| 5.1. | This section in the IM listed the obligations that would form part of the licence conditions of the Radio Frequency Spectrum (RFS) Licence. |
| 5.2. | The WOAN will be licenced for both I-ECNS and Radio frequency Spectrum licences. |
WOAN OBLIGATIONS
| 5.3. | EMPOWERMENT PROVISIONS |
| 5.3.1. | Most comments received on the WOAN obligations related to empowerment provisions. |
| 5.3.2. | There was a large number of submissions that encourage stricter empowerment obligations for the WOAN such as 100% black ownership3 and 50% black female ownership4 as opposed to the level 3 BBBEE, that is proposed by the Authority. It was also suggested that allocations to incumbents whether through the WOAN or from the Authority must be subjected to a 40% Black SMME participation which is not limited to all services provided by incumbents5. |
| 5.3.3. | The submissions also suggest that the WOAN must encourage involvement of local communities in the operations of the WOAN as much as it is practically possible, including site construction and networking maintenance. Such involvement must begin with requisite skills training and development6. |
| 5.3.4. | Some submissions are of the view that 100% black ownership of the WOAN should remain for 20 years7. |
| 5.3.5. | The Authority has considered the empowerment recommendations from interested parties and has in addition to the empowerment provisions stipulated in the ECA imposed the following empowerment provisions for the WOAN: |
| 5.3.5.1. | The application must include the percentage of equity ownership to be held by persons from historically disadvantaged groups, which must not be less than 30% equity shareholding with an equivalent voting power in the Applicant; |
| 5.3.5.2. | The application must include the percentage of equity ownership to be held by black people as defined by section 1 of the B-BBEE Act, which must not be less than 50% equity shareholding with an equivalent voting power in the Applicant; |
| 5.3.5.3. | The applicant must be at least 20% black women owned in order to encourage meaningful participation of black women in the industry; |
| 5.3.5.4. | The application must include diversity of ownership to ensure meaningful participation of all entities involved including SMMEs; |
| 5.3.5.5. | The application must include effective participation by targeted groups, including women, youth and persons with disabilities. |
| 5.3.5.6. | The Authority has imposed empowerment obligations on the WOAN in order to ensure that it is a credible empowerment tool that will assist the Authority to achieve the objectives of the ECA as set out in section 2, namely: to encourage transformation in the industry, promote an environment of open, fair and non-discriminatory access to broadcasting service, electronic communication networks and to electronic communication services, as well as to promote the empowerment of historically disadvantaged persons including black people, with particular attention to the needs of women, opportunities for youth and challenges for people with disabilities. |
| 5.4. | There were calls by the interested parties for all other spectrum that is available to be made available to the WOAN first8. |
| 5.5. | The Authority has considered and set aside spectrum for the WOAN first in order to ensure its viability. The WOAN will not participate in the auction for spectrum but will be allocated the spectrum already set aside for it in terms of the beauty contest spectrum assignment model. |
| 5.6. | The Authority intends to auction all the identified spectrum excluding the set aside for the WOAN. |
| 5.7. | Some submissions argued that the public sector (government) has to play a more active role in the WOAN9. |
| 5.8. | The Authority has considered the submissions indicated in paragraph 5.7 above and permits the WOAN applicants to partner with the public sector in accordance with Section 3.3(e) of the Minister’s Directive. |
| 5.9. | Other submissions suggested that only the WOAN should be allowed to secure sufficient spectrum to roll out a national network and produce capacity to support market needs at the wholesale level in order to enable the WOAN to compete in a skewed market10. |
| 5.10. | Having considered the representations, the Authority is of the view that the WOAN must have sufficient spectrum set aside to roll out a national network and produce capacity to support market needs at the wholesale level in order to enable the WOAN to compete in a skewed spectrum market. However, the Authority has an obligation to ensure that in assigning spectrum to the WOAN it does not go against its mandate in terms of the ECA to promote effective competition. To this end, the Authority has taken a decision to undertake a simultaneous auction process that will allow operators to obtain sufficient spectrum to roll out a national network and has considered applying incentives to the WOAN that will help it to compete in this perceived skewed spectrum market. |
