Cwele’s court bid fails to halt Icasa

Empowerment requirement now reduced for broadband auction

CAPE TOWN — The Independent Communications Authority of SA (Icasa) is forging ahead with plans to auction high-speed broadband spectrum licences despite Tuesday’s court bid by Telecommunications and Postal Services Minister Siyabonga Cwele to stop it in its tracks.

The telecommunications regulator has, however, postponed the date of the auction from January to May 2017. It has also watered down the requirement that bidding companies have a 30% black ownership.

This was because of a request from one of the operators to extend the deadline and for clarifications to be made to the invi- tation to apply, Icasa acting chairman Rubben Mohlaloga said on Monday. The postponement “has nothing to do whether or not we win or lose the case”, he said.

Icasa has already issued invitations to bidders to apply for the licences but made amendments to the invitation in a notice in the government gazette on Friday.

The deadline for applications is now February 3 2017 instead of October 3 2016. Qualifying bidders will be announced on April 3, the auction will be held on May 3 and the licences will be awarded on July 3.

Four lots of spectrum within the 700MHz, 800MHz and 2,600MHz bands will be auctioned at a minimum bidding price of R3bn per lot.

The government gazette clarified that the R3m application fee paid by each applicant will be “refundable on condition that the invitation to apply is set aside by a court of law”.

The invitation to apply has also been amended to stipulate that an alternative to applicants having a minimum 30% equity ownership by historically disadvantaged groups is that they must have a level four or higher status in terms of the broadbased black economic empowerment codes of good practice.

Mohlaloga explained that this was to bring the invitation to apply in line with Icasa’s spectrum regulations.

Attempts by the government and Icasa to settle the dispute ahead of the court action came to naught and they will now fight it out before a judge.

Mohlaloga said that an administrative decision by Icasa to hold an auction could only be reviewed by a court and could not be rescinded at the request of the executive authority.

Cwele has argued that the regulator had no power to proceed with the sale of what is a national asset without the goahead of the government and that any such sale should await the publication of the integrated white paper on information and communication technology, which has been in the pipeline for some time and which is expected to be considered by the Cabinet shortly.

Cwele’s proposed policy, which is stuck in the Cabinet process, is explicitly against an auction and argues instead for an “open access system” which would allow new entrants to gain access to spectrum via consortia. This system, says the white paper, would introduce competition and would be better for consumers.

The department’s view is that the high reserve price and the short time frames of Icasa’s

Cwele’s proposed policy argues for an open access system

auction process would favour a few rich and powerful firms and reinforce the high price structure. The high bid price is one of the critical issues to be argued in court. Mohlaloga would not be drawn on the subject except to say that it was based on Icasa’s modelling.

Government is concerned that the auction will simply consolidate the dominant position of big players.

Icasa, however, is adamant that the Constitution and various laws oblige it to make spectrum available in a timeous manner. The unavailability of spectrum has become a constraint to the growth of the economy and the IT sector. The regulator has argued that the licence conditions and the ring-fencing of one of the lots will attend to the department’s concerns.

One of the lots — lot A — would be awarded through a separate process and had been ring-fenced for a wholesale open-access network operator, Mohlaloga recently told Parliament. Setting this lot aside tackled the concern about new players entering the market, he said. The licence conditions for the other lots would oblige licensees to provide open access to a minimum of three mobile virtual network operators which had to be more than 51% owned by historically disadvantaged groups, he said.

A licensee will have a maximum of three years from the date the 700MHz-800MHz spectrum becomes available to provide the obligatory services.

Mohlaloga also pointed out that the Icasa regulations made provision for spectrum sharing.