Jobs at stake with loop unbundling

The Independent Communications Authority of SA (ICASA) has approved a discussion document for the unbundling of Telkom's local loop.

According to ICASA spokesperson Paseka Maleka, the document will be gazetted during the course of the week, and will be made available to the public.

A public consultation period will then be opened, but the time frame is still unclear in this regard.

The last mile, or local loop, is the copper link between the end-user and Telkom's network, and is currently owned by the fixed-line operator.

Unions have expressed concern over the potential job losses posed by LLU. According to Marius Croucamp, spokesperson for trade union Solidarity, the proposed LLU in its current form will result in an 80% decrease of income for Telkom and, therefore, will “undoubtedly also lead to job losses”.

The rationale behind LLU is to foster competition and reduce telecommunications costs through eliminating the requirement for large investments by potential competitors to build their own infrastructure for last mile connectivity.

LLU has been on the cards for at least five years. After several delays, the Department of Communications last November finally set a deadline for the process to be wrapped up by November this year. Maleka says ICASA is on track to meet the deadline.

According to Solidarity, in a recent information session about LLU, three objectives for the unbundling were given. These included increasing broadband network access competition, increasing broadband penetration, and reducing the prices for broadband.

“Unfortunately, there is no research to determine that LLU will in fact result in more competition in the market or lower prices. It is also unclear whether the demand for broadband is big enough to justify unbundling,” says Solidarity.

The union also argues that other alternatives to increase broadband penetration are available, such as IP stream, which must still be investigated.

Telkom previously argued that access to its copper network isn't necessary, because there is a wireless last mile.

Solidarity sees the potential result of LLU on Telkom to be revenue loss, increasing costs, and under-recovery of costs.

“The LLU will also not necessarily create more jobs in the telecommunication industry, as many companies (especially Telkom's current competitors) opt to use foreign employees instead of South Africans to fill vacancies,” says Croucamp.

“Solidarity is very concerned about the potential effects of the planned LLU and will definitely take part in the consultation process at ICASA to minimise job losses.”

Last week, Solidarity slammed Telkom for the large number of voluntary severance packages it had approved, warning of a major skills shortage at the company.

At the first round of wage negotiations that took place at Telkom on Thursday, Solidarity called for a two-year moratorium on retrenchments and a 12% wage increase.

Croucamp says there is insufficient room for a solid increase in Telkom's salary budget as the telco reportedly awarded more than 1 650 permanent employees voluntary severance packages.

“It appears that more voluntary severance packages will be offered, as Telkom wants to include a formal mechanism for voluntary severance packages in this year's wage agreement,” Croucamp notes.

The Communication Workers Union has also spoken out against the approval of voluntary severance packages, saying it views it as another form of job losses in that sector.

Telkom's executive for employee relations, Meshack Dlamini, says the operator is currently offering a general increase of 4.5%. The company is also including job security and retention of voluntary severance and a voluntary early retirement package facility in its offer.

“Parties were informed that the offer on job security is subject to acceptance of the 4.5% general increase, 0.5% once-off payment to those who exceed their individual targets, two-year agreement and the retention of the VSP/VERP facility,” says Dlamini.

Solidarity says issues concerning standby allowances, telephone allowances, leave and payouts for long service periods will also be discussed during the negotiations. The next round of wage negotiations at Telkom will take place on 8 June.