How spectrum availability will reduce cost to communicate; with ICASA & Deputy Minister

Meeting report

Opening remarks by Deputy Minister
Deputy Minister of Communications and Digital Technologies, Mr Philly Mapulane, noted the apology of the Minister and said that Wednesdays are difficult days for members of the executive because those are Cabinet days. He said that a detailed presentation had been prepared by the Independent Communications Authority of South Africa (ICASA) which will deal with competition issues arising from the auctioning of the spectrum and if this has contributed to lowering the cost to communicate in South Africa. The auctioning of the high demand spectrum represents a significant milestone because there have been difficulties in the spectrum processing as there has been litigation after litigation. The litigation was finally resolved and ICASA was able to proceed in March 2022 in auctioning the spectrum, which was very successful. Out of the auction, the national fiscus benefited from the proceeds in an amount of R14.4 billion.

The money was still being collected because there was a point where all the available spectrum auctioned was being made available to the mobile network operators. As of 31 July 2023, all broadcasters from any band above 694 megahertz were successfully migrated. A two stage agreement was made with the broadcasters. Two stage in the sense that the agreement was that from 31 July 2023 all of them had to be migrated below 694 MHz. There is still temporary analogue broadcasting of some highly populous areas using the sub-694 MHz until 24 December 2024. Not many transmission sites are transmitting analogue broadcasting. This is so the broadcasters can be allowed some time as they have been affected by Covid 19 as well as the analogue ‘switch off’.

The entire auctioned spectrum is available and ICASA, as the Authority, facilitated that and had to ensure all that was auctioned has been paid for and that the fiscus receives that amount.

On the question of lowering the cost to communicate by addressing competition in the sector, the Department of Communications and Digital Technologies (DCDT) is working on that. Cabinet has approved the draft Bill a couple of weeks ago and it will very soon be tabled in Parliament. The Bill seeks to take forward the recommendations of the Data Services Market Enquiry done by the Competition Commission on the cost to communicate. That is something that is being done by the Department to address this very question that is being posed to ICASA.

How spectrum availability will reduce costs to communicate: ICASA briefing
Mr Peter Zimri, ICASA Council member, confirmed the apology of the ICASA Acting Chairperson who was to have given the presentation but was unfortunately unavailable. He will be taking his place and he is joined by some of his colleagues who are present in the meeting. The presentation has been shared to all Committee members.

ICASA initiated the licensing process of the radio frequency spectrum in the bands: IMT700, IMT800, IMT2600 and IMT3500 for the purposes of providing national broadband wireless.

The licensing of the International Mobile Telecommunications (IMT) aimed to deal with growth in demand for spectrum as a result of significant growth in traffic for broadband services. Other objectives include the promotion of broad-based black economic empowerment, universal provision of electronic communications networks and connectivity for all, development of SMMEs, encouragement of investment and innovation in the sector, promoting competition within the sector, and ensuring efficient use of the radio frequency spectrum.

Access to the right type and amount of spectrum is important for the provision of mobile services. The assignment of spectrum (especially in the sub-1GHz bands) lowers barriers to entry as entrants possessing such spectrum do not have to make costly infrastructure investments as the coverage of this spectrum is greater and can easily penetrate buildings. ICASA’s auction design and rules considered the auction outcome to ensure that competition concerns were addressed.

Expected impact of spectrum on competition and prices
• Availability of coverage and capacity spectrum
• Increased number of players and credible competitors
• Reduction in infrastructure roll-out costs and increase in retail price competition
• Increase in coverage (via coverage obligations)
• Reduction in retail prices (price competition).

Through its spectrum auction process, ICASA created six credible competitors in Rain, MTN, Vodacom, Telkom,Liquid Telecom and Cell C. It is envisaged that competition will be more intense with more rather than fewer players in the market. Consequently, the intense competition becoming more beneficial for the citizens and consumers. In the spirit of efficient spectrum management, spectrum resources should not be hoarded and must be released to capable hands for the social and economic benefits by all citizens.

Discussion
Deputy Minister Mapulane welcomed the ICASA presentation but unfortunately had to point out to the Chairperson that the presentation was not shared with the Department.

The Chairperson thanked him for pointing that out and said that ICASA would have to answer to that as it is a serious oversight.There must be an alignment between the two and the Department should be informed of strategic developments, especially on social responsibility matters. ICASA needs to say if they are declaring their outright and absolute independence by not sharing the presentation.

