Spectrum: update by Minister, Department and ICASA

Meeting report

Ms M Shinn (DA) wanted clarity on who had called the meeting and for what purpose, given that there was a court case between the Department and ICASA, and Members had not seen the Minister’s letter to the Chairperson.

The Chairperson said the meeting followed on from a meeting on high demand spectrum held in February. She accepted that the meeting could not go into the merits of the court case because it was sub judice, but said there could be discussion on it for Members to have a sense of what the issues were.

Department of Telecommunications and Postal Services
Dr Siyabonga Cwele, Minister of Telecommunications and Postal Services, said it was a matter of public record that the Department had taken ICASA to court to review and interdict its decision to proceed with the auction of spectrum licences, and that therefore it would be difficult to discuss and provide a presentation.

It had not been the intention of the Department to go to court. When the Department had heard about ICASA’s intention to publish an Invitation To Apply (ITA) for high demand spectrum, the Department had tried to persuade it not to do so, based on the Department’s concerns. ICASA’s response had been that it was not prepared to change its decision, as it had taken an administrative decision to issue the licences and this decision could be reviewed only by a court. After the Department had written several letters, it had taken the matter to court.

Following the meeting in February, the Department had tabled a draft information communication technology (ICT) white paper in March, which had included high demand spectrum and had been sent to Cabinet. The white paper policy was still before Cabinet. The Department had met with ICASA on the issue of spectrum after the February meeting, where the processes being followed had been clearly spelt out, including the Cabinet processes. ICASA had responded in writing on these processes in June.

He said it was unfortunate that the Department found itself in the current situation, but that it was not the first time. It had faced a similar situation with ICASA over the issue of market consolidation in the Vodacom/Neotel case in the previous year. In that instance, it had not interdicted ICASA but had gone the route of the Competition Tribunal, and had appealed to ICASA to engage with it because a court case cost money and resources. The Department’s concerns were not very much different from some of ICASA’s concerns. He would not discuss the ITA regarding spectrum.

Discussion

Ms Shinn said she noted the differences in approach between ICASA and the Department. She wanted to know whether ICASA had seen something in the white paper that they had found difficult to deal with. She asked why the release of the white paper had been delayed, noting that media reports suggested a tug-of-war between factions within the Cabinet.

The Minister said it was difficult to discuss Cabinet matters, which had to follow Cabinet processes. There had been no delay. Cabinet processes were being followed, and he was unaware of any tug-of-war in the Cabinet.

The Chairperson asked whether gaps in the law could have led to the impasse.

ICASA

Mr Rubben Mohlaloga, Acting Chairperson of  ICASA, spoke to the mandate and the strategic goals of ICASA, identifying universal access to broadband services and access to communication services at affordable prices as relevant goals regarding high demand spectrum. He then spoke to spectrum policy and the legislative framework for radio frequency spectrum and for Broadcasting Digital Migration (BDM).

The radio frequency spectrum policy had been developed over the past five years, including the International Mobile Telecommunications (IMT) roadmap which, inter alia, dealt with the 700 and 800 MHz bands. ICASA had indicated that it would be issuing an ITA in the form of an auction. The ITA had been published in July, and had followed a process. ICASA was currently assisting applicants, and the closing date was 3 October 2016. The assignment process would follow existing legislative frameworks.

He stopped his presentation at this point, saying the rest of the presentation notes could be read by the Committee.

Discussion

Mr C Mackenzie (DA) asked if there were other bands of spectrum that were unallocated. What processes had been followed when allocating spectrum in the past, and had obstacles been placed in ICASA’s path then?

Ms Shinn said that some of the comments submitted by bidders indicated that the plan was being criticised because entry costs did not facilitate the opening up of the market to new entrants. What was Lot A to be used for, and why was it being auctioned separately? Were there anticipated amendments to be made to the ITA before the closing date? She said that ICASA had apparently seen the white paper, and asked what it contained that was diametrically opposite to what ICASA had envisaged. When was digital migration happening?

