Temporary Covid emergency spectrum should stay where it is
Independent Communications Authority of South Africa (Icasa) should convert the COVID-19 emergency spectrum temporarily assigned until 31 May 2021 into indefinitely assigned spectrum until such time the design of the auction has been determined and held.
Also, Icasa should convert all spectrum currently assigned to mobile network operators (MNOs) on a temporary basis into privately owned, regular and fully tradeable spectrum.
These are key messages from the Free Market Foundation (FMF) submission (here) to Icasa in response to the Regulator’s invitation to make representations on the issues which the Authority should consider regarding the review of the ICT COVID-19 National Disaster Regulations.
Icasa assigned temporary emergency spectrum in April 2020 until three months after termination of the Covid-19 national state of disaster or 30 Nov 2020 (whichever occurred first). Six MNOs were granted emergency spectrum (see table below) and were able, by creative partnerships, new investment and great effort, to ensure the data networks could supply data to meet the surge in demand from lockdown and homeworking. MTN and Vodacom, in particular, successfully prevented network crunches despite very high increases in data usage, and the new spectrum not being immediately usable and interference from broadcasters (dirty spectrum).
Icasa then extended the emergency spectrum regulations to 31 March 2021 when the long awaited spectrum auction was to take place. Due to legal challenges from Telkom and MTN over the flawed design of the auction, it has been delayed indefinitely to the detriment of consumers in terms of pricing, service and access to new technologies. In good faith Icasa extended the duration of the temporary assignment of emergency spectrum by two months to 31 May 2021. That deadline looms.
Temporary Spectrum allocated to MNOs in April 2020
However, Icasa has announced a review of this temporary spectrum allocation with a view to it being returned. It appears Icasa believes the MNOs are making too much money by utilising this spectrum while not paying license fees, forgetting that the networks had to rapidly invest in infrastructure to accommodate the new spectrum and that they have surpassed all expectations in keeping consumers and business linked into the economy via mobile networks. Icasa should not penalise MNOs but the opposite, applaud the valiant effort in keeping the economy going in the crisis of the pandemic. Some commentators say that Icasa may be punishing Telkom and MTN for their interdicts against the auction going ahead in its current form.
Spectrum is the lifeblood of the data industry. Calls for #datamustfall should in reality be #providemorespectrum because only by doing this will prices come down and service improve. It has been 15 years since the two biggest network operators, Vodacom and MTN, who together provide 75% of data coverage, were allocated more spectrum. The industry has been starved of this essential resource due to policy delays including the failed digital migration (converting spectrum used by TV broadcasters into the digital space) and battles between Icasa and various ICT Ministers. Yet, suddenly, under the Covid-19 crisis - the spectrum was immediately available. Where was it? In someone’s drawer?
In its submission, the FMF draws four main conclusions. These and others are made substantially in the FMF SEIA – Socio Economic Impact Assessment on Government Policy for Radio Spectrum released in April 2021 (here)
- The current design of the auction would mean that the two main carriers face the possibility of not gaining access to the vital band of 3.5 MHz for at least 10 years and this will have a significant impact on consumers.
- The temporary spectrum allocated demonstrated sound judgement and a good sense of proportion from Icasa in that it is the best available reflection of the true spectrum needs of South Africa’s mobile carriers.
- The incorrect notion that market failure exists is based on a false understanding of economics. The mobile telecoms market is contestable – the test of competition and market operability. See 4.2 of the SEIA addendum for a full analysis.
- Constitutional and legal obligations govern Icasa’s actions and withdrawing temporary spectrum would violate these and may lead to protracted litigation.
Icasa has held back a significant amount of spectrum for the WOAN – wireless open access network - intended, according to Icasa, to facilitate better competition and transformation in the industry. FMF founder and President Leon Louw said, “A market with 6 operators sharing spectrum through voluntary roaming agreements, which meant they avoided a spectrum crunch during the past 16 years and during the Covid crisis, means the free market has been in action. The industry has already created a WOAN and there is no need for an artificial structure which creates the opportunity for rent seeking and inefficient allocation of resources.”