Local loop regulations by November

The Independent Communications Authority of SA (ICASA) is determined to finalise a regulatory framework for local loop unbundling (LLU) by November.

However, the regulator has set itself a tight timeframe, as it is inviting comments on an LLU discussion document until the middle of September, giving it less than two months from then to finalise the regulations.

LLU has been on the cards for the past decade, but has yet to become a reality in SA. Freeing up access to the last mile is vital to stimulate competition, aid economic growth and push down the cost of communications.

In May 2007, late communications minister, Ivy Matsepe-Casaburri, set Telkom a 2011 deadline to free the last mile. Last November, the Department of Communications reiterated this commitment to the sector.

International experience shows unbundling the local loop is a costly exercise. It is also a lengthy process; with some international players taking up to a decade to completely open up last mile access.

Industry commentators previously questioned whether the November deadline is realistic, and Telkom has warned it cannot be met, as there are too many variables to take into account.

However, ICASA's GM of markets and competition, Pieter Grootes, says the regulator will meet the deadline, and questions whether the industry is up to the challenge.

This morning, the regulator released a discussion document and invited the industry to inform it as to what form unbundling should take. ICASA outlined four potential options: wholesale access, line-sharing, full access, and sub-loop unbundling.

Increasing consumer choice is “crucial” to increasing the number of network users and increasing the “size of the pie” for licensed operators, says Makhakhe. ICASA believes the “pie” can be increased by R1 billion in additional revenue by freeing up the last mile.

“All that is needed is more people seeking fixed-line connections for broadband services and for them to be provided with the desired service.”

The current available resources are not being used efficiently, notes Makhakhe. This is a “substantial opportunity cost” as these resources are paid for as they must be maintained, he explains.

ICASA's goal in unbundling the local loop is to connect more people through fixed-line, or other, connections, create an environment in which consumers have more choice and ensure that jobs are secure, he says.

Makhakhe says LLU will stimulate demand for fixed-line broadband, which will create the need for installation and maintenance services.

Solidarity has warned that LLU will lead to an 80% decline in Telkom's revenue, which will cost jobs.

“LLU, in the case of SA, also represents a revenue generation opportunity for all operators, including Telkom, which further supports both job retention and job creation,” says Makhakhe.

Previous discussions around unbundling the local loop have been fixed on ending Telkom's monopoly over the last mile of copper.

However, unbundling is not limited to Telkom's fixed copper line, but includes all operators, including mobile networks and municipalities that have laid down fibre connections, says ICASA.

Councillor William Stucke says unbundling potentially applies to all local loops, regardless of the form of access and the operator.

Telkom says it has not yet had an opportunity to review the paper and will comment at a later stage.

CEO Nombulelo “Pinky” Moholi previously said local loop unbundling is a “major” risk to Telkom.