where a law (which includes the Disaster Management Act) confers power to make regulations, that includes a power exercisable in the same way and subject to the same conditions to amend those regulations, unless a contrary intention appears.

No general contrary intention appears from the Disaster Management Act or the ministerial regulations and directions under it. 
But Icasa's amendment of its Covid-19 State of Disaster regulations must be exercisable in the same way and subject to the same conditions as the regulations. Icasa's amendment of those Regulations to require licensees to pay fees for temporarily-assigned spectrum bands must accord with the relevant considerations in the Disaster Management Act and the ministers' regulations and directions issued under the Act.

Those relevant considerations are whether a contemplated measure (here, imposing fees) will contribute to alleviating the disaster's effects by assisting or giving relief to the public, or addressing Covid-19's spread, or relaxing spectrum regulations as far as possible. 
Yet Icasa based its decision to require licensees to pay fees on the consideration that licensees experienced revenue growth during the national state of disaster and lockdown. 

But licensees' revenue growth is not one of the relevant considerations to which Icasa should have regard in determining whether to amend its Covid-19 State of Disaster Regulations so as to impose fees on licensees for using emergency spectrum: 
Icasa's amendment regulation imposing a fee on licensees for their use of the emergency spectrum can be reviewed and set aside by the courts, because Icasa failed to apply its mind to relevant issues and took irrelevant considerations into account.

This article was first published in the February 2021 edition of EngineerIT.

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