SOUTH AFRICA: SPECTRUM UPDATES

This article outlines recent developments in the technology, media and telecommunications industry with specific reference to spectrum-related issues, and includes a high-level update regarding:

• the digital migration process that is currently underway (which was the subject of litigation brought by the free-to-air broadcaster, e.tv (Pty) Ltd (tv));
• the outcome of the International Mobile Telecommunications (IMT) spectrum auction held by the Independent Communications Authority of South Africa (ICASA) between 8 March and 17 March 2022;
• the litigation instituted by Telkom SA SOC Ltd (Telkom) (which Telkom has now withdrawn) against ICASA in relation to the IMT auction; and
• the draft Spectrum Policy.

The digital migration process and associated litigation

What is broadcasting digital migration?

Broadcasting digital migration (BDM) refers to a process in which the broadcasting of television and radio services is moved from analogue to digital platforms. The process begins with the ‘switch-on’ and transmission of digital signals and ends with the ‘switch-off’ of analogue signals. During this process, there is a period of ‘dual-illumination’ in which both analogue and digital signals are transmitted.

Why the transition from analogue to digital?

The transition to digital terrestrial television broadcasting was initiated pursuant to the International Telecommunications Union (ITU) resolution that countries in Region 1 (including Europe, Russia, Africa, the Middle East and the Islamic Republic of Iran) should migrate their broadcasting services from analogue to digital platforms. The ITU’s deadline for the migration was 17 June 2015.

The primary objective of BDM is to clear the radio frequency spectrum (a valuable and scarce resource) currently occupied by broadcasters to enable the provision of other telecommunication and broadcasting services. Accordingly, completion of the BDM process will make way for spectrum allocation.

Current status of the BDM process

South Africa did not complete the digital migration process by 17 June 2015 as required by the ITU. The Minister of Communications and Digital Technologies (Minister) initially aimed to complete the process by 31 March 2022 (which deadline has been extended). This came after a mandate from the President in his State of Nation Address delivered in February 2021 and following litigation brought by Telkom in December 2020 in respect of the invitation to apply for high-demand IMT spectrum, published by ICASA in October 2021 (2020 ITA), in terms of which the spectrum auction was initially scheduled to take place in March 2021 (2020/21 spectrum litigation). e.tv intervened in these proceedings and argued, amongst other things, that it would be prejudiced as a free-to-air broadcaster if ICASA were to license low frequency bands of IMT spectrum, which are currently occupied by broadcasters (the sub-1GHz spectrum i.e. the 700MHz and 800MHz radio frequency spectrum bands), to mobile network operators as this would allegedly cause interference.  On that basis, e.tv argued that the Minister should take active steps towards completing the digital migration process.

While the 2020/21 spectrum litigation was ultimately resolved by way of a settlement which was made an order of court on 15 September 2021, e.tv’s concerns were not addressed given that the order set aside the 2020 ITA and ICASA was directed to start the BDM process anew. As a result of this, e.tv launched fresh proceedings against the Minister on 13 October 2021 seeking, amongst other things, an order directing the Minister to undertake a consultation process with affected parties (including, but not limited to, e.tv) in respect of the analogue switch-off date, the date for the completion of the BDM process and on appropriate measures to ensure that South Africans who are currently reliant on analogue broadcasting are not deprived of their constitutional right to access information (e.tv application).

Numerous industry players (other than the Minister) were cited as respondents in the e.tv application, including Vodacom (Pty) Ltd (Vodacom), which opposed the application on the basis that, if the court were to grant the relief sought by e.tv, it would cause a material delay in ICASA assigning sub-1GHz spectrum for IMT use. On 29 October 2021, Media Monitoring Africa and SOS Support Public Broadcasting intervened in the e.tv application. The hearing of the application took place on 14 and 15 March 2022.

According to a supplementary affidavit filed by the Minister in the e.tv application on 14 March 2022, analogue transmission has largely been switched off in five of the nine provinces in South Africa.  The five provinces concerned are the Free State, Northern Cape, North West, Limpopo and Mpumalanga. According to a media article dated 22 August 2022, the Department of Communications and Digital Technologies has concluded the analogue switch-off of SABC TV transmitters in these five provinces.

On 27 March 2022, the High Court handed down its judgment in the e.tv application, dismissing e.tv’s and the intervening applicants’ applications with costs; and extending the deadline for analogue switch-off from 31 March 2022 to 30 June 2022.

e.tv appealed against the High Court judgment.  On 28 June 2022 the Constitutional Court ruled in favour of e.tv, holding that the switch-off of analogue television broadcasting in South Africa must be delayed to allow for more consultation. Nevertheless, the Court left it to the Minister to determine a new analogue switch-off date and a new deadline for registrations for set-top boxes. The judgment may be found here.

The new deadline for registrations for set-top boxes is 30 September 2022.

The 2022 spectrum auction

The diagram below sets out a high-level overview of the 2022 spectrum auction.

On 1 October 2021, following the Court’s order in the 2020/21 spectrum litigation, ICASA outlined its plans to expedite the licensing of high-demand IMT spectrum and the Wireless Open Access Network (the WOAN), which was intended to be a fifth market player, and which would provide wholesale services using shared spectrum. In particular, ICASA published an Information Memorandum (IM) for public consultation, held a workshop on the IM, and published a second IM between 1 October 2021 and 29 November 2021.

On 10 December 2021, ICASA published a new invitation to apply for high-demand spectrum in radio frequency spectrum bands IMT700, IMT800, IMT2600 and IMT2500 (2021 ITA). Although ICASA had initially envisaged publishing an ITA in respect of the WOAN on 15 November 2021, ICASA suspended the timetable in relation to the licensing of the WOAN on 19 November 2021 and the Minister proposed on 11 March 2022 that the WOAN be scrapped altogether.

Applications in respect of the 2021 ITA were due to be submitted to ICASA by 30 January 2022. On 21 February 2022, ICASA published a list of the applicants who qualified as bidders to participate in the auction process, namely Telkom, Vodacom, MTN, Cell C, Liquid Technologies and Rain.

The spectrum auction took place from 8 to 17 March 2022 and comprised two main stages:

• the opt-in round, which was a single bidding round included by ICASA as a pro-competitive measure for the benefit of ‘Tier-2 operators’ i.e. wholesale national operators not classified as Tier-1 (Tier-1 operators are wholesale national operators with a retail market share of more than 45% in at least one region identified by ICASA in its Findings Document on Mobile Broadband Services Inquiry); and
• the main stage, which comprised 58 bidding rounds between the six bidders.

The opt-in round

Vodacom and MTN are Tier-1 operators and were not eligible to participate in the opt-in round. On 8 and 9 March 2022, the opt-in round took place. The winners of the opt-in round were Rain and Telkom who were awarded the following:

• Rain won 2x10 MHz in the IMT700 band and 10 MHz in the IMT2600 band, for which it bid ZAR 1 152 274 105.50 in total; and
• Telkom won 2x10 MHz in the IMT800 band, for which it bid ZAR 1 504 815 407.10.

Rain and Telkom spent a cumulative amount of ZAR 2 656 089 512.60 in the opt-in round. Neither Rain nor Telkom held any sub-1GHz spectrum on a permanent basis prior to the auction.

The main stage

On 10 to 17 March 2022, the main stage of the auction took place. TechCentral reported on the outcome of the spectrum auction which is tabulated as follows:

Bidder	IMT700	IMT800	IMT2600	IMT3500	Total value
Telkom				22	ZAR 608 800 000.00
Rain			10		ZAR 280 100 000.00
MTN		20	40	40	ZAR 5 152 100 000.00
Vodacom	20		80	10	ZAR 5 381 600,000.00
Cell C				10	ZAR 288 200 000.00
Liquid				4	ZAR 111 000 000.00

 

One lot of IMT spectrum in the IMT800 (2x10MHz) was not sold at the auction, but ICASA has indicated that it will license this spectrum in the future.

ICASA raised a total of ZAR 14.4 billion in the auction, which exceeded its expected ZAR 8 billion.  The proceeds will go the national fiscus.

On 17 August 2022, ICASA published a memorandum in which it communicated its intention to start the second phase of the licensing process in respect of additional radio frequency spectrum for mobile networks, focusing on licensing more low- and mid-frequency spectrum. While no deadline has been given, the process is expected to be completed by March 2023.  

The 2022 spectrum litigation

On 4 January 2022, Telkom launched proceedings against ICASA in respect of the 2021 ITA and the spectrum auction process which was scheduled to take place in March 2022. Telkom’s application comprised two parts:

• Part A was an application to interdict ICASA from proceeding with the auction process pending the outcome of Part B; and
• Part B is a review application to set aside ICASA’s decision to publish the 2021 ITA.

Part A was initially due to be heard on 25 January 2022, but Telkom removed Part A from the court roll. As such, ICASA was able to run the auction as outlined above, although Telkom has persisted with the relief it is seeking in Part B.

The matter was expected to be heard from 11 to 14 April 2022. However, on 8 April 2022 ICASA confirmed that a settlement had been reached with Telkom. In terms of the settlement, Telkom will not pursue the litigation further and ICASA has undertaken to issue an Information Memorandum relating to certain unsold spectrum.

The draft Next Generation Radio Frequency Policy for Economic Development

On 8 September 2022, the Minister published the draft Next Generation Radio Frequency Spectrum Policy for Economic Development (Spectrum Policy) in terms of section 3(1) read with section 3(5) of the Electronic Communications Act 36 of 2005 (ECA) for public comment.

The proposed Spectrum Policy aims to advance the use of spectrum with the stated intention of driving down the cost of communication, which will support the rollout of communications networks for socio-economic development in South Africa. The Spectrum Policy also seeks to use spectrum to drive broader and inclusive economic participation by banning the hoarding of spectrum and permitting spectrum sharing and trading between licensees, which would ensure, with the prior approval of ICASA, the availability of flexible spectrum sharing models.

In terms of the Spectrum Policy, this will enable ICASA to implement spectrum sharing in a manner that preserves the rights of licence holders while providing access to unused spectrum for sharing. It is unclear why reference is made to ‘permitting spectrum sharing’ given that the ECA currently does provide for spectrum sharing but not spectrum trading or leasing.

All interested parties are invited to make written submissions on the proposed Spectrum Policy within 30 working days of the date of publication (i.e., by 20 October 2022).