Icasa invites input on proposal for secondary spectrum market

The Independent Communications Authority of SA (Icasa) has started work on a proposal that could allow mobile operators to share or buy spectrum from each other without waiting for rare and periodic auctions, a suggestion that appears to have the buy-in of the industry.

After more than a decade, the regulator completed a spectrum auction in March 2022 that raised R14bn for state coffers. However, some of the spectrum sold is still occupied by broadcasters, which need to switch from analogue to digital TV, a process called digital migration.

The new proposal will enable mobile operators to trade or make deals around the radio frequencies that carry data and radio signals without going through an auction.

Under the current system, the spectrum can change hands only through an auction. However, over the years operators have found ways to overcome these limitations by using roaming agreements. These allow one company to use another’s network where it does not have its own coverage. For example, Vodacom uses Rain’s 4G network and Telkom roams on both MTN and Vodacom’s networks.

Icasa’s proposal is floated in a discussion document, “Dynamic Spectrum Access and Opportunistic Spectrum Management”. The regulator is inviting comment from industry players about setting up a secondary market through which operators can trade or share frequencies. This is specifically for frequencies in the 2GHz to 8GHz bands, which include those suitable for 5G services.

“Secondary spectrum trading /leasing [secondary markets] are the most flexible forms of spectrum trading employed among network operators to exchange access rights to spectrum,” says Icasa in the paper. Such markets “are a key enabler to unlock the potential of the DSS [dynamic spectrum sharing] approach” establishing exchange markets.

Jacqui O’Sullivan, MTN chief of corporate affairs and sustainability in SA, said the company “believes that allowing spectrum trading in the mobile market is essential to support the efficient use of spectrum in the SA market and will facilitate greater network investment.

“Spectrum trading is international best practice and will help ensure faster recycling of spectrum, reducing the time [that] spectrum lies fallow, and allowing faster resolution of spectrum capacity constraints. It would also promote greater transparency over access to spectrum and limit incentives for the inefficient hoarding and underutilisation of spectrum.”

Telkom said it only supports secondary markets “if approved by the regulator. All spectrum transactions involving highdemand spectrum must therefore be approved by the authority, regardless the label attached to such agreements by the involved parties.”

A key factor in assessing and approving these transactions is the promotion of competition, said the fixed-line operator.

It also noted that spectrum sharing is a standard regulatory tool used daily by regulators and spectrum licensees to coordinate efforts — more pronounced where the use of the spectrum becomes crowded.

Setting up secondary spectrum markets can be done in three ways.

The first is spectrum trading where “a primary holder of [a] spectrum licence (network operator) trades part/or all their exclusive rights to spectrum block(s) of interest with another network operator in need for the remainder period of their licence condition”.

A second way is spectrum leasing where a primary holder “enables another network operator in need to gain a nonexclusive, short-term access rights to their spectrum block(s) of interest in a geographical area of interest”.

In spectrum pooling, the third option, licence holders enter into bilateral agreements to create a common pool of their spectrum assets to expand coverage or to improve quality of service in specific geographic areas.

While the case for setting up these secondary markets appears sound, Icasa says such arrangements have achieved limited success from its studies.

This is mainly down to certain operators unwilling to trade or share their spectrum as a way to maintain a dominant position, while others simply do not have the incentive to do it. In other cases, there are regulations or established markets to allow for secondary trading.

Spectrum sharing forms the second phase of a continuing restructuring plan by the regulator for buying, selling and using spectrum in SA. In the first phase, Icasa created rules for TV white spaces, which allowed network operators to provide affordable broadband services in underserved and unserved rural and township areas.

TV white spaces are “unused” spectrum located in the 470Mhz-790Mhz band, in which television broadcasters tend to operate.