Black enough for WiMax?

Johannesburg, 20 Jun 2008

Any additional WiMax spectrum will be allocated to companies with 51% black ownership if the Independent Communications Authority of SA (ICASA) gets its way.

The authority published its decision on how it wants to allocate the 2.6GHz and 3.5GHz bands, commonly used for WiMax delivery globally. The gazetted decision will still follow due process before it is passed as regulation, which includes a public comment forum and parliamentary agreement.

The authority has decided to auction WiMax spectrum to bidders, but not before it has held a beauty contest to whittle down the list of eligible players. The decision follows hearings conducted by ICASA in March with respective value added networks (VANS), universal service access licensees and telecommunications incumbents.

"This process will give the authority a leverage to implement both economic and social objectives as per section 2 of the ECA (Electronic Communications Act)," says the ICASA document.

Black is best

ICASA gazetted the criteria for bidders who hope to participate in the beauty contest phase of spectrum allocation, which include stringent prescriptions around historically-disadvantaged individuals.

Bidders will now need to have a minimum of 51% broad-based black economic empowerment, with a focus on women. ICASA says "HDI levels of participation in management and control, in line with the Employment Equity Act" are also required. Companies must also have an affirmative procurement policy, as well as a focus on HDI skills development.

ICASA also requires applicants to hold electronic communications network service (ECNS) licences, to be allowed to bid for WiMax spectrum.

According to ICASA's decision document, each successful applicant in the 2.6GHz band will be allocated 20MHz. The allocation of 20MHz allows for a maximum of six companies to be allocated spectrum.

Vox Telecom CEO Douglas Reed is thrilled with the decision by ICASA. Vox is one of the few contenders that have a black ownership near the 51% mark. "We currently have 42% ownership and our intention is to move that above 51%."

Reed says the decision has been a long time coming, especially with incumbents like Vodacom piggy backing on the WiMax networks of iBurst. "The decision should have been made a few years ago."

20MHz just not enough

<B>The</B> <B>Internet Service Providers' Association (ISPA) Q & A</B>

Dominic Cull, ISPA's regulatory adviser, speaks about ICASA's decision
Q: What are the implications of ICASA's decision on ISPs?
A: This is difficult to answer given the ongoing lack of clarity on licence conversion outcomes and the lack of detail on the pre-qualification and auction processes which ICASA is proposing. The authority's desire to further industry transformation is laudable, although there appears to be a degree of confusion as between HDI and BEE. These provisions will obviously have an impact on those of ISPA's members seeking allocations in these bands.
Q: Is ISPA happy with ICASA's decision?
A: The decision as to methodologies for allocating scarce frequency appears to be reasonable and ISPA welcomes the decision by ICASA to prioritise regional allocations for smaller operators. ISPA does have a concern regarding the size of the proposed allocations in the 2.6GHz and 3.5GHz ranges insofar as these allocations may be too small to be effective. ISPA notes that ICASA has tried to balance the available spectrum against the clamour from industry for access thereto, but that there has been no review of existing allocations in this band with a view towards assessing current levels of use.
Further to this, ISPA is concerned by ICASA's statement in the document that 80% of the spectrum in the 3.5GHz band has already been "permanently assigned". It is not clear to ISPA why such assignments are to be regarded as permanent.

IS and MWeb were two of several companies to implement WiMax test sites in the hopes of being allocated spectrum by the authority.

While both companies are pleased a decision has been made, they have raised several concerns around the BEE requirements and auction. IS and MWeb have effectively been eliminated from the beauty contest phase, not having the required 51% black ownership.

Director of regulatory affairs at Internet Solutions (IS) Siyabonga Madyibi says the company is worried that a two-phased (required BEE status and auction) approach could be too complex. "It will take a long time to get the spectrum allocated under a two-step process, and will leave a lot of room for litigation during the auction."

Madyibi points to the case with the ECNS conversion process, halted by legal action brought by Altech Autopage Cellular. "ICASA should either choose a beauty contest, or it should choose the auction, having both is just too convoluted," he adds.

"This is just not enough to make a national roll-out, when you look at the incumbents like Telkom who have around 66MHz."

30% or 51%

GM of regulatory affairs at MWeb Calvo Mawela says there are several inconsistencies which MWeb plans to take up with ICASA. He says companies that are applying for ECNS are generally accepted as applying for WiMax. "ECNS black ownership requirements are 30% and suddenly ICASA wants 51% for the spectrum beauty contest."

MWeb has also voiced strong opposition towards the auction itself, an opinion it has held since the first hearings on WiMax allocation. "An auction is not ideal for the South African environment. Those companies with money will be able to outbid those who don't have."

While Mawela concedes that there are few large incumbents that will meet the beauty contest requirements, he believes there are other more meaningful ways of allocating spectrum. Mawela would not expand on what MWeb would recommend, saying the company would need to follow an approval process before letting the public know.

Altech Autopage Cellular, which also intends to bid, was not available for comment at the time of publication.

Other allocations

In the 3.5GHz band, ICASA will allocate two slots of 15MHz each to each municipal geographic area in SA. "The authority believes that smaller operators will be accommodated within the local municipal geographic area."

For the 2.4MHz to 2.6MHz band, a separate allocation process will be followed. According to the authority, this is in line with international trends.

Telkom says it is in the process of considering the option and is unable to comment at present.