It is a long and detailed presentation, rightly so as the lives of South Africans have become connected to issues of connectivity, so the critical nature of the ICASA task is a big one. South Africans live in a unitary state but the country is predominantly rural, and one will find that digital coverage is a huge challenge. Most of the schools mentioned in the presentation are on the margins of society and coverage is really a frustration. During the COVID-19 outbreak, when students were required to study online, those who could not were disadvantaged instantaneously. The majority of those were in rural areas so there was no way for the students to study online. Service providers generally take their time to get to rural areas when there is a breakage or theft of cables or battery. The instability of the network and signal seriously disadvantages people in rural communities. It brings misery as rural communities have now become reliant on stable communication networks. It is now no longer a matter of privilege but rather a right to have reliable signal.

ICASA needs to be very firm with all those who have a licence to provide this service to ensure that ultimately they do provide the service. We are supposedly a country with a well managed economy on issues like this so infrastructure investment to ensure coverage must be forced and brought forward. It cannot be something that South Africa is still looking forward to.

The Chairperson spoke about the expense of data. It has reached a level of brutal exploitation of the poorest of the poor. South Africa is one of the few countries that charges exorbitant prices when it comes to data. The brutality of it is that ICASA knows that the country has a very high unemployment rate. People seeking employment must communicate through these services and of course, they require affordable data. When ICASA allows data price increases, it creates a bigger problem by blocking people from being able to seek employment. He also raised the expiration date when buying data. Why does data have to expire? It does not rot, so why does it expire? It is against the very ethos of a developing state.

Mr M Nhanha (DA) said that the lack of connectivity really bothers him, particularly with the current service providers being Telkom, Cell C, MTN, Rain and Vodacom. There is tremendous underinvestment by some of these service providers in rural areas. It is a known fact that in Alex, which is his hometown, when there is load shedding, MTN has no coverage, even though Vodacom does. He apologised for singling MTN out but says that it is true. If you go to the older side of Transkei and there is load shedding, expect to have no connectivity, particularly with MTN. He asked ICASA to what extent is it able to address this. It cannot be that one or two network service providers are disadvantaging South Africans in the manner in which MTN does. What is ICASA doing to ensure that mobile service providers service all areas without exception?

The second issue is the configuration of SIM cards. There is a practice of SIM cards being sold for R1.00 or being given freely, people take the SIM cards, use the free airtime, and throw it away, not knowing that the SIM card has been RICA’d in their names. Mr Nhanha called this a reckless business practice because RICA is supposed to be obeyed. What impact does this have on the RICA law?

Thirdly, what guarantee is being given to South Africans that they will benefit from these spectrum licences and what measures are in place to ensure this? Lastly, there has been mitigation around the spectrum licensing, how far is that process? Have you been able to resolve legal matters?

Ms C Visser (DA, North West) agreed with the Chairperson and Mr Nhanha about connectivity. Most of North West is without signal and without connectivity most of the time. Even in times of a crisis when connectivity is needed, it is not available. Telkom lines are stolen and there is nothing left, so North West is really depending on network service providers to provide them with connectivity. Her main concern is the number of complaints she has received from people via the radio.

Ms T Modise (ANC, North West) asked why ICASA did not make the presentation available to Members beforehand. Could this please not be accepted by the Chairperson should it happen again? She asked if ICASA had set aside a percentage for small, micro and medium enterprises (SMMEs) or is that something that is still going to be done in the future. How will ICASA ensure that small business enterprises enter the telecommunications market? In ICASA’s assessment, what is the percentage of coverage of telecommunication services in rural areas by licenced operators? People who reside in rural areas really struggle with coverage.

The Chairperson said that it is worrying that the spectrum is now available; however, ICASA is not saying when they will commence with the social obligations in terms of connectivity. Social obligations are central and ICASA will have to be called again to answer questions about their incomplete presentation. The presentation is said to lack some detail and the devil is always in the detail to see if progress is being made on transformation. Lastly, the Chairperson is keen to know if the auction has occurred. The reason is that some of these things happen in a very subdued manner and not in the centre of public discourse, as if to suggest that there are certain targeted groupings that are supposed to be the beneficiaries of the auction.

ICASA response
Mr Zimri apologised on behalf of the Authority for the unavailability and delay in receiving the presentation; he would investigate what transpired. One of the questions was how ICASA addresses enforcement and compliance. Throughout the process, ICASA has always identified monitoring and compliance as a huge task, so there is a monitoring unit that monitors certain areas throughout the country. ICASA will come back with a better detailed and complete presentation at a later stage as they were not sure how deep and detailed, they should go. There are slides that were meant to be part of the presentation but because they were worried about time and the length of the presentation, they had to cut it short.

