While there has been some chatter about the prospects of this year’s spectrum licensing process amid the release of emergency spectrum, the Independent Communications Authority of SA (ICASA) is confident the process won’t be stymied.
Before the COVID-19 crisis hit, ICASA was in the process of planning for the assignment of high-demand spectrum by auction, as government looks to use the funds raised from the auction to add to the fiscus.
However, in March, the communications regulator had to quickly focus on a spectrum relief plan, to meet the demands on networks amid the COVID-19 lockdown.
More people working from home has meant pressure on network providers; therefore, the regulator made way for the release of temporary spectrum, to ease congestion, ensure good quality of broadband services, and enable licensees to lower cost of access for the duration of the declared State of Disaster.
ICASA states: “It is of critical importance to note the recent emergency release of the radio frequency spectrum for purposes of assisting operators to meet demand for communication services during the National State of Disaster does not, in any way, negate processes that are currently under way for permanent assignment of spectrum through an auction, the process which the authority had committed to finalise by the end of 2020; as well as the assignment of the radio frequency spectrum to be set aside for the wholesale open access network (WOAN) due for completion next year.”
Jury’s still out
The regulator is not known for its swift action when it comes to matters of allocating spectrum, so the jury is still out on whether it will indeed be able to finalise the licensing process by the promised deadline.
Pronouncements go as far back as 2018, with president Cyril Ramaphosa saying his administration will ensure urgent allocation of spectrum.
Derrick Chikanga, IT services analyst at Africa Analysis, believes it’s tough to tell whether the auction will go ahead this year, but judging from history, anything can happen.
“The issue of spectrum allocation has been postponed several times in the past and it wouldn’t be a surprise if we encounter further delays on this occasion, especially given the advent of the COVID-19 pandemic. One would only hope the regulator sticks to its own deadlines and avoids further delays on this issue.”
Independent analyst and researcher Dr Charley Lewis says there has been a great deal of scepticism from both lawyers and analysts around ICASA’s ability to claw back the emergency spectrum it issued in response to the pressures of the COVID-19 lockdown.
“A lot, of course, depends on exactly how long the State of Disaster remains in place. The temporary spectrum assignment extends until 30 November, but neither the assignment nor the attached conditions have yet been gazetted.
“Both the 30 November date of the temporary assignment and the likelihood that the State of Disaster will extend for some months into the future, make it highly unlikely ICASA will be able to complete its auction of high-demand spectrum and its licensing of the WOAN − both processes are unfortunately intertwined − this year.
“I am sure the operators will put a lot of pressure on ICASA for them to retain the spectrum. And they will have the strength of incumbency on their side, along with the argument that the cost of deploying the additional network equipment suited to those bands is high, and that it takes time to hit the ground running.”
IDC senior research and consulting manager Sabelo Dlamini is of the view that there is a very high chance the auction will happen, especially because the spectrum has already been allocated on a temporary basis. “There is a need for continuity, considering the high demand of connectivity at this stage.
“The coronavirus will be a wake-up call to push the regulator to follow up on its commitments. As the social distancing observations will continue, more people will be working from home, thus increasing the demand for more affordable and reliable mobile networks – the regulator will be left with few options than to move forward.”
Crunch time
South Africa’s last big set of spectrum issued was in the 2.1GHz band, which helped the operators in their 3G network deployment. Vodacom and MTN were allocated such spectrum, respectively, in 2004 and 2005, while Cell C received such spectrum in 2011.
During this time, mobile operators have had to split and refarm their spectrum resources to mitigate spectrum shortages and expand 4G availability.
Dlamini and Chikanga both agree the spectrum licensing process is long overdue and it remains critical that the auction must take place this year.
Dlamini states: “There is an increased demand this year because of the coronavirus impact and there will be a need for continued service offering from operators who are already providing services over the temporary allocated spectrum.”
Chikanga says, besides being long overdue, the issue of assigning spectrum has a severe impact on the development of the local telecoms market.
“Telcos have long argued that additional spectrum will enable them to reduce data prices. Hence, allocating more spectrum should compel them to live up to their word of further reducing data tariffs. Also, some operators, notably Vodacom, have started launching their 5G services, though on a lower scale. However, the availability of additional spectrum could enable operators to provide 5G connectivity of a much wider scale.
“This will help marginalised communities that don’t have access to fibre connectivity to also achieve high-speed connectivity. The low economic growth forecasts and a possible recession due to the COVID-19 pandemic could negatively impact the capex of most telcos. These operators might not generate enough revenues to meet their capex requirements; hence the provision of additional spectrum could mitigate the impact of limited capex and ensure telcos still expand their service coverage.”
For Lewis, it is no longer critical that ICASA auction high-demand spectrum this year, given that all of that spectrum is in the hands of the operators, albeit temporarily.
“If ICASA is sensible, it will use the temporary assignment period as a proofing ground to estimate demand and pricing for its planned auction, as well as to gather information on the uses and deployments that the operators will roll out once the auction is completed.”
However, he stresses that it remains critical that the spectrum be returned to ICASA as envisaged and the auction proceeds as expeditiously as possible.
“The temporary spectrum simply went pro-rata to incumbents. There are a number of very important socially-desirable objectives envisaged for that auction, which have been waived in the interim. These include market diversification, achieving BBBEE objectives, and ensuring universal access and service is strengthened. The current temporary assignments have almost none of those provisions, aside from some e-learning support requirements. In that light, it is bitterly ironic that the first deployment of the temporary spectrum went to rolling out 5G in selected affluent, urban areas.”
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