The Chairperson said the 2.6 GHz was available while the availability of others bands depended on BDM’s success. When would the BDM migration happen? It was apparent from the previous meeting that ICASA and the Department were not seeing eye to eye. The Committee had called for alignment of their work, to avoid a negative impact on the sector. What had been done by ICASA, following the Committee’s recommendation?

ICASA response

Mr Mohlaloga said ICASA had published a discussion document on spectrum management. This process would culminate in the regulatory framework of TV ‘white spaces,’ and that the work was ongoing. ICASA had also published draft regulations on the use of millimetre band spectrum, and this process was also ongoing. This would help a lot in the provision of broadband.

He said there was a process of migration from certain bands, and then a certain amount of spectrum would be available. There was an assignment plan in place.

ICASA had to take into account existing policy frameworks and South Africa Connect regarding new players and open access networks.

There were open access obligations which would be imposed on all winning bids for lots B to E. The regulations also allowed for spectrum sharing.

On the matter of costs, he said it was a matter of litigation, so he would not answer.

The ITA was amendable and if there was a need to amend it, ICASA would do so. He believed the ICT white paper was a confidential document, so he would not answer the question.

He said that by 2017, there would be a switch off and then that spectrum would be wholly available in 2018.

Mr Pakamile Pongwana, CEO: ICASA, gave a brief history of allocation methods. He said the first licences issued had been a multiparty decision in 1994. By 1999, the Cell C allocation had resulted in a court case. In 2002, the Telecommunications Act had been amended so that that the government could license through law. There had then been an amendment to self-provisioning, which had created an environment that resulted in a court case in 2006. As a consequence of that case, value-added services became licencees, and the country ended up having a total of 400 to 500 licencees, with spectrum being allocated on a first come, first served basis. In 2011, the concept of high demand spectrum had evolved and the discussion had been on how to distribute high demand spectrum amongst so many licencees with a limited spectrum. A high data throughput could be achieved only by carving the spectrum into chunks.

In that environment, the most transparent method of allocation was an auction, notwithstanding the fact that auctions had their own problems. The alternatives were to go the route of looking at business plans, but this was not transparent or doing it according to the law.

The amount of spectrum still being used in the analogue environment, in the 700 MHz band, was 22.8% and in the 800 MHz bands, it was 10.2%. This meant a total of 67% was available across the two bands.

Mr Mackenzie asked whether there were other spectrum bands which government could use, assuming there had been no court case.

Ms Shinn asked who would run the auction, and how would they be chosen.

The Chairperson reminded ICASA that the issues the Committee had raised and made recommendations on were around the alignment there was between ICASA and the Department, the issue of new entrants and issues around consultations.

Mr Mohlaloga said he felt the issue of alignment had been addressed.

He said the other blocks of spectrum available to government were the Public Protection and Disaster Relief (PPDR), emergency services and Radio Frequency Spectrum (RFS) assignments.

Open access obligations had been imposed on new entrants in the application. Regarding consultation, it was improbable for regulatory frameworks to be developed without consultation. An information memorandum had been published before the ITA, and responses had been received.

Mr Pongwana said the auction process would be done in consultation with National Treasury. Regarding the radio frequency plan, he said that after every world radio conference, the country’s radio frequency plan was redrafted and presented to the Minister for approval. This was normally done jointly between ICASA and the Department. The world conference was where bands were allocated – for instance, the military, radar and aeronautical bands.

Ms Shinn wanted clarity on whether Treasury would manage the procurement of an auctioneer, or do the auction itself.

Mr Pongwana said bid specifications had been drawn up for an auctioneer, and consideration would be given to how much auctioneers charged. ICASA would work through Treasury and its office of procurement. ICASA needed to be careful, because it would be the first time an auction like this would have taken place in South Africa.

The Chairperson said she had received letter from interested parties in the sector, who had said the matter might affect them and wanted to provide input. However, because the Committee had not sent out any notices or advertisements that the meeting was open to stakeholders, the meeting had not been opened for such inputs, and because other parties might feel that they wanted to provide input, but had not been informed. The Committee was currently seeking legal advice, given that the matter was before the court.

The meeting was adjourned.