With a deadline set for the unbundling of the local loop infrastructure, Telkom has begun negotiations with the Department of Communications (DOC) to ensure the terms and conditions of this exercise are also favourable for the fixed-line operator.
The local loop, or last mile, is the copper link between the end-user and Telkom's network and is currently owned by the company. The local loop unbundling (LLU) process includes a number of regulatory interventions aimed at providing new market entrants access to the incumbent's local access network.
The rationale behind LLU is to foster competition and reduce telecommunications costs by eliminating large investments by competitors to build their own infrastructure for last mile connectivity.
Speaking to ITWeb at Telkom's interim presentations yesterday, acting CEO Jeffery Hedberg explained that the company was involved in a number of interactions with the DOC around LLU, to discuss the implications of how the local loop process will be handled.
He added that Telkom would embrace the process, but noted the company would advocate for a process that would ensure Telkom receives a return on its investment, if it has to continue to maintain the infrastructure.
Hedberg argued that Telkom would not invest if other players would simply be free to piggyback on its network on their own terms and conditions.
He pointed to the clear risk that exists if the process is carried out this way. He argued that a situation would then arise where the incentive to invest in a network would be lost, because the option for free piggybacking on someone else's network would be more favourable.
Nonetheless, Hedberg noted the regulatory environment continues to pose challenges to all operators and has added “a step change on regulatory and legal issues” as a new element to his turnaround strategy for Telkom.
He said the company is preparing for the inevitability of LLU. “In preparation for the unbundling of the local loop, Telkom will put a lot more focus on its access network and its strategy to build that access out,” he explained.
Hedberg reiterated that this move is indicative of Telkom's new drive to focus its resources on areas that are delivering cash and promise.
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