Finally, Icasa to begin first spectrum auction in almost a decade

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Icasa starts the auction of broadband spectrum on Tuesday.
Icasa starts the auction of broadband spectrum on Tuesday.
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  • Network operators hope to use the additional broadband spectrum to expand the 4G and 5G technologies.
  • The companies participating in the auction are Liquid Intelligent Technologies, MTN, Cell C, Rain, Telkom and Vodacom.
  • Only tier-2 companies such as Cell C, Liquid Telecoms, Rain Networks and Telkom will participate in the opt-in auction on Tuesday.

The long-awaited auction of broadband spectrum kicks off on Tuesday following several delays and hiccups. 

The process will see six network providers, Liquid Intelligent Technologies, MTN, Cell C, Rain, Telkom and Vodacom bid for various frequency bands crucial for the rollout of new generation technologies. The Tuesday auction will be conducted through the opt-in process, which is only open to tier-2 operators, i.e., Cell C, Liquid Telecoms, Rain Networks and Telkom.

Vodacom and MTN are described as tier 1 operators.

The main auction starts on 10 March, and will be conducted using an online auction platform, the Independent Communications Authority of South Africa (Icasa) said.

Icasa will release the radio frequency spectrum in the 700 MHz, 800 MHz, 2600 MHz, and 3500 MHz band - the country's first spectrum auction in more than a decade. The 3500 MHz, is the 5G spectrum band, which many companies would be vying for as they seek to roll out new generation technologies and boost capacity.

Icasa had previously stated that the auction reserve prices will generate a minimum of R8 billion for the fiscus.

But despite its benefits to the economy, the auction process has been hindered by several legal challenges, and a case lodged by Telkom against the process is set for 11 to 14 April. It is not yet clear if the outcome of the case would impact the results of the auction.

Icasa said a public announcement of the winners would be made at the end of the opt-in auction as well as the amount of spectrum they won and the amount they will need to pay.

READ | Timeline: The rocky road to SA's spectrum auction

The tier system was one of the arguments brought forward by MTN in its court challenge of the auction process. The company wanted clarity on the definitions used by the regulator to differentiate tier-1 and tier-2 operators.

The company was concerned that the opt-in phase would allow the smaller companies to have the first bite in the lucrative frequencies.

"The importance of this licensing process lies mainly in the enhancement of competition in the mobile services sector, increasing broadband connectivity and coverage, as well as bridging the digital divide between urban and rural access to mobile broadband networks," Icasa said in a statement on Monday.

All six qualified bidders will be allowed to bid for spectrum in the online main auction on 10 March.

Icasa chairperson Keabetswe Modimoeng said the regulatory authority would take the necessary to ensure that there are "no irreversible anti-competitive effects for the industry and the market" in the auction process.

In its submission to Icasa in October 2021, Telkom, which cited its dissatisfaction with the process, urged the authority to consider that the licensing of spectrum will have "long term implications and will set the market for the next 10 to 20 years" and that it is important that it is licensed correctly.

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