ICASA 'sidesteps' unbundling

The Independent Communications Authority of SA (ICASA) has been accused of sidestepping the issue of local loop unbundling (LLU), after yesterday publishing a document that pushes out implementation for a year.

Freeing the last mile will enable more competition in the sector, which will trim prices, and also has the potential to add about R1 billion in revenue to the telecoms sector.

Alternative telecommunications companies have argued that freeing up the last mile would spur uptake of broadband, boosting the economy as jobs will be created.

However, despite a directive by former communications minister Roy Padayachie that “the unbundling process in SA should be urgently completed and implemented in 2011”, the process has been pushed out by at least a year.

The industry argues ICASA's timelines are disappointing and a setback for the sector, which had expected a proper implementation guideline from the regulator, and not its plans on how it intends getting to an unbundling framework.

Yesterday, ICASA chairman Stephen Mncube announced the authority would follow a phased approach, with the first step kicking off next February.

Mncube said the authority will convene an industry working group to establish an Access Line Deficit Recovery Scheme, which will start work in February. Telkom has argued it makes a loss on the access portion of the line, which has led to a deficit that needs to be recovered.

ICASA will also engage the industry to ensure the price of IP Connect is reduced. “It is expected that this will be with effect from 31 March next year,” said Mncube.

network to provide services to end-users are untenable, and that they have to pay three times to deliver a service through IP Connect.

Mncube said a bitstream product would be in place by 1 November next year. Bitstream does not involve unbundling the copper pair, but rather refers to a situation in which third parties have access to a high-speed access link at the end-user's premises.

Bitstream was one of the four options ICASA initially put on the table for discussion earlier this year. The others include shared access to the local loop, full unbundling or sub-unbundling.

Bitstream is generally considered the first step of LLU, and was requested by a number of stakeholders as a way to kick-start the process with minimal disruption to Telkom's business.

“In order to facilitate the introduction of bitstream, the authority will establish an industry working group to address technical issues, including the establishment of an ordering system specification mechanism. This will convene starting in February next year,” said Mncube.

Mncube said as a separate process, ICASA will undertake an inquiry into the unbundling of wireless access networks.

In the framework document, Mncube said: “LLU is an intervention that offers significant advantages to operators and to the consumer. However, it also involves significant disruption to operators, particularly the incumbent.”

Vox Telecom CEO Douglas Reed says ICASA's framework is a disappointment and a setback for both the industry and end-users. However, he says it is not a surprise as the company had not banked on LLU happening on time. “We are not holding much store for LLU.”

Reed says it will take between two and three years for consumers to start seeing the benefits of local loop unbundling anyway. While it will not trim costs “dramatically”, it will speed up price reductions, he adds.

Internet Solutions' executive for regulatory affairs, Siyabonga Madyibi, says ICASA completely sidestepped the issue. “Everyone was hoping to take a major step forward in the process of creating a more open, innovative and competitive marketplace through the release of the LLU framework by ICASA.

“What we effectively got was an outline of how ICASA plans to get to the framework, which has effectively pushed the entire process back by a year.”

Madyibi argues that ICASA has failed to achieve what it set out to do. “As such, they have failed to meet their mandate, in my opinion.”

The phased approach announced by the authority is welcome, as it will best serve the interests of the industry and end-user market, allowing Telkom and ICASA to get one part of access right before implementing other unbundling solutions, says Madyibi.

However, ICASA has “proven to be very flexible when it comes to deadlines, which leaves us and the rest of the industry very sceptical and disappointed at yesterday's outcome,” Madyibi says. “The legal threats made by Telkom have obviously been taken to heart by ICASA, so the deadline ICASA committed to earlier this year has now come and gone.”

Madyibi says the industry at large was hoping to have more clarity and certainty from the communications regulator with regard to how LLU will be implemented in phase one, which it did not receive.

“The next step in the process is for the workgroups on LLU and bitstream access to work on developing the framework that everyone was expecting today. While this is an important step in the process, the fact that the outline we received today doesn't get us any closer to a workable solution to LLU is extremely frustrating and disappointing,” Madyibi adds.

Derek Hershaw, CEO of MWeb ISP, notes there are both positives and negatives to take out of yesterday's announcement. The company is happy to see that a phased approach is being implemented and that the IP Connect costs will come down next March.

Hershaw says, however, the timelines are disappointing. “Having said that, these are not simple issues and there's a lot at stake, so we have to get this right. If that means we take a bit of extra time and do it properly, then so be it.”

In addition, the fact that the wireless loop will not be included in the process and will be dealt with separately is a negative, says Hershaw. “There doesn't seem to be a specific timeline for this.

“Overall, we were expecting more, but the wheels are in motion now and I think there will be sufficient pressure from the industry to make sure that we start building some momentum on these issues.”

ICASA spokesman Paseka Maleka says the authority has laid a foundation for unbundling and now needs to stick to the deadline. He adds that the industry and ICASA need to pull together to make sure unbundling is a success.

Telkom, which has argued that unbundling would result in job losses, says it has not had a chance to review the framework and will comment at a later stage.