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Thank you Mahlangu
Communications controller Icasa is putting the car before the horse to go ahead with plans to license access to new spectrum bands before concluding an investigation into the mobile broadband services market.
That is the opinion of the Telkom group executive for regulatory affairs and government relations, Siyabonga Mahlangu. who said that an Icasa investigation, which began with public hearings broadcast live on Monday, should look at Vodacom and MTN’s network exchange agreements with Rain, Cell C and Liquid Telecom and their impact on the market. And it must before It licenses the 4G and 5G spectrum bands, which is expected to do in March 2021.
“The competition is not working,” Mahlangu said. “The structural problems in the mobile market are ingrained. Effective regulatory measures are needed to prevent the problem from getting worse. “
He said the Icasa investigation “should take precedence over spectrum licensing.”
His request to Icasa comes after Telkom earlier this month said it had approached the Competition Court to specifically object to Vodacom’s roaming agreements with Rain. That move was surprising given that the Competition Commission had previously sanctioned the agreement.
Mahlangu on Monday accused South Africa’s two largest mobile operators of creating “sophisticated structures to subvert regulations” through deals like Vodacom’s deal with Rain (for additional national 4G coverage), Vodacom’s deal with Liquid Telecom ( for the deployment of a new 5G network) and MTN’s agreement with Liquid Telecom (also for additional national 4G coverage). Instead of “roaming” deals, which is how Vodacom and MTN have described these deals, they amount to “spectrum trading,” he said.
‘Alignment’
Icasa’s investigation should not only take precedence over spectrum licensing and invitations to apply (ITA) for that spectrum, but should also look closely at the implications of these network sharing agreements, Mahlangu said. (Both MTN and Vodacom are scheduled to make presentations to the Icasa audience.)
“We know that ITAs have been issued (for spectrum for commercial operators and a planned wholesale open access network). But there has to be an alignment between the results of this process and the spectrum licensing, ”he said. “If you finish this research later than the (spectrum licensing), you will see a market determined by the results of the ITAs for the next 20 years.”
In his presentation, Mahlangu said that between them MTN and Vodacom control more than 70% of the market in terms of both subscribers and revenue and more than 80% when it comes to operating profit. The two companies have “control over the best sites, they have preferential spectrum assignments, they have access to distribution channels and there is a lack of pro-competitive regulation to keep them honest.”
“Telkom remains the single most viable challenger for these two operators, at least if they are looking for infrastructure-based competition. The other players have rallied around the two operators. However, Telkom, being the challenger, does not have a spectrum below 1 GHz (useful for providing wide coverage and good signals in buildings). On top of that, Telkom has to deal with the fact that these incumbents have access to additional spectrum through network sharing agreements … Although labeled as facility leasing along with roaming, they are not. They are a means by which large operators can access additional spectrum and, therefore, consolidate their positions in the market.
“Because of these spectrum trading agreements that have been entered into in the form of these network sharing agreements, it is no longer important to focus solely on spectrum ownership. It is important to focus on access to spectrum, which will determine the type of competition we will see in the market, ”said Mahlangu.
Speaking on behalf of Telkom in the same presentation, Mark Williams, MD of consultancy Berkeley Research Group, said that deals like the one between Vodacom and Rain and MTN and Liquid Telecom allow the two big operators to “extend their leadership.” In effect, Williams said, the agreements “transfer capacity from smaller operators to incumbents and restrict those smaller operators to specific areas of the market.”
“This has profound implications for the way the competition works. It also has implications for the ITA: Vodacom and MTN can access more spectrum than is included in their licenses, before the next auction. This should have been taken into account in the design of the ITA, ”he said. “Not managing the spectrum correctly will distort the competition in LTE and 5G.”
Furthermore, Icasa should ensure that there is “equitable” access to high places to ensure effective competition based on infrastructure. “There is a very unbalanced market for sites: Vodacom and MTN are way ahead of the other MNOs. Trade negotiations are one-sided, putting smaller players at a disadvantage. The core issues relate to ‘foot dragging’ by traditional mobile network operators, and the operational terms are worse for third-party access seekers than their own internal businesses. ” © 2020 NewsCentral Media
