War between MTN and Vodacom begins
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MTN has announced that it will fight Vodacom’s attempt to block spectrum pooling agreements approved by the Independent Communications Authority of South Africa (Icasa).
This comes after Vodacom launched legal action against the industry regulator to interdict these spectrum agreements between MTN, Cell C, and Liquid.
Vodacom alleges that Icasa allowed MTN to secretly pool spectrum belonging to Cell C and Liquid Intelligent Technologies with its own.
It said MTN amassed large blocks of precious spectrum this way, giving it a huge and unfair advantage.
Spectrum is the lifeblood of any wireless network carrier. It is the raw bandwidth they use to communicate between their towers and customer devices like smartphones.
In a media statement issued on Thursday, MTN characterised its opposition of Vodacom’s lawsuit as standing up for everyday South Africans.
Cell C and Liquid Intelligent Technologies have joined MTN’s opposition to Vodacom’s interdict application.
MTN warned that if Vodacom’s interdict succeeds, it would degrade the quality, speed, and capacity of MTN’s network, impacting a substantial portion of the population.
It won’t just be MTN subscribers impacted, but also wholesale Internet Service Providers, Mobile Virtual Network Operators (MVNOs), its public and private sector customers, and members of the public who are reliant on these entities.
Operators that roam on the MTN network like Cell C and Telkom will also be affected, it warned.
“Additionally, the effect of Vodacom’s application could fundamentally result in an industry-wide shift in the spectrum landscape in South Africa,” warned MTN.
“It could potentially also impact the use and transmission of radio frequency spectrum by any parties in the industry who share frequencies.”
MTN South Africa’s acting chief sustainability and corporate affairs officer, Marina Madale, said they argue in their responding papers that Vodacom has failed to provide evidence to support an interdict.
“Given the impact on MTN, its partners, roaming customers, MVNOs, subscribers, and the public, MTN believes that the request for interim relief should be dismissed,” she said.
In addition to the interdict, Vodacom has asked the court to review Icasa’s approvals of MTN’s spectrum pooling applications.
“This was all done in secret, without any notice to Vodacom (or the public), and without any opportunity afforded to comment and make representations on whether this ought to be allowed,” Vodacom argued.
Vodacom also argued that the pooling agreements constitute notifiable mergers that should have been lodged with the Competition Commission.
Since Icasa did not follow proper procedure and Vodacom believes the agreements were unlawful, it wants the approvals set aside.
MTN argued that spectrum pooling arrangements enhance competition in any market and generate efficiencies for all parties involved.
“MTN and its pooling partners applied to Icasa to pool spectrum in early 2022, leveraging off the positive impact of temporary spectrum pooling arrangements that were approved during the Covid–19 pandemic,” it explained.
While the Covid–19 regulations enabled expedited approvals, MTN said these types of arrangements are not new and commonplace in other markets.
“The South African regulatory framework permits parties to apply for such arrangements, and MTN and its partners applied to Icasa in terms of the Electronic Communication Act and received approval,” Madale said.
“Pursuant to these approvals, MTN designed and deployed its network.”
MTN denied Vodacom’s allegations that the applications with Cell C and Liquid were done in secret to implement an unlawful scheme purely for their own commercial benefit.
“MTN was open about its decision to pursue pooling arrangements with other mobile network operators, and followed the process set out in the Electronic Communications Act and Regulations,” it said.
Madale said spectrum pooling is an efficient technique to use spectrum, which has benefits for customers and licensees like MTN, Cell C, and Liquid.
“More efficient applications of spectrum advance the industry and benefit the broader public.”
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By attacking MTN’s spectrum pooling arrangements, Vodacom may have fired the first shots in a war of mutually assured regulatory destruction.
Nearly all of South Africa’s major network operators have some deals operating in regulatory grey areas.
Vodacom’s secret deal involving Cell C’s contract subscriber base is one such arrangement that could face increased scrutiny in response to its attack on Icasa and MTN.
In addition to its deal with Cell C, Vodacom has agreements with Liquid and Rain involving their spectrum — albeit with no pooling. Curiously, this wasn’t mentioned in its court papers.
The Rain deal has been lucrative for the upstart cellular operator, and losing it would hurt the company severely.
Telkom has continued to remain an outsider to all of this for now. However, it previously cited these mysterious deals in a lawsuit it brought against Icasa to halt the March 2022 spectrum auction.
While Telkom settled out of court to allow the auction results to stand, its grievances about Vodacom and MTN’s spectrum deals remain.
“Telkom has consistently asked Icasa to review all spectrum sharing and pooling deals, as these have the potential to skew competition,” a Telkom spokesperson previously told MyBroadband in response questions about Vodacom’s legal action.
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