Media releases

DTPS statement regarding ICASA's spectrum ITA

Tuesday, 26 July 2016

Statement by Cell C Chief Legal Officer: Graham Mackinnon

Cell C has read the statement issued by the Minister of Telecommunications and Postal Services, Dr Siyabonga Cwele, regarding the intention of the Department of Telecommunications and Postal Services (DTPS) to review ICASA’s decision to issue the Invitation to Apply (ITA) for the auctioning of spectrum.

Cell C’s concern that ICASA had issued the ITA without obtaining buy-in from all stakeholders, especially the DTPS, now appears to be well-founded.

If due process has not been followed, then Cell C supports the Minister’s efforts to ensure that this is done. Spectrum is an incredibly valuable national resource that urgently needs to be unlocked for the benefit of every South African and hence all the necessary boxes should have been ticked before issuing the ITA.

In addition, upon a closer reading of the ITA, it seems that ICASA has not taken into account the future competitive landscape of the telecommunications industry in South Africa. The ITA contemplates two very attractive spectrum lots relative to other lots that, on an auction, would go to the bidders with the deepest pockets. This would favour and further entrench the current Vodacom/MTN duopoly.

Consumers have benefited massively from competition in the mobile industry. The recent study commissioned by National Treasury (and conducted by the University of Johannesburg’s Centre for Competition, Regulation and Economic Development) found that competition to MTN and Vodacom mainly driven by Cell C assisted by lower and asymmetrical termination rates, saved the South African consumer more than R47 billion between 2010 and 2015.

In the context of last week’s forecast by the Governor of the South African Reserve Bank of zero percent growth for 2016, it is even more important that competition is stimulated as this drives economic growth and job creation.

The ITA is also a final document – in other words it does not seem to be capable of being amended to take into account the concerns of industry and other stakeholders. Apart from certain contradictions and inadequacies in the spectrum auction process detailed in the ITA, the uncertainty as to how the Lot A spectrum will be awarded and the actual date of availability of the 700 MHz and 800 MHz spectrum bands, makes it difficult for interested parties to properly evaluate their participation in the proposed auction.

All of these factors suggest that the Minister may be correct in his assessment that ICASA has acted with undue haste and did not properly consult before issuing the ITA.

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