| 5.11. | Some submissions suggest that the reserve price for auction should not apply to the WOAN considering the importance of the WOAN’s financial sustainability11. |
| 5.12. | The WOAN will not be participating in the auction process and will therefore not be required to pay a reserve price. |
| 5.13. | In the Authority’s view, since the WOAN is deemed an empowerment and transformation tool, it is necessary to ensure its financial sustainability. Although the Directive enjoins the Authority to consider a payment holiday period of 10 years, the Authority is satisfied that a seven (7) year payment holiday for both general licence fees and spectrum fees is sufficient from the date of licence issuance. Two (2) years will be for deployment of operations and five (5) years will be to have cash flow to assist it with financial sustainability. |
| 5.14. | Some submissions were of the view that the WOAN will be a late entrant into the market and will be expected to compete against dominant, vertically integrated and well entrenched incumbents. |
| 5.15. | Mindful of this market structure, the Authority has applied incentives that would help the WOAN to compete against the well-entrenched incumbents as indicated under paragraphs 5.25 to 5.27 of this Reasons Document. |
| 5.16. | There are also submissions that are of the view that the asymmetric framework for WOAN should include: |
| 5.16.1. | The assignment of adequate spectrum at a reasonable or even zero cost; (The Authority has considered this and has afforded the WOAN a seven (7) year payment holiday for the general licence fees and spectrum licence fees). |
| 5.16.2. | Access to back haul, metro and long-distance links, limiting the amount of initial investment by enforcing a requirement for sharing of existing passive infrastructure; (The Authority has considered this and explains its considerations further in paragraphs 5.31 – 5.33 of this reasons document) |
| 5.16.3. | A special dispensation in respect of rapid deployment roll-out obligations, recognition of need to target urban areas first; (The Authority has considered this and explains its considerations further in paragraph 5.20 of this reasons document) |
| 5.16.4. | Access to USAF/Digital Dividend Funds; (The Authority does not administer the USAF but complies with Section 89, 90 and 91 of the ECA on this aspect) |
| 5.16.5. | The appointment of a credible, black-owned and woman-led consortium must operate WOAN12. (The Authority has considered the WOAN empowerment obligations in paragraph 5.3 of this reasons document) |
COVERAGE
| 5.17. | There was a proposal from the public of a 70/30 split in favour of rural areas to ensure that the WOAN is sustainable13. Some representations indicated that a 97% coverage obligation in Underserviced areas is uneconomic14. |
| 5.18. | Most representations received indicated that open access obligations will be beneficial to encourage partnerships with the WOAN15. |
| 5.19. | Some submissions indicated that coverage obligations will diminish the viability of the WOAN, there will be low returns on investment in the rural areas. |
| 5.20. | The Authority has not implemented coverage obligations for the WOAN to ensure that it is sustainable. |
MVNO
| 5.21. | There are representations that were submitted that advocated for the removal of MVNO access obligations.16 |
| 5.22. | Some submissions advise that the requirement for a licensee to provide open access to a minimum of three MVNOs as a condition of its licence is likely to be detrimental to an environment where the WOAN can grow and become a healthy and viable wholesale business. It is instead believed that the licensee and the WOAN should compete in the open market for MVNO business, supporting a more competitive market for wholesale services17. |
| 5.23. | The Authority has considered the submissions and has proposed open access obligations where a licensee who is assigned spectrum through this process is required to provide access to wholesale services on open access principles of fairness, transparency and non-discrimination to any other person licensed in terms of the ECA and persons providing services pursuant to a licence exemption. In the Authority’s view, it is important to promote the viability and sustainability of the WOAN by giving more Licensees access and to furthermore support the open access principles of fairness, transparency, and non-discrimination in line with the provisions of Chapter 4 of the ECA. |
| 5.24. | The requirement for a licensee to provide open access to a minimum of three MVNOs as a condition of its licence was not considered for the purposes of finalising the WOAN ITA as it is not applicable to the WOAN. |
30% OFFTAKE
| 5.25. | One of the common questions that were asked in the submissions relates to uncertainty as to the 30% of the national capacity that needs to be procured from the WOAN. The Authority was further requested to clarify how the 30% capacity offtake requirement on licensees will work in practice18. |
| 5.26. | The Authority has considered the 30% capacity offtake and has proposed obligations and incentives, respectively for the WOAN as follows: |
Obligations
| 5.26.1. | A licensee that will be assigned spectrum through this process (WOAN) is required to make available a minimum of 30% national capacity to be procured by successful Applicants that will be assigned Radio Frequency spectrum through the IMT auction licensing process, as soon as the WOAN is operational, for a period of 7 years. |
| 5.26.2. | The obligation to procure a minimum of 30% national capacity from the WOAN by successful Applicants that are assigned Radio Frequency spectrum through the IMT auction licensing process, collectively shall be imposed on the IMT auction licensees as licence terms and conditions in accordance with regulations 7 (e) of the RFSR. |
| 5.26.3. | The WOAN will be provided details on which successful applicants assigned Radio Frequency Spectrum through the IMT auction licensing process will be obliged to procure 30% national capacity from the WOAN collectively after the IMT auction licence applicants have been assigned spectrum with a licence condition for the 30% uptake in accordance with regulation 7 (e) of the RFSR. |
Incentives
| 5.27. | An obligation to procure a minimum of 30% national capacity from the WOAN by successful Applicants that are assigned Radio Frequency spectrum through the IMT auction licensing process, collectively shall be imposed on the IMT auction licensees as licence terms and conditions in accordance with regulations 7 (e) of the RFSR as an incentive to the WOAN. |
FACILITY LEASING AND INFRASTRUCTURE SHARING
| 5.28. | Some submissions state that preferential access to facilities leasing should be limited to the WOAN19. |
| 5.29. | Other submissions state that obligations should be imposed on other licensees to prioritise WOAN access to active and passive infrastructure sharing and roaming.20 |
| 5.30. | It must however be noted that some submissions oppose preferential access to operator assets by the WOAN. These advocate that access should be based on fair, reasonable and commercially negotiated terms which must apply to infrastructure sharing.21 |
| 5.31. | The WOAN and other licensees are subjected to the Facilities Leasing Regulations in force to deal with access to electronic communication facilities. The Authority is to impose licensing conditions for Tier 1 operators to provide reference offers for their pricing.22 |
| 5.32. | Chapter 8 of the ECA makes provision for facilities leasing. In addition to this the Authority has developed Facilities Leasing Regulations in terms of section 44 of the ECA. This gives the Authority the power to perform regulatory oversight to ensure compliance with the facilities leasing requirement. |
| 5.33. | The WOAN just like the other licence holders will be subjected to the Facilities Leasing Regulations. |
_________________________________________
| 3 | ABBA submission – page 1; Bowline Security submission – page 1 & 2; Day Dreamer & ICT Project (PTY) LTD submission – page 1; FCC Projects and Services submission – page 1 & 2; GoBe (PTY) LTD submission – page 2; JuiceTel (PTY) LTD submission – page 2; Sun ʼn Shield Technologies submission – page 2; Tuse Applications (PTY) LTD submission – page 2; UniqueNet Resource submission – page 2; Zavuna Technologies submission – page 1. |
| 4 | Smile Communications submission – page 13. |
| 5 | ABBA submission – page 2; GoBe (PTY) LTD submission – page 2; JuiceTel (PTY) LTD submission – page 2. |
| 6 | The ICT SMME Chamber submission – page 6. |
| 7 | Bowline Security submission – page 2; Day Dreamer and ICT Project (PTY) LTD submission – page 1; FCC Projects and Services submission – page 2; UniqueNet Resource submission – page 2. |
| 8 | Bowline Security submission – page 2; GoBe (PTY) LTD submission – page 2. |
| 9 | Altron Nexus Solutions submission – page 4 – 5. |
| 10 | Cell C submission – page 6. |
| 11 | Cell C submission – page 21 – 22. |
| 12 | Smile Communications submission – page 9. |
| 13 | ABBA submission – page 2; GoBe submission – page 3; JuiceTel submission – page 3 |
| 14 | MTN submission – page 13; South Africa Communications Forum submission – page 9 |
| 15 | ABBA submission page 2; GoBe submission – page 3; JuiceTel submission – page 3; |
| 16 | MTN submission – page 13 & 39 |
| 17 | Vodacom submission – page 9 & 37 |
| 18 | Cell C submission – page 38; FNB Connect submission – page 1; Smile Communications submission – page 10; Telkom submission – page 10; |
| 19 | Telkom submission – page 10 |
| 20 | Community Investment Ventures Holdings submission |
| 21 | MTN submission – page 13 & 39 |
| 22 | This aspect is an IMT process and will be dealt with further in the IMT committee’s reasons document. |
