ICASA on the 800 MHz and 2.6 GHz Band

Meeting report

Presentation by the Independent Communications Authority of South Africa ICASA
Dr Marcia Socikwa, Councillor, ICASA extended the apologies of Dr Stephen Ncube, Chairperson of the Board of ICASA, who was unable to attend the proceedings.  She introduced Ms Miki Ndhlovu, Councillor and Mr Dumisa Ngwenya, General Manager, ICASA to the Committee.

Dr Socikwa explained that the 800 MHz to 2.6 GHz band was referred to as the “sweet spot spectrum” by the industry as it was highly lucrative.  800 MHz was coverage driven and suitable for rural areas and 2.6 GHz was suitable for urban and capacity-driven environments.  Research conducted by ICASA had found that the licensing of the spectrum was difficult and subject to many challenges.  Germany had successfully auctioned the 800 MHz and 2.6 GHz bands together but problems were experienced by countries that attempted to license the bands separately.  ICASA had attempted to license the 2.6 GHz band during 2010 but had found that there was a policy gap and that Government’s position on the issue was unclear.  ICASA had embarked on extensive research and widely consulted with stakeholders in the communications industry.  The conclusion was reached that the process of licensing the spectrum was complex and best dealt with by a specialist, who must be appointed by the Minister of Communications.

The presentation included an overview of the main issues to be taken into consideration, the socio-economic aspects and the motivation for combining the 800 MHz and 2.6 GHz licensing (see attached document).  The preferred harmonised frequency arrangements had been adopted by SADC and were favoured by the International Telecommunications Union (ITU) and most European countries.  Licenses had been issued to certain operators but changes would have to be made to allow the optimum utilisation of the spectrum.  ICASA had found that the current licensees were not using their allotted spectrum to any great extent.

The presentation concluded with a summary of the necessary activities and the timeframes for achieving licensing by the target date of March 2012.  The other issues that had to be considered included scenario planning, communication with stakeholders and the key decisions over the nature of the process, universal service obligation criteria and rollout targets as well as the involvement of historically disadvantaged individuals (HID’s).

The Broadside Analysis of Spectrum Status in South Africa document provided additional information but was not presented to the Committee.

Ms Ndhlovu presented a review of the licensing of the spectrum (see attached document).  Details were provided of the number of licensed community radio stations, commercial radio stations, television broadcasters, internet service providers, courier companies and South African Post Office outlets.

ICASA had undertaken a review process in April 2009.  Discussion documents were issued and public hearings were held during December 2010.  The results of the public hearings were in the process of being compiled.  Operators were generally focused on the delivery of services rather than the provision of infrastructure.  Promises to provide services to under-serviced and rural areas were made in order to obtain licenses but were subsequently not fulfilled.  ICASA attempted to encourage operators to provide services in under-serviced areas but need to put regulations in place that could be enforced.  The Authority had realised that it was necessary to consult communities in the first instance to determine the actual needs before engaging with stakeholders on implementation.  One of the challenges was that there were four models to provide universal access but no effective measures were in place to hold operators accountable for delivery.

ICASA had compiled data on the services required by municipalities throughout the country, which would be made available to the Committee.  The Eastern Cape, KwaZulu Natal, Limpopo, Mpumalanga and North West provinces continued to suffer from a lack of access.

Discussion
The Chairperson noted that the presentation documents by Ms Ndhlovu had not been provided to the Committee.  Questions from the Members would therefore be limited to the presentation by Dr Socikwa.  The Committee was of the opinion that ICASA had failed to carry out its responsibility to provide universal access.

Mr N van den Berg (DA) asked if ICASA was satisfied that all the necessary activities were carried out to ensure the success of the licensing process.  He was aware of complaints that ICASA was not accommodating the roll-out of community radio stations and that the procedures were tedious and inefficient.

Ms W Newhoudt-Druchen (ANC) asked for clarity on how the international experiences and the decisions made by the ITU affected South Africa.  She recalled the surprise expressed by the United States of America in 2009 that South Africa was using 3G technology before it was available in the USA.  She found the information provided in the presentation to be contradictory and had understood that the issue was the provision of benefits rather than financial losses and cost.

The Chairperson agreed that the presentation had listed the socio-economic issues on slides 3 and 4 and then proceeded to list all the cost considerations.  He was critical of the emphasis placed by ICASA on economic considerations at the expense of providing universal access.  ICASA’s objectives were driven by the business interests of operators and the developmental interests of Government were not represented.  He questioned the attitude of the ICASA Councilors and would have preferred it if the presentation document had focused on addressing the needs of the country.  It was clear that the 800 MHz to 2.6 GHz band benefited the operators financially but the benefits to the country were not mentioned.

The Chairperson pointed out that ICASA had proceeded with licensing in 2010 despite the lack of policy at the time.  The penalties for non-compliance were ineffective and operators preferred to simply budget for penalties rather than acting in the best interests of the country.  ICASA should ensure that there were appropriate consequences for non-compliance, for example the recent withdrawal of the spectrum license by the Indian regulator.  The concerns of community radio stations over the possible loss of their frequencies after digital migration had to be addressed.

