Vodacom-MTN ‘duopoly’ risks being entrenched, says Cell C

2016-07-27 07:00 - Gareth van Zyl, Fin24
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Cell C's head office in Johannesburg. (Gareth van Zyl)

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Johannesburg - A plan to auction off wireless broadband spectrum without government buy-in and greater consultation risks entrenching Vodacom and MTN's dominance, says Cell C.

Cell C expressed this view on late Tuesday as it threw its weight behind Telecoms and Postal Services Minister Siyabonga Cwele's move to sue the Independent Communications Authority of South Africa (Icasa).

Earlier this month, Icasa invited applicants to apply for 700MHz, 800MHz and 2.6GHz spectrum licences, which will boost the rollout of faster LTE broadband across the country.

The auction for the licences is expected to occur in January 2017 and the reserve price to bid on lots of spectrum will be R3bn.

But on Monday night, Cwele said his office plans legal action against Icasa over the auction because government has not yet established policy direction on spectrum.

Cwele further accused Icasa of allegedly failing to adhere to legislation and regulations in launching the auction.

The move by Cwele has sparked support from Cell C.

“Cell C’s concern that Icasa had issued the ITA (Invitation to Apply) without obtaining buy-in from all stakeholders, especially the DTPS, now appears to be well-founded,” said Cell C chief legal officer Graham Mackinnon in a statement.

“If due process has not been followed, then Cell C supports the Minister’s efforts to ensure that this is done. Spectrum is an incredibly valuable national resource that urgently needs to be unlocked for the benefit of every South African and hence all the necessary boxes should have been ticked before issuing the ITA (Invitation to Apply),” said Mackinnon.

Cell C has further accused Icasa of not taking the “future competitive landscape of the telecommunications industry in South Africa” into account.

Mackinnon said the auction is set up so that two “very attractive spectrum lots” would go to bidders with the “deepest pockets”.

“This would favour and further entrench the current Vodacom/MTN duopoly,” said Mackinnon.

Vodacom is South Africa's biggest mobile network with 35 million customers, MTN has 28 million subscribers and Cell C has 24 million connections.

‘Lack of flexibility’

Mackinnon further criticised Icasa for making the auction ITA “a final document” that seemingly can’t be amended to accommodate industry and stakeholder concerns.

It’s also uncertain as to when the 700 MHz and 800 MHz spectrum bands will become available after the auction, making it difficult for interested parties to evaluate their participation, said Mackinnon.

Icasa defends decision

Meanwhile, Icasa on Tuesday defended its decision to invite interested parties to bid for the wireless broadband spectrum.

“Icasa has noted the contents of the Minister’s statement and believe that we have followed the law as it currently applies in publishing the ITA (Invitation to Apply),” said Icasa spokesperson Paseka Maleka in an emailed statement.

“However, Icasa will decide on a course of action once papers have been filed with the courts,” said Maleka.

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