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

Some submissions have recommended a frequency reuse factor. The suggestion is that a Frequency Re-use factor should be applied primarily to the point-to-point formula so that a discount is given for the re-use of a frequency. Vodacom proposes a 4 scaled Frequency Reuse factor with a value of 0.1 for a reuse of more than 50 times. It is not clear whether these submissions mixed up the existing Bulk User arrangement with the new system.

This is inconsistent with the general purpose of the new approach. The existing factors in the point-to-point formula already incentivise efficiency as the assignment holder pays only for what he is assigned for a particular path. There is no disincentive for an assignment holder to have numerous PRP assignments in the same frequency and the assignment holder will be able to enjoy the equipment economies of scale. A frequency re-use factor gives an unfair advantage to large companies over small ones, assuming equal efficiency for both because FREUSE is based on the number of links and wrongly assumes that having more links implies efficient usage. The FREUSE factor does not provide any further incentives to efficiency beyond those already existent in the model.

A broadband incentive factor was recommended. The Authority believes that a broadband incentive is justifiable in rural areas but is already reflected in the GEO factor. By reducing the GEO factor, the Authority has increased incentive for rollout of services, including broadband, in rural areas.

Sentech, Neotel, MTN and MWeb recommended that Guard bands should be excluded from the bandwidth for pricing purposes.

Guard bands, are required to protect normal operation within used bands, hence guard bands are valuable for licensees and should be paid for.

MTN and other operators recommended that a factor should be added to give an incentive for the use of equipment that makes more efficient use of the spectrum.

The Authority believes that the proposed formula as contained in the draft regulations already gives incentive to make more efficient use of the spectrum in that the user has every incentive to reduce the amount of spectrum that is denied to others.

The Authority has decided to limit multi-year licence fees to certain categories of services, for a maximum period of five years. This is done so as to prevent spectrum hoarding, inefficient spectrum use and to allow for efficient planning.