South Africa: Rivals upset as MTN bids on spectrum the industry had ignored

Telecoms

Cellphone giant MTN appears to have stolen a march on its rivals, quietly applying for additional access to a little-known radio frequency spectrum that had been virtually ignored in the rush for high-demand spectrum.

Now rivals Cell C, Vodacom, Smile Communications and Neotel are scrambling to oppose its application for access to spectrum situated between 2010MHz and 2015MHz. They have called for the regulator to issue a general invitation to apply for the allocation.

MTN stated that allocation to the unassigned spectrum within the band would provide it sufficient capacity to support the rapid increase in data traffic being experienced by network operators both nationally and globally.

Data is becoming the new revenue stream for operators. In the six months to June, MTN’s data revenue rose 14.7% to R4bn supported by an increase in the number of mobile data users to 13.5-million from 11.9-million.

Spectrum is a scarce resource that mobile operators and new players are jostling to access. The delay in issuing high-demand spectrum licences has hampered the roll-out of high-speed wireless network for some operators, including Smile Communications, which is already operating similar networks in Uganda and Tanzania.

Until now, the industry’s focus has been on the high-demand spectrum sitting within the 2600MHz and 800MHz bands. But there have been regulatory and policy delays slowing the process.

In its presentation at the Independent Communications Authority of South Africa (Icasa), Cell C argued spectrum was a scarce and valuable resource and had to be assigned in the public interest. Policy and regulatory processes had to be followed.

It said if MTN, which already has access to some capacity within the spectrum band it is applying for, was granted the extra allocation, it would give it "unfair and unjustified" competitive advantage over Cell C.

"Cell C has previously been prejudiced in the assignment of spectrum," said Mothibi Ramusi, head of regulatory at Cell C.

Awarding the spectrum to an "already dominant operator without following proper procedure is not appropriate and undermines the government’s developmental goals to provide broadband access to all by 2020," Mr Ramusi said.

Smile, founded by businesswoman Irene Charnley, said access to the band would be insufficient to provide a fully fledged wireless services. But if MTN was awarded the extra capacity, Icasa should also issue Smile with the spectrum it had already applied for in 2009.

Thato Mahapa, Smile’s senior manager for legal and regulatory affairs, said the allocation of additional capacity to MTN could "prejudice" other companies. Smile "vehemently" objected to the "haphazard allocation of critical spectrum."

Another cellphone giant, Vodacom, said the spectrum in question was a high-demand spectrum as Icasa had previously charged the company licence fees for its allocation in that band. As a result, Icasa was obliged to issue an invitation to apply before awarding more capacity within that band.

MTN did not make a presentation on Wednesday. But, in its application, it said it had developed a custom radio access solution that would provide last-mile access.

The access solution would be for areas where the deployment of radio technologies including long-term evolution or fixed-access mediums such as fibre would be "economically infeasible". These required high capital expenditure.