ICASA has identified the proliferation of SIM cards as a problem. The previous week they had met with the Department of Justice, which is the custodian of the RICA law and a joint effort is being looked at to ensure that the RICA’d or 'plastic roaming’ SIM cards are not abused and not being distributed as freely as is happening. ICASA has requested operators not to include numbers on these SIM cards and to at least sell them numberless so that the RICA process can happen with someone who is present at the time so that the individual can be positively identified. ICASA has updated its numbering plan regulation to ensure that it can identify individuals on these SIM cards. They also met with the banking sector as there are a lot of issues within the sector about SIM cards that have been ported and RICA’d that cannot be traced. We have also engaged with the South African Banking Risk Information Centre (SABRIC) to ensure we discuss this going forward.

On the RICA law, ICASA is coordinating meetings with the Department of Justice to discuss how we ensure the law is implemented as effectively as possible. ICASA has a certain mandate and the Department of Justice also has its own mandate for RICA. We, therefore, need to do some ‘handshaking’ on some of the activities and have joint coordination on these RICA’d SIM cards, which we believe has become a massive problem in South African.
There is a transparent process to ensure that all South Africans will benefit and ensure that ICASA does not leave anyone behind and to connect the unconnected. On affordability, they will try to ensure that the prices get driven down. ICASA has also released a Wi-Fi spectrum which does not charge in smaller communities. This has opened an avenue for small to medium business enterprises to begin to roll out services in those under-serviced areas. On the percentage of coverage in rural areas, what is called a sector report gets published, which will be shared for everyone’s viewing.

Adv Nkhetheleni Norman Gidi, ICASA Executive for Policy Research and Analysis, replied that there is no longer any litigation on spectrum licensing as it has been resolved. That is what paved the way for the spectrum auction. On the impact of load shedding, ICASA has established a Council committee to investigate the impact of load shedding on ICT services.

Mr Phil Molefe, ICASA Executive for Engineering and Technology, added some context on the quality of monitoring of service providers. ICASA has published the end-user subscriber chapter regulations, to prescribe the minimum quality of service standards that the service providers should offer to subscribers. On a quarterly basis ICASA monitors the quality of service across the provinces using those prescribed quality of service parameters.

Mr Owen Mhlanga, ICASA Senior Manager: Market Regulation, touched on data high prices which is a sentiment ICASA shares as well. How the pricing in the market works are there are two types of prices. There are standard prices, which are prices that remain flat and are faced by consumers who consume data out of bundle. Then you have promotions, which are normally for consumers who are in bundle. If you buy data in bundle, it means you get to enjoy the promotions. Promotions tend to be cheaper compared to the standard tariffs. From ICASA’s assessment of the market, they have seen that a lot of people are informed of the lower rate bundles.

Ms Nonkqubela Jordan-Dyani, DCDT Acting Director-General, said that they will work with ICASA in preparation for the next meeting. On network coverage, that is a reality and there is certainly a misalignment on what is being reported by the operators as opposed to what is experienced on the ground. The SA Connect phase 2 project is also looking to close the coverage gap through deployment from the Department's side, together with the relevant entities. On the social obligations, a task team has been established between the Department and the regulators at a technical level.

Closing remarks by Deputy Minister
Deputy Minister Mapulane raised the sharing of documentation again. He emphasised that this is not an act of pettiness but rather about the need to work together with ICASA. It is understood that ICASA is independent; however, when everyone is called on to present together, there must be coordination. He confirmed what Councillor Zimri had mentioned earlier that there was another meeting taking place with the ICASA CEO present. He asked that next time when everyone is called to appear before a committee of Parliament, it should be taken seriously.

Closing remarks by Chairperson
The Chairperson said that the Committee was not appreciative of the way the meeting had gone. The ICASA presentation was not detailed enough and was lacking a lot of information. The presentation was also not shared beforehand with Members. The CEO could not attend the meeting due to a parallel meeting. This was disrespectful and condescending as ICASA had treated this meeting with Parliament as the ‘side’ meeting. Since ICASA is independent, it was as if it was undermining the Committee. The two met only two times a year, yet something like this had happened. The Chairperson asked that ICASA apologise to Parliament so that it is on record and never happens again. ICASA was present in the meeting just to tick boxes, hence the incomplete presentation.

The issues discussed in the meeting are important and affect the daily lives of people. They require a report back to the electorate so when a presentation is expected and not received, some of the many questions cannot be answered. It will have another meeting before the end of the year and he appealed to ICASA, to prepare for it and come back as a collective and constitute the meeting in a manner where Parliament would have all answers. He thanked everyone who took the time to attend the meeting and encouraged ICASA to reach out should they require assistance.

The meeting was adjourned.