Telkom has withdrawn the portion of its court application against the Independent Communications Authority of South Africa (Icasa) that compels the authority to inform all potential parties interested in the spectrum auction of the proceedings.
In December, Telkom took to the courts to have Icasa’s spectrum licensing process suspended on the basis that the respective invitations to apply (ITAs) for the International Mobile Telecommunications (IMT) spectrum and the Wireless Open Access Network (Woan) were fundamentally flawed.
Part A of Telkom’s application was meant to compel Icasa to inform all parties who may have an interest in applying for spectrum licences of Telkom's application.
Telkom’s founding affidavit tabled at the Pretoria High Court indicates that interested parties should be notified to ensure that they are afforded an opportunity to be heard in parts B and C of the proceedings should they elect to participate.
In Part B of the three-fold application, Telkom is seeking an order interdicting the completion of the spectrum assignment process contemplated in the two ITAs pending the outcome of Part C, which seeks to review and set aside the authority’s decisions to publish the two ITAs.
Icasa noted that Telkom has decided to withdraw Part A of the court application, and despite Telkom’s continuation of Part B and Part C of its application, Icasa remains committed to see this licensing process to its completion for the benefit of all South Africans, in particular, consumers of electronic communication services, by March.
“Our efforts are geared towards licensing the high demand spectrum through an auction by no later than end of March 2021. We have adequately consulted relevant stakeholders and the public throughout this process and cannot do so to a point of regulatory paralysis,” said Icasa chairperson Dr Keabetswe Modimoeng.
Telkom group executive for regulatory affairs Siyabonga Mahlangu said in the founding affidavit that Icasa made a “fundamental flaw” by including the 700 MHz and 800 MHz frequency bands, which are not available for use and are not likely to be available for use for a long period after the auction.
Television broadcasters are currently using those frequencies, and there is no formally committed date to which the frequencies will become available for use.
“While the process of migrating the broadcasting services from the 700 MHz and 800 MHz has begun, it has not yet been finalised and it remains unclear when it will be finalised,” he explained, noting that the decision to include the 700 MHz and 800 MHz frequencies in the auction process is unlawful as Icasa has no power or authority to assign and therefore license radio frequency spectrum which is not yet available for use by any licensee that may succeed in the auction process.
Mahlangu argued that the date of availability of spectrum also has an influence on the economic value of spectrum.
“There is therefore a risk of over-bidding if the spectrum is freed and cleaned later than anticipated and under-bidding if the spectrum is freed and cleaned earlier and a bidder loses out by undervaluing the spectrum.”
Telkom further argues that the decision to proceed with the auction of the 700 MHz and 800 MHz under the current terms and conditions specified in the Auction ITA is severely prejudicial to Telkom as it will likely entrench the dominance of Vodacom and MTN in the market, to the detriment of smaller players such as Telkom.
“Because of the manner in which the ITAs have been structured, they will not promote competition in the market.”
Further, Telkom and any other bidder that may be successful in bidding for the 700 MHz and 800 MHz bands will have to commit capital that will be locked into the payment of these bands while not being able to generate a return thereon.
“Telkom is an obvious contender for portions of the frequencies in the 700 MHz and 800 MHz bands. Access to these bands of spectrum would enable Telkom to meaningfully compete in the market for the provision of mobile communication services, and especially in the mobile data services market.”
Currently, Cell C , Rain, Vodacom, Telkom, Liquid Telecoms and MTN have submitted applications in response to the ITAs, which closed in December.