South Africa’s plan to block spectrum hoarding

South Africa’s communications minister has said that a new use-it-or-lose-it policy will prevent companies like mobile networks and broadcasters from hoarding precious radio frequency spectrum.

Minister Mondli Gungubele published the Next-Generation Radio Frequency Spectrum Policy for Economic Development in the Government Gazette on Tuesday.

It outlines how the Independent Communications Authority of South Africa (Icasa) must regulate and assign high-demand spectrum in the future.

Spectrum is the raw wireless capacity operators use to communicate between devices and their networks. Mobile networks, television and radio broadcasters, vehicle tracking companies, and many others rely on this resource.

Part of Icasa’s regulatory responsibility is to prevent licensees from hoarding spectrum that could be used for other purposes.

When assigned spectrum, licensees are given carte blanche to decide what technology is used to provide a specific service.

This practice is affirmed in the  “liberalisation of spectrum use” section of the policy, which mandates spectrum be assigned on a “technology neutral basis.”

Icasa will then need to measure how much of this spectrum is used to ensure that all allocated spectrum is used as efficiently as possible.

The policy states that any spectrum that goes unused for 24 months will be subject to the use-it-or-lose-it principle.

For over twelve years, spectrum hoarding has been regulated by employing financial incentives, making it expensive for operators to keep more capacity than they need.

Icasa introduced this as the “Administrative Incentive Pricing scheme” on 1 April 2012.

Ellipsis, a legal consultancy specialising in telecommunications and related industries, explained that the fees were to cover the cost of Icasa regulating the spectrum and introduce more efficient use of spectrum in South Africa.

Telkom and state-owned signal distributor Sentech also became obligated to pay the new fees, and are examples of the new pricing regime’s success.

Telkom announced in 2013 that Icasa’s new fees would have increased the state-owned telco’s spectrum fees to over R922 million from just under R37.5 million.

Telkom made this decision as it started migrating its legacy services to next-generation technologies.

That same year, Sentech said that it was returning its highly sought-after 2.6GHz and 3.5GHz spectrum to Icasa.

When Sentech announced that it would return its spectrum, its CEO, Setumo Mohapi, said that the tenfold cost increase was a big consideration in returning the spectrum to Icasa.