South Africans will not immediately benefit from being able to get a fixed broadband line without also having to fork out for a voice line, as Telkom provides copper connections at a loss.
The Independent Communications Authority of SA (ICASA) agrees with Telkom's argument that it subsidises the cost of connections to end-users. As a result, there is no saving in separating voice and data connections, because the copper link still has to be paid for.
The industry has been arguing that the two products should be offered separately as an initial win for consumers who no longer wanted to be forced into signing up for voice just to get fixed broadband.
The Internet Service Providers' Association (ISPA) and MWeb have called for the introduction of naked ADSL as a quick win in the process of local loop unbundling (LLU).
However, ICASA's finding that Telkom has an access line deficit effectively scuttles the chances of this happening any time in the near future.
Spokesman Paseka Maleka explains the issue of naked ADSL involves both the ability to split services, as well as the question of charging for them separately. He says that, as there is an access line deficit, naked ADSL would cost more than the current bundled offering.
As Telkom is making a loss on all access lines, ICASA will embark on a process to determine how it can best deal with the deficit, with the co-operation of the industry and Telkom, says Maleka.
ICASA's document, handed out at a recent public hearing into its LLU findings, notes the access line deficit is a “significant obstacle to the introduction of fixed-line local loop unbundling”.
Disappointed
Derek Hershaw, CEO of MWeb ISP, says because ICASA agrees there is an access line deficit, naked ADSL has been put on the backburner because the scope of Telkom's shortfall to provide access has yet to be quantified.
However, Hershaw argues that, while consumers may have to pay a bit more for ADSL than is currently the case if the voice side was dropped, the total monthly bill would come down.
“We were hoping that in the short-term there could be some quick wins that could stimulate ADSL growth; our fixed-line broadband penetration rates are far too low by any standards,” says Hershaw.
“The cost of having to pay for a landline just to get ADSL access is clearly a barrier to entry and naked ADSL would have removed that barrier,” Hershaw adds. MWeb is disappointed that an immediate opportunity to grow the market has been missed.
“Telkom is using this 'access deficit' argument to protect their voice revenues and as a consequence, the SA consumer has to pay an inflated price to get ADSL,” Hershaw argues.
MWeb has been mobilising public support in a bid to remove mandatory landline billing with ADSL lines.
“Naked ADSL is another step in the process of driving down the cost of connectivity. It's also about the right to only pay for something if you want to use it, which is completely logical,” Hershaw says.
Makes no sense
MWeb's submission to ICASA before the public hearings held earlier this year argues that one of the most valuable benefits of LLU is the ability to provide naked ADSL to the market. It says this can be “easily achieved through regulation”.
The Internet service provider says because Telkom bundles voice with data, ISPs are unable to offer ADSL Internet services to any of these consumers. “This unnecessarily restricts access to broadband for a large group of consumers.”
MWeb argues that unbundling of products and pricing are provided for in the Consumer Protection Act. The National Consumer Commissioner has issued a compliance notice to force Telkom to comply with bundling provisions in the Act, to which Telkom has objected.
ISPA argued earlier this year that Telkom's insistence on bundling its ADSL data service with a compulsory voice service could be a contravention of the Consumer Protection Act.
Former GM Ant Brooks argued Telkom would be hard pressed to prove that bundling a voice service and ADSL line offers economic benefits or convenience to the subscriber, as most either want to use an alternative provider for data, or no voice service.
“Many users regard the voice line rental fee as a 'Telkom tax'. In many cases, the voice service is not wanted yet consumers are forced to pay for it if they want an ADSL line," said Brooks. “Telkom is constraining consumer choice with this practice.”
In its submission to ICASA, ISPA argued that the first phase of LLU should see the introduction of naked ADSL and bitstream access for fixed broadband. “There is no reason that ISPA is aware of as to why this could not be achieved by November 2011.”
No can do
However, Telkom has argued it is not technically possible to split the services because its modern network uses a “combo” card, which means that splitting voice and data would have to happen on the card, and is not possible.
“Frequency splitting occurs internal to the card. Incidentally, this is a key reason why Telkom regards calls in the industry for naked ADSL as ill-informed and nonsensical.”
Telkom's submission says: “Naked ADSL should not be considered a realistic option for discussion considering the technical architecture of current networks.” The operator argues that retrofitting a next-generation network with legacy splitter banks would lead to technical and economic inefficiencies.
During the public hearings, Telkom also argued there would be no cost benefits for consumers if naked ADSL was implemented as it subsidises the telephone connection.
The operator has said it is studying the document and will comment at a later stage.
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