SA's second national operator has lodged a complaint with the industry regulator against Telkom's refusal to free up access to parts of the local loop.
This move could see the entire issue resolved without the need for regulation.
Unbundling the local loop - the last bit of copper that connects end-users to Telkom's network - has been on the cards for at least five years. After constant delays, the Department of Communications last November finally set a deadline for the process to be wrapped up by November this year.
However, this deadline is unlikely to be met, as several regulatory issues still have to be cleared up before every telecoms company can be granted access to the last mile.
Telkom's hold on the last mile of copper has meant that new operators have had to innovate through wireless technology to gain access to houses or businesses in order to provide services.
While bigger players are able to roll out their own infrastructure to close the gap, access to the copper connection is vital for smaller players to compete in the fixed-line sector. More competition will benefit the end-user, as market forces will see prices coming down.
Fed up
Towards the end of last month, Neotel lodged a complaint with the Independent Communications Authority of SA (ICASA), because Telkom has refused to lease its last mile to its competitor.
Neotel's complaint, a copy of which is in ITWeb's possession, asks ICASA to force Telkom to provide access to the last mile at two locations in Johannesburg's northern suburbs and “any additional locations Neotel may specify from time to time”.
The second national operator argues that Telkom's refusal to give it access breaches the Electronic Communications Act, because Neotel will have to buy last mile managed solutions from Telkom as an interim measure.
However, Telkom argues that Neotel's request relates to local loop unbundling, which is “currently enjoying the attention of the regulator”. Telkom's letter to Neotel adds: “The process is still some way from being finalised.... In the circumstances, the request from Neotel is somewhat premature.”
Short circuit
Cull says the complaint could potentially make local loop unbundling happen faster than the regulatory process allows for, but it faces the challenge of ICASA's internal timeframes and the possibility of a lengthy court battle if Telkom resorts to litigation.
However, the second national operator's complaint does focus attention on the issue, which has been dragging on for years, says Cull. He explains ICASA now needs to apply its mind to the situation, and decide whether the complaint has any merit before moving forward.
Cull says Neotel's complaint is unlikely to derail ICASA's regulatory process, but the November deadline is ambitious and may not be met.
Access to the local loop is vital to increase competition in the fixed-line space, which could see prices dropping, says Cull. Least-cost routing companies have previously argued that they need access to the loop to avoid having to create their own infrastructure, which will be a costly exercise.
Deadline dilemma
In March, communications minister Roy Padayachie was confident the November deadline for the unbundling of the local loop would be met. “I am informed by the regulator that the project is on track and that we will make the deadline,” he said at a press briefing.
However, Telkom previously warned that regulatory and business hurdles make the deadline highly unlikely. In January, the incumbent argued that several regulatory issues need to be sorted out before the process can start.
Telkom's new CEO, Nombulelo “Pinky” Moholi, said last month, on the day her appointment was announced, that there are challenges with unbundling the local loop. She said Telkom is willing, but there are regulatory issues and the “dates are rather tight”.
Among the questions that still need to be answered are whether to charge third parties for use of the last mile, who will maintain the copper infrastructure, and how access will be priced.
Moholi says Telkom is charging access at below its cost base. She says these issues need to be resolved before the unbundling date arrives. Telkom is looking at the practicalities of unbundling, she adds.
Dealing with
ICASA spokesman Paseka Maleka says: “The authority is currently processing the dispute in accordance with the relevant provisions of the Act and regulations, which empowers the regulator to consider all relevant information to determine whether the dispute warrants further investigation.”
Maleka says the fact that the dispute has been leaked to the media “by an unidentified source” won't affect the process. ICASA won't provide “any further information relating to this dispute until affected parties have been afforded an opportunity to respond,” he adds.
Neither Telkom nor Neotel responded to requests for comment.
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