MTN, Cell C & Liquid go against Vodacom's spectrum lawsuit

In a high-stakes tussle over airwaves, Vodacom took MTN, Cell C, and Liquid Intelligent Technologies to court, challenging the legality of their spectrum pooling arrangements. The conflict, rooted in South Africa's telecoms regulations, mirrors the fierce competition in the industry and raises questions about market fairness.

The dispute lies in the spectrum pooling agreements initiated by MTN and its partners, Cell C and Liquid, which were approved by the Independent Communications Authority of South Africa (ICASA), the industry’s watchdog. 

These arrangements, aimed at optimizing spectrum usage, were seen as beneficial during the COVID-19 pandemic when expedited approvals were commonplace. MTN, leveraging these temporary measures, applied to ICASA in early 2022 for permanent spectrum pooling, a move it argues is both efficient and competitive.

Vodacom, however, contends that these agreements were carried out behind closed doors and unlawful, accusing MTN and its partners of securing an unfair competitive advantage. Vodacom's CEO, Shameel Joosub, asserts that MTN's superior network performance, evident in speed tests, can only be attributed to an unlawful amalgamation of spectrum beyond its licensed allocation.

MTN, in its defense, maintains that the spectrum pooling was conducted transparently and in accordance with the Electronic Communications Act. Marina Madale, MTN South Africa’s Acting Chief Sustainability and Corporate Affairs Officer, emphasized that spectrum pooling is a common practice globally and is sanctioned by South African regulations. She argued that such arrangements enhance competition and efficiency, benefiting operators and consumers.

The legal battle intensified in May 2024 when Vodacom sought an urgent interdict from the High Court to halt these pooling arrangements, pending a review of ICASA’s decision. Vodacom claims that ICASA's approvals were granted secretly and without public consultation, violating procedural norms. It further argues that the pooling agreements should have been reviewed by the Competition Commission as notifiable mergers.

The implications of Vodacom’s legal challenge are far-reaching. MTN warns that an interdict would degrade its network quality, impacting not only its subscribers but also wholesale ISPs, MVNOs, and other operators like Cell C and Telkom that roam on its network. This potential degradation could disrupt services for a substantial portion of the population, showing the critical nature of spectrum in maintaining network performance and capacity.

Cell C and Liquid Intelligent Technologies have joined MTN in opposing Vodacom’s application. Cell C, on the one hand, is confident in ICASA’s process, asserting that the approvals were lawful and transparent. Liquid echoed similar sentiments, emphasizing the collaborative benefits of spectrum pooling in improving service delivery.

This legal confrontation has broader implications for the telecommunications landscape in South Africa. Nearly all major operators, including Vodacom, engage in complex spectrum arrangements that operate in regulatory gray areas. Vodacom's spectrum agreements with Cell C, Liquid, and Rain, though not involving pooling, suggest a competitive environment where spectrum optimization is crucial.

Telkom, another significant player, previously raised concerns about such arrangements, emphasizing the need for regulatory scrutiny to ensure fair competition. While Telkom has remained on the sidelines of the current dispute, its past grievances resonate with the ongoing legal and regulatory debates.

Vodacom's legal challenge against MTN, Cell C, and Liquid underscores the critical role of spectrum in the telecommunications industry and the complexities of regulatory compliance. 

As the High Court deliberates on the interdict, the outcome will not only determine the immediate fate of these spectrum pooling arrangements but also set a precedent for future regulatory practices and competitive dynamics in South Africa’s telecom sector. The stakes are high, with potential impacts on network quality, industry competition, and consumer benefits hanging in the balance.