Ms J Killian (COPE) understood that the so-called “sweet spot” spectrum would be lucrative once it was auctioned.  She felt that such a valuable resource should be maximised and asked if it was possible to combine the auction with the universal access obligation.  She noted that ICASA blamed the policy vacuum as the reason for missing the 2010 licensing deadline.  She wanted to know if the reconsideration of the licenses already issued could be done in a manner that would ensure the optimum use of the frequency band and result in an increase of revenue.  She understood that ICASA operated within the communications market and the regulations were intended to provide direction and needed to reflect the environment.  Regulations and legislation tended to address market failures.  It was necessary to regulate the industry to ensure that operators implemented Government’s objectives.  She asked what initiatives would be effective to encourage the provision of services to the rural areas.

Ms S Ndabeni (ANC) asked what the implications were of the ITU directive that there should be no spectrum distribution before digital migration.

The Chairperson said that the Electronic Communications Act (ECA) balanced the interests of the public and business.  He saw no such balance in the presentation.  He asked how the current licensees utilised the spectrum, if the operators were providing infrastructure and what would change under the new scenario.  The practice of operators to import equipment and technology and demanded infrastructure to support such equipment was not desirable.

Dr Socikwa replied that not everything had been done to ensure the success of the licensing process.  She cited the lack of capacity and funds as the reasons for the failure to meet the objectives.  Most projects involved many external role players and required strong leadership.  ICASA found it challenging to take the leadership role, acquire the necessary independent technical expertise and balance the interests of all the stakeholders.  Community radio stations needed to comply with a number of conditions, for example a board that was representative of the community had to be established, decisions could only be made with a quorum and adequate financial management practices needed to be in place.  There was a limited amount of spectrum available but it was hoped that more would become available once digital migration had taken place.  It was not cost-effective for most community radio stations to utilise satellite broadcasting.

Mr Ngwenya explained that South Africa was a member of the ITU and was part of region 1.  A country could divert from its ITU region, provided that neighbouring countries were not affected.  Such diversion had cost implications as economies of scale applied to the equipment that could be used.  Manufacturers were able to provide equipment at less cost because it was used throughout the applicable region.

Ms Ndabeni asked if the Department of Communications (DOC) as the policy maker had provided ICASA with policy guidelines.

Mr Ngwenya responded in the negative.  The DOC was the responsible entity and led the local and international processes.  There was extensive engagement between ICASA and the DOC.

The Chairperson said that regulations should follow policy, which had not been the case when ICASA proceeded with licensing during 2010 and had almost given the spectrum away before being stopped by the Minister.  He reiterated the Committee’s view that ICASA needed to change its attitude towards implementing Government’s objectives.  He asked for an explanation of ICASA’s decision to proceed with licensing the 800 MHz to 2.6 GHz band before clear policies were in place.

Dr Socikwa replied that the first constructive engagement with the DOC had only occurred during the budget planning exercise.  She expected that the two entities would continue to engage in such a manner in future.

Mr Ngwenya explained that slide 4 of the presentation argued the need to proceed with licensing whilst slide 9 argued the need to harmonise the arrangement.  The need to bridge the digital divide between the rural and urban areas was highlighted as a socio-economic issue.  800 MHz was more suitable for rural areas as it was coverage-driven whilst 2.6 GHz has more suited to a high capacity urban area.  The licenses issued to internet service providers during 2003/04 were in accordance with the country’s plan for internet services developed in the late 1990’s.  Not many operators were attracted to the 3.5 GHz band and it remained under-utilised.  Under the new scenario, the band plan would change and ICASA would need to renegotiate the spectrum licenses that had already been issued to operators.

The Chairperson wanted to know why the existing licensees were not utilising the spectrum that had been allocated to them and how ICASA intended to deal with the incumbent licensees.

Mr Ngwenya replied that the main reason was the development of new technology and the limited coverage provided by the spectrum.  ICASA was considering a number of interventions, for example imposing a penalty for under-utilisation, capping the spectrum and reclaining the spectrum if it was not used.

Ms Ndabeni suggested that more stringent penalties were imposed on operators who failed to meet their universal access obligations.

Dr Socikwa replied that it would be necessary to amend the ECA.  The existing legislation made it difficult for ICASA to reclaim the spectrum from licensees.  Operators also held on to spectrum simply to prevent competition from entering the market.  She agreed with Members that penalties were too lenient to be effective.  The proposed amendment to the ICASA Act in 2011 would allow more stringent measures to be implemented.  She would be happy to provide the Committee with details of the operators who had failed to meet the licensing obligations.  Applicants for the “sweet spot” band would have to specify what measures would be put in place to meet universal access obligations.

Mr Ngwenya said that there were no technical reasons why community radio stations should lose spectrum.  Discussions with the DOC and Sentech to put community radio stations on the digital platform were underway.  Sufficient spectrum should be available after the dual illumination phase of digital migration was completed.

Ms N Michael (DA) thanked the ICASA Councilors for the excellent service she had experienced during the recent Local Government elections.

The Chairperson advised that ICASA and DOC would present a joint presentation to the Committee on 16 August 2011.  He asked ICASA to ensure that the community radio stations were communicated with and reassured about the availability of spectrum.  He thanked ICASA for the presentation but warned that the Committee would hold the ICASA Board accountable for ensuring that Government’s objectives were met.

The meeting was adjourned.