SA's fixed-line operator, Telkom, yesterday went on the offensive at local loop unbundling (LLU) hearings, arguing that discussions about whether its assets should be sold off or it should be restructured are outside the ambit of the process.
The operator also argued that LLU will be the most intrusive regulatory intervention ever, will not create jobs, and will be costly to implement. The company told the hearings at the Independent Communications Authority of SA (ICASA) that the regulator has no legal basis to demand freeing the last mile.
Telkom's group executive of regulatory affairs, Andrew Barendse, argued that LLU is “possibly the most intrusive and far-reaching” form of regulatory intervention. He said SA has a different set of market conditions to the US and Europe, where unbundling has been implemented.
Barendse said, based on international experiences, freeing the last mile will be complex and costly to implement and does not always meet its stated objectives. In addition, there has been “intensive” litigation around the process, he added.
Telkom cautions against LLU as there is “so much at stake” and it cannot be left to the potential of regulatory failure, said Barendse. Telkom is the single largest investor and employer in the telecoms sector, he noted.
“LLU will put all these matters at risk,” said Barendse. Unbundling is an issue of grave concern, he added.
At stake
Senior legal advisor for regulatory affairs, Thamisanga Kekana, said Telkom was “displeased” about the contents of statements made at the hearings. He said the company is concerned about ICASA's conduct.
The ICASA committee had been querying presenters, during the two-day process, as to whether Telkom should be restructured into separate units, or whether companies would contemplate buying a part of its network.
At no stage did ICASA raise these issues, which are not contemplated in the discussion document the authority released in June, said Kekana. “What is at stake here is the commercial viability of Telkom.”
Kekana argued that the enquiry is into how LLU must be done “responsibly” and in the absence of prescribed procedure, the scope must be limited to what is in the discussion document.
The line of questioning should be limited to ICASA's June document, said Kekana. He asked for an undertaking that issues of restructuring and asset disposal not be considered during the three-day hearings.
As a result, ICASA councillor William Stucke told the Telkom panel to step outside of the room and a private consultation between the ICASA committee and Telkom's regulatory team took place behind closed doors for about 40 minutes. Members of the public were not enlightened as to the outcome.
After the hearings resumed, Kekana argued that there was no legal basis for ICASA to proceed with LLU and the Electronic Communications Act did not even define the process.
Debunking myths
Regulatory affairs executive Izak Coetzee said there are several “myths” surrounding LLU, including that it will introduce more competition, lower the cost of broadband and create jobs. He says these aspects should not be considered as “fact”.
Coetzee said it is not correct to assert that taxpayers have paid for Telkom's network. He pointed out that it spent R65 billion on its infrastructure between 1991, when it was incorporated as a company, and 2010.
In the same time, the company only received R4 billion in funding from government, which has a 38% stake in the operator, Coetzee noted. However, it has paid almost R17 billion in dividends to government in the past five years, he said.
Coetzee argued that, as copper is depreciated over a period of between 20 and 40 years, the company has not yet paid the network off. In addition, breakages and copper theft require constant spending.
Africa Analysis MD Andre Wills, presenting on Telkom's behalf, argued that BT's experience of unbundling showed that jobs were not created. Instead, the operator went from having a work force of 93 000 to 77 000 between 2007 and 2011. LLU was implemented in the UK in 2005.
In addition, said Wills, unbundling also did not extend the reach of broadband penetration in the UK.
Share
