By the time the industry regulator finally unbundles the local loop, many operators are likely to have bypassed the need to use the copper infrastructure and will go directly to people's homes and businesses.
The Independent Communications Authority of SA (ICASA) is meant to unbundle access to the last mile by next November. The last mile, or local loop, is the copper link between the end-user and Telkom's network and is currently owned by Telkom.
However, the process has repeatedly been delayed, after initially being mooted at least five years ago, and there are doubts in the industry that the current deadline will be met. Telcos are now in the process of connecting customers to their networks by technologies that cut out the last mile.
Neotel currently bypasses the copper infrastructure through wireless technology, and Vodacom has plans to eventually cut out the loop by running fibre direct to clients. In addition, Telkom is starting to eliminate the need for copper in its own network by putting in wireless connections.
In addition, Internet service provider Screamer is offering data bundles that cut Telkom out of the loop completely. The company is offering WiMax data services as an alternative to Telkom's ADSL offering.
Going wireless
Telkom outgoing CEO Reuben September said last month the company aimed to decommission its copper access network and replace it with wireless connections. September said the company would roll out a wireless last mile in conjunction with its mobile rollout.
Although Telkom is currently maintaining the copper network, areas within the network that are vulnerable to theft and breakages are being replaced by wireless.
In its 2009 annual report, theft of copper cost Telkom outbound revenue losses estimated at R907 million. The company has not yet disclosed what copper theft cost in the last financial year.
Telkom has budgeted R6 billion over the next five years for its mobile strategy, which includes replacing the copper last mile. Although the company does not have a timeframe for total transfer to wireless, it says: “The wireless technology evolution is progressing at a rapid pace.“
However, the business case for Telkom migrating to a wireless last mile access technology still has to be proven for a high bandwidth, low latency service, the company says.
Telkom's wireless last mile will not form part of the infrastructure that is to be unbundled as part of the regulatory process, and will belong to Telkom. Local loop unbundling is defined by ICASA as copper-based infrastructure.
Gary Hart, executive head of Managed Network Services at Vodacom Business, says it is only a matter of time before SA sees fibre to the home. Hart says, in future, Vodacom will go onto fibre completely, and will then not need the local loop to be unbundled.
Hart explains that rolling out fibre is costly at the moment. However, as more people invest in fibre infrastructure, prices will come down and this will allow fibre to be rolled out to more people.
Although Neotel has wireless infrastructure, Wandile Zote, executive head of corporate communication, recently said: “As far as we're concerned, gaining access to the 'last mile' via the local loop unbundling is very important for our fixed-line strategy.”
Too late
Richard Hurst, independent telecoms analyst, says local loop unbundling is a bit too late. “By the time it's done, it's not going to matter anymore. All the other operators will have rolled out their own infrastructure.”
He says the “enablers of competition and broadband are not being put in place by the regulator”. As a result, the market is finding its own way of gaining access to consumers in SA.
However, Hurst points out that fixed infrastructure has a larger capacity for broadband than wireless. He says that fibre, at the moment, is “pie in the sky”, but is an eventuality in other countries and will become one in SA too.
Chris Gilmour, Absa Investments analyst, says ICASA has dragged its heels for so long that there is no real need to unbundle the last mile. He says copper will become a “deteriorating asset in the ground” and competitors will either role out fibre, or wireless to connect.
Several attempts to get comment from ICASA were unsuccessful.
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