The slow pace of regulatory change in the South African telecoms landscape is inhibiting competition in the market.
Industry players and analysts seem to concur that local loop unbundling (LLU) and licensing for high-demand spectrum could make a massive difference in what services are provided this year.
“We have competition, but it is not healthy. The competitive landscape will remain blighted if one company is allowed to maintain its market dominance,” says World Wide Worx MD Arthur Goldstuck, referring to Telkom's control of the local loop.
However, he adds: “It is not a criticism of Telkom, but rather of the slow pace of regulatory change in SA.”
The unbundling of the local loop, or last mile, has been on the cards for the past decade, and is expected to increase competition in the telecoms market as well as drive down prices.
Late last year, communications regulator, the Independent Communications Authority of SA (ICASA), said it would implement a phased approach to LLU, with the first leg expected to kick off in November this year, in effect extending Telkom's advantage in the market.
SA's second-largest fixed network provider and Telkom rival, Neotel, last year lodged a complaint with ICASA against Telkom's refusal to free up access to parts of the local loop.
bandwidth to SA, consumers have so far not enjoyed reduced costs.
“The problem still is that Telkom controls the last mile,” Victor argues. “To open up the market, ICASA must find a way to split the last mile out of Telkom.”
Spiwe Chireka, a senior analyst at market research firm IDC, says that for competition to blossom, the issue of unbundling the local loop should be dealt with once and for all. There is no need to keep on pushing out the deadline, she points out.
“Delays on spectrum auctions are also inhibiting competition in the industry. ICASA has to get its act together on this issue,” Chireka adds.
In the same vein, Goldstuck argues that placing a very strong emphasis on promoting competition should be a priority for the Department of Communications and ICASA.
“Any effort to slow down the process of local loop unbundling should be recognised by government for what it is - holding back competition, economic growth and the interests of the consumer and business.”
Goldstuck adds that the landing of international undersea cables has seen a dramatic fall in wholesale bandwidth prices, but it hasn't always been passed on to consumers.
“The problem for service providers is not the cost of bandwidth, but the revenue from subscribers. Cutting costs also cuts revenue, which can result in a company's sustainability being threatened.”
He believes that LLU and licences for high-demand spectrum could make a massive difference in what services are provided this year.
“We should see steady, although slow, progress in fibre to the home, first to gated complexes. Most major fibre projects will approach completion, but will make their real impact in 2013.”
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