Electronic Communications Act, 2005 (Act No. 36 of 2005)

Most submissions supported the principle of AlP as the basis for pricing the spectrum. The main critique of AlP is whether it would actually modify the behaviour of spectrum users. The Authority concurs with operators that AlP is the appropriate method of charging for spectrum use. Furthermore, the Authority believes that the essence of AlP is that it should modify the behaviour of spectrum users by incentivising efficient use of spectrum, preventing stockpiling of spectrum or the handing back of spectrum that is not needed and the movement by operators to less congested spectrum.

Telkom proposed that the Authority should use a model that reflects the value of the so called sweet spot (i.e. the 700 MHz -3.5 GHz bands which include cellular bands). This was considered, but was ruled out as the proposed approach would be subjective, not technology neutral and would inappropriately penalise the cellular operators for being allocated/ assigned a particular band.

Sentech requested the Authority to restrict the formula to a smaller number of factors e.g. SHR, BW, ASTER, CG. The rationale for the proposal is that Finland and Denmark use an AlP formula with fewer factors and that the fewer the factors the simpler the formula. The Authority's view is that this argument does not hold because it is not the number of factors that causes complexity, but the complexity of specific factors. Furthermore, the Authority believes that the public consultation process allowed operators an opportunity to interpret the formula and most presenters did not regard the formula as complex. The Authority, has therefore not tempered with the number of factors in the formula.

Some submissions discussed the issue of Spectrum Auctions as a means of assignment. There was, however, a split between those favouring auctions and those not favouring auctions in principle in the South African context.

As stated in the opening address to the public hearings, the regulations form part of a broader framework on frequency spectrum including spectrum coordination and management, the treatment of spectrum where demand is greater than supply and the national frequency band plan, among others. Whilst the focus of these draft regulations is on spectrum fees, the spectrum auctioning mechanism is contained in the draft regulations for awarding radio frequency spectrum for competing applications in terms of section 31(3) of the ECA.