Unbundling still a priority for LCRs
Local loop unbundling (LLU) may be long overdue, but it has not passed its technological expiration date, argue least-cost routing (LCR) players.
The process has been repeatedly delayed, after initially being mooted at least five years ago. This has prompted analysts to argue that by the time LLU is completed, it's not going to matter anymore, as operators will have rolled out their own infrastructure.
This may be true for bigger players, which have already begun bypassing the local loop. Neotel bypasses the copper infrastructure through wireless technology, and Vodacom has plans to eventually cut out the loop by running fibre directly to clients.
In addition, Telkom is starting to eliminate the need for copper in its own network by putting in wireless connections.
But players in the LCR market argue there is still a great need for access to the local loop.
“It is very difficult to build a business case for laying down brand new infrastructure, such as fibