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South Africa’s highly coveted RF spectrum auction has been delayed after Telkom and Etv won an injunction against the Independent Communications Authority of South Africa (ICASA).
Telkom launched its legal challenge late last year. The company said that if ICASA goes ahead with the auction as planned, ruining South Africa’s telecom industry for 20 years.
He also warned that Mobile data prices in South Africa will remain high if ICASA does not make changes to the spectrum auction.
Telkom’s two main complaints about the auction were as follows:
First, several important spectrum bands in the 700MHz and 800MHz regions are not commercially viable, as they are still used by broadcasters.
Telkom wants assurances from the High Court that the government will be forced to migrate broadcasters out of those bands, as it will have no incentive to do so once it has the auction money in its pocket.
Second, Telkom argued that ICASA went ahead with the process without first completing its Mobile Broadband Services Market Consultation. Telkom maintains that this is illegal and irrational.
The root of this argument is that Telkom does not believe that ICASA is doing enough to break the dominance of Vodacom and MTN in the market.
Exclusive round of “participation”
In addition to the court case presented by Telkom and Etv, MTN has launched its own legal challenge against the structure of the ICASA auction and the way it classified network operators in the categories “Level 1” and “Level 2”.
MTN objected to ICASA’s plan to exclude Vodacom and MTN from the first round of the auction, where certain lots of spectrum will be available to smaller network operators.
ICASA called this exclusive round the “Voluntary Participation Plan”.
The spectrum that will be part of the subscription round includes frequencies in the 3,500MHz band, a particularly sensitive point for MTN because it needs spectrum in this band to advance its 5G rollout in South Africa.
MTN warned that ICASA risked undermining its auction by allowing smaller operators to obtain extremely valuable spectrum for much cheaper than it would have been willing to pay.
He also warned that if the smaller operators were to keep the entire 3,500MHz spectrum, the larger network might not be interested in bidding for the remaining waste.
Part of MTN’s argument against this “voluntary participation plan” is a technical point: ICASA made a mistake in its definition of Tier-1 and Tier-2 operator.
Vodacom has filed a counter-application against MTN, saying there was a way to continue the auction as is while allaying MTN’s fears. Vodacom’s request will be heard alongside MTN’s this month.
Spectrum Stock, Subscriber Numbers and Network Performance of Cellular Network Operators in South Africa
One of MTN’s arguments against ICASA’s plan to exclude Vodacom and Vodacom from the first round of the auction is that they are the ones who struggle the most with capacity because they serve the majority of customers.
“Less efficient spectrum users and licensees with fewer clients will be privileged over the most efficient (and needy) licensees in spectrum acquisition,” stated MTN.
To see which operators are doing the most with the spectrum they have and getting the most out of their investment, we looked at how efficiently each of the top five players in the space are using their spectrum alongside the average download speed of their network.
We add up all the spectrum suitable for mobile networks that has been allocated to operators, then divide their number of subscribers (in thousands) by the amount of spectral bandwidth they have (in megahertz).
To calculate your Spectral Efficiency and Average Speed (SEAS) factor, we then multiply that number by your average download speeds (in Mbps), measured by MyBroadband in 2020. To make the final number easier to read, we divide it by a thousand.
The following table summarizes the figures used to calculate which networks in South Africa serve the most customers and provide the best network performance with the least amount of spectrum.
| Network operator | MTN | Vodacom | Telkom | Cell C | Rain | Liquid |
|---|---|---|---|---|---|---|
| Spectrum holdings | 86 MHz | 81 MHz | 142 MHz | 76 MHz | 44 MHz | 90 MHz |
| Subscribers | 31.2 million | 42.8 million | 14.9 million | 11.8 million | 1 m | No data |
| Subscribers per MHz | 363k | 528k | 105k | 155k | 22.7 thousand | No data |
| Average download speed (2020) | 52.84 Mbps | 29.39 Mbps | 21.58 Mbps | 17.46 Mbps | 11.90 Mbps | No data |
| SEAS Factor | 19.2 | 15.5 | 2.3 | 2.7 | 0.03 | No data |
| Network investment (CAPEX, 2017-2019) | R28.5m | R28.3m | R24.2m | R3.58m | No data | No data |
| Market share (revenue) | 25.6% | 40.7% | 24.9% | 8.8% | No data | No data |
Delayed spectrum release
ICASA has said that as a result of the injunction granted to Telkom, the spectrum auction will have to be delayed.
Telkom asks the court to order that South Africa’s migration from analog to digital transmission, which will release the 700MHz and 800MHz bands, be completed by June 30, 2021.
However, President Cyril Ramaphosa said during his State of the Nation address that digital migration will only be completed in March 2022.
“We have never been this close to licensing high demand spectrum,” said ICASA President Keabetswe Modimoeng.
“We were literally three weeks away from auctioning this much-needed resource that would have benefited South Africans … in terms of reducing data costs and improving the quality of service and experience.”
Modimoeng said that the ICASA Council has resolved to exhaust all legal avenues.
“We were here in 2016 when an injunction was issued on a similar matter, and that led the Authority to enter into an out-of-court settlement, withdraw the ITA and other forms of mediation,” Modimoeng stated.
“Such interventions got us nowhere. We will not go back there. We believe the best option is to exhaust all possible legal avenues at our disposal, including appeals, to ensure that this delicate licensing process is not only defined by industry players, but also by the public interest. However, we await the reasons for the sentence.
ICASA noted that Telkom’s opposition to this licensing process has been constant, as it was also one of three applicants in the 2016 litigation against the regulator.
“The delay in the licensing of high demand spectrum has huge implications in terms of competition in the mobile services market, as well as reducing the cost of communicating, particularly data costs for consumers and businesses,” said ICASA.
“As long as a ban is in place, South Africans will continue to bear the brunt of high data costs, ineffective competition and an underprivileged economy.”
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