Spectrum battle in South Africa: Rain supports regulator against 3 telcos’ lawsuit


South Africa wireless broadband operator, Rain has thrown its weight behind the industry regulator in a legal showdown with Telkom, MTN and Vodacom over temporary spectrum.

TechCentral reports that Rain filed papers in the high court this week warning that Telkom etal are trying to license spectrum via the back door, adding that if the telcos are successful in securing a ruling the regulator, Independent Communications Authority of South Africa (ICASA), there could be permanent harm done to competition in the telecommunications industry — and, by extension, to consumers.

Rain therefore wants the court to reject Telkom and co’s request for an urgent interdict to stop ICASA from taking back temporary spectrum at the end of November as planned.

In an affidavit to the court, Rain chief technology officer Gustav Schoeman said: “In April 2020, Telkom received an enormous amount of spectrum from Icasa — but under a temporary spectrum regime aimed at alleviating network congestion during the unstable and uncertain time when the Covid-19 pandemic was just beginning and every South African was confined to their home during the hard lockdown.”

Nineteen months later, conditions are “very different”, Schoeman said. “Restrictions have been relaxed, South Africans are steadily being vaccinated, and there is very little chance that South Africa will return to the hard lockdown of April 2020.

“It is thus entirely justifiable for ICASA to wish to change the temporary regime it instituted last year. Not only have conditions changed, but the lopsided spectrum assignment is doing permanent damage to competition in the market.”

“Telkom is not trying to protect the ‘stability of the ICT industry’. It is trying to protect the grossly unfair spectrum assignment it received under the emergency regime. If Telkom succeeds, it will gain market share using temporary spectrum it has no fair claim to; and Vodacom and MTN will entrench their dominance in the industry using their temporary spectrum, all to the long-term disadvantage of consumers.”

Speaking to TechCentral at the weekend, Rain CEO Brandon Leigh said that if Telkom is successful in securing an interdict, the harm done to competition could be permanent.

Rain’s legal team will be doing legal battle not only with Telkom, but also with Vodacom and MTN, which this week filed papers at the high court in favour of Telkom’s application against ICASA. MTN also filed separate papers, in which it has made additional arguments against the return of the temporary spectrum assignments.

Leigh told TechCentral that Icasa awarded the temporary spectrum on an emergency basis in 2020, soon after Covid-19 struck, and that it was never meant to licensed on a long-term basis.

“In good faith, ICASA allocated all resources they could to handle the spike (in network traffic for people working at home),” he said. “It was temporary — it’s even in the name.”

Rain, Leigh said, is concerned that if the temporary spectrum is not returned, then it will become a “de facto allocation” outside a formal licensing process — Icasa plans to auction off the spectrum next year in a process that is expected to raise billions of rand for the national fiscus — and will skew the market in favour of the big incumbent operators.

Leigh also hit out at Telkom for holding up the auction through legal action — the company secured a ruling against ICASA in March, forcing it to withdraw an invitation to apply to participate in the auction.

He said Telkom’s argument about not being able to access spectrum still use by television broadcasters (a key component of its court action against the licensing process) has been proved to be false — why else would it be fighting to keep the temporary assignments it has in these bands?

“Telkom argues it can’t use 700MHz and 800MHz… Yet, in this application, it has asked to keep it. How can you argue you want to stop the auction because you say you can’t use (the 700MHz and 800MHz bands) but also want to keep the temporary spectrum (in these bands)?

“We feel firmly that the operators, and specifically Telkom, are abusing this process to get spectrum allocated. Telkom always stops the auction; they have more spectrum than anyone, and they say they need all this spectrum. They have spectrum already they don’t use. Why do they need more?”

Leigh said Vodacom, MTN and Telkom received large tracts of spectrum from ICASA under the Covid-19 regulations. Other markets players, including Rain, didn’t request much spectrum — if any at all — due to the fact that it was always meant to be a short-term measure to deal with a national crisis. (Icasa has pointed out previously that Cell C did not ask for access to any temporary spectrum, using it temporary nature as justification for not doing so.)

“If we’d known temporary spectrum allocation would go on for two years, we would have applied for everything we could get,” Leigh said.

“We need a strongly competitive environment. We do not need to abuse the good faith that was bestowed on everybody (by ICASA). We agreed the auction should happen… What is not correct is creating a concept of a panic as a motivation to scare the courts into making a decision that will change the telecoms landscape in South Africa forever…”

“Telkom’s motive is to use the temporary spectrum to create a fear of ‘digital load shedding’, and to use that as a justification for spectrum allocation. We will fight that… We cannot use a pandemic as a methodology for spectrum allocation.”

He said the “perpetual licensing of temporary spectrum creates a disincentive for the recipients to support the spectrum auction, as effectively they have already been awarded the spectrum they would otherwise need to buy at auction”.

A solution, Leigh said, might be for an interim spectrum arrangement to replace the temporary spectrum until the auction can take place. But he warned that this must be a new licensing process that has a “very different intent to that of the Covid emergency allocation”.

The high court is expected to hear the case on an urgent basis on 26 October.


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