Loop unbundling will cost jobs

The two largest unions at fixed-line operator, Telkom have warned against local loop unbundling (LLU), arguing it will cost, instead of create, more employment.

Both the Communication Workers Union (CWU) and the South African Communications Union (SACU), which represent about 12 000 out of about 21 000 Telkom employees, say unbundling the last mile is not feasible.

The Independent Communications Authority of SA (ICASA) is holding public hearings this week, which will aid it in developing a framework for LLU, which it needs to publish next month.

ICASA's discussion document indicates that jobs will be created, as the last mile will need to be maintained, and unbundling it will add at least another R1 billion in revenue to the sector.

However, SACU estimates that unbundling will cost at least 10 000 Telkom staff members their jobs, as it will no longer require employees to maintain the last mile, and there is no clarity as to which entity would carry this responsibility, argues presenter Harry Botha.

In its presentation, authored by president Michael Hare, SACU argues if ICASA enforced LLU on Telkom, it would slow down ADSL broadband speeds, and Telkom would have to be restructured to make the process work, which would “lead to innumerable job losses”.

Last year, Telkom offered voluntary severance packages, which 186 management members and 1 830 bargaining unit employees accepted, costing the company R739 million. It has been under pressure to cut down on costs, and has previously referred to LLU as a risk.

ICASA has said that LLU will increase the number of competitors in the space, which will push down prices and improve broadband penetration.

However, Hare argues LLU would also “undermine foreign investment and innovation in the fixed-line network”. He says it would also delay the roll-out of the universal access and broadband services.

“SA is now doing well in broadband terms, and Telkom SA is at the heart of this relative success. Fixed-line (affordable service) ADSL broadband subscribers now number around 760 000,” Hare writes.

CWU national co-ordinator, Vulture Ntuluki argues LLU will only benefit the rich, mostly white people, who live in suburbs. He says freeing the last mile will not benefit the rural poor, or people who live in townships.

Ntuluki questions the cost of the process, and argues that when costs increase, the first way companies look at trimming expenses is to cut down on the workforce. He argues that Telkom is “financially unstable”.

Tshepang Lesiba, a member of the CWU's restructuring team, says the challenge is job creation, and innovation trims the amount of people that need to be employed.