On September 28, 2016, the South African government approved the National Integrated Information and Communication Technologies Policy White Paper, which has been in development since 2012 and replaces the existing white papers on Telecommunications (1996) and Postal Services (1998). The ultimate aim of the paper is to build a seamless information infrastructure by 2030, which was set out in the National Development Plan. It outlines a framework of access to communications infrastructure and services, including new universal service measures to extend coverage to rural areas and a spectrum policy that establishes a wireless open-access, wholesale-only network (OAWN).
Operators to surrender exclusive rights to spectrum or face exclusion from additional frequencies and low fees
The South African government has released a policy white paper that outlines universal service measures and a new spectrum policy that facilitates spectrum sharing and an open network access model. The objective is to encourage the entry of new players into the market and bridge the digital divide in the country by providing affordable, ubiquitous communications infrastructure and services.
The biggest and probably most contentious change, which was controversially not included in the three-year public consultation process, is the decision to migrate to a price-regulated, open access system for the allocation of spectrum. Where demand exceeds the availability of spectrum, or where the frequencies in a band are already fully allocated, there will be a shift towards nonexclusive frequency assignment. The new regime would see spectrum license holders share and collaborate with others through the deployment of an OAWN. This will be a public-private sector-owned and managed consortium consisting of current license holders, infrastructure companies, private equity investors, Internet service providers, OTTs, and MVNOs.
This is a move away from best practice and the more common approach internationally of assigning exclusive spectrum rights to individual licensees, usually for a set period and geography. A few countries, including Kenya, Rwanda, Russia, and Mexico, have attempted similar approaches in the past, but with limited success.
Any high-demand spectrum that is currently assigned will need to be returned to the regulator in order to be reallocated exclusively to the consortium as open access frequencies. Failure to surrender the spectrum and join the communal network would result in operators not having access to any additional frequencies or government incentives such as low spectrum fees and access to public facilities. Unassigned spectrum, on the other hand, will be incorporated immediately into the wireless OAWN. This has had consequences for the upcoming auction of spectrum in the 700MHz, 800MHz, and 2.6Ghz bands, which was planned for May 2017. The regulator, the Independent Communications Authority of South Africa (ICASA), has been ordered by the High Court to halt the auction process so that they can be assigned as open access frequencies.
The government has argued that this approach would be a more effective way of using scarce spectrum and would ensure that there isn't a duplication of resources. It explains that by opening up the market to more players and concentrating only on services-based competition, SMP operators would be prevented from using their dominance to deny access to rivals. However, it seems likely that major mobile operators, such as MTN and Vodacom, will contest the new framework in the Constitutional Court. Communal ownership seems unreasonable considering the significant amount of investment they have made in their networks over the past 10 years, and it would almost certainly discourage investment in the future. Mobile operators will also be feeling unfairly treated, because the fixed line infrastructure market, dominated by Telkom, has been left largely unchanged by the white paper.
Questions remain around the open access spectrum regime; however, ICASA will soon be conducting an industry-wide public consultation to determine the terms and conditions of the wireless OAWN as well as setting the timeframe for returning spectrum.
South Africa (Country Regulation Overview), TE0007-000984 (February 2016)
Sarah McBride, Analyst, Regulation