SA’S DIGITAL ECONOMY PLANS HANG IN THE BALANCE AS REGULATOR, INDUSTRY FAIL TO FIND COMMON GROUND

The government’s much vaunted plan to quickly licence high demand spectrum HDS) for digital communication is hitting multiple snags, as various arms of the state seem to be taking different tacks to the problem.

Operation Vulindlela now a key player as Icasa and industry squabble over digital migration process that is already years behind schedule


The state’s new priority reforms unit Operation Vulindlela has stepped in, hoping to broker a way forward and speed up the critically important spectrum auction. Icasa, the telecoms regulator has been challenged in court by some of the main stakeholders, such as mobile network operators MTN and Telkom, as well as broadcaster e.tv.

This threatens the auction and Icasa has had to halt the process until the courts adjudicate the matter, or at least an out-of-court compromise is struck. Telkom and e.tv obtained an interdict against Icasa in late February, preventing the regulator from going ahead with spectrum auction it had promised by the end of March. Since that decision by the Pretoria High Court put the brakes on Icasa’s plans, the regulator has dug in its heels.

“Icasa has considered the detailed reasons for judgement in respect of the interdict granted to Telkom and e.tv, as it relates to the Invitation To Apply (“ITA”) for high demand International Mobile Telecommunications (“IMT”) spectrum, as well as the ITA for the Wireless Open Access Network (“WOAN”).

“The Council of the Authority reaffirms its view that it is of utmost importance that the spectrum be licensed, and that all avenues be pursued to avoid further delays in the process,” Icasa wrote in a statement released on March 16.

Icasa’s determination to pursue “all avenues” to “avoid further delays in the process” could have been read as potential olive branch to the litigants, indicating the regulator was ready to enter into negotiations to end the impasse as soon as possible.

Not so. The statement continued: “To this end, and having taken legal advice, the Council has resolved to pursue an expedited appeal against the decision of the Pretoria High Court, which may include directly petitioning the Constitutional Court.”

Icasa has not yet filed an appeal, let alone petition the Constitutional Court. However, its bullish stance is in stark contrast to the attitude adopted by Operation Vulindlela.

The unit was formed by the Presidency late in 2020 to pursue quick reforms and clear policy and implementation bottlenecks, and it focuses on building state capacity, monitoring and implementing policy to drive economic growth and job creation.

The unit, led politically by Deputy Finance Minister David Masondo and reporting directly to the Presidency, held its first media briefing the day before Icasa’s somewhat combative statement was issued. The contrast between Vulindlela’s approach and that adopted by the independent sector regulator could not have been greater. Vulindlela’s technocrats were keen to emphasise the need for negotiation and compromise to clear the way forward on spectrum.

“We are currently engaging all actors to find a win-win situation,” said Rudi Dicks, who heads the Project Management Office in the Presidency and is a key member of the Vulindlela unit.

Perhaps the most glaring example of Icasa’s and the government’s preferred approaches to the spectrum conundrum relates to broadcast digital migration. The process, which started in March 2021 but has been delayed for years, is aimed at moving analogue broadcasters such as e.tv off the 700-800 MHz spectrum by
March 2022. Despite the migration only beginning in March 2021, Icasa insisted on including these spectrum bands in the auction originally slated to start the same month (before the court interdict).

Having spoken to the Department of Communication and Digital Technologies, Vulindlela sees the process slightly differently. First, the analogue signal still in use by broadcasters must be switched off (in March 2022 if the government has its way), which will then be followed by the state doling out the “digital dividend” spectrum bands freed up from the migration. If this is not possible, as seems likely, then some spectrum will have to be made
available to bidders who cannot use their 700-800 MHz allocation immediately.

“The Vulindlela Unit is working closely with the Department of Communications and Digital Technologies to accelerate digital migration as another priority reform. Significant progress has been made in this regard, which should enable migration to be completed by March 2022,” Dicks told 4IRSA.

“While completing migration may not be necessary for the auction to take place, it is necessary to make additional spectrum available for use by successful bidders, and it is therefore a focus of urgent attention.”

Dicks said during the press conference that that while key players in the sector had concerns, the state was confident the right policies were in place, but it was their implementation that was being contested.

“Completing the auction of spectrum is a key priority of government and is included in Operation Vulindlela because of its importance to the economy as a whole. It is in the interests of all of the parties, and indeed of all South Africans, that the auction should go ahead as soon as possible without a prolonged delay, he said.

“The current legal challenge will of course impact on the time frame for the auction, but we remain of the view that a solution could still be reached that would allow government to expedite the auctioning of spectrum. Already Icasa has indicated that it is open to discussions with the parties in an attempt to find a solution that would allow the auction to proceed, and we believe that such a solution is possible.”

But despite the optimistic tone from Dicks and the Vulindlela unit, Icasa is an independent Chapter 9 regulator.
If it cannot independently find a quick way out of the impasse, and the matter does require a court resolution, there is little the state will be able to do. South Africa’s big bet on the digital economy might well be delayed yet again. That would have wide-ranging and potentially disastrous consequences for the entire economy.

By: Amy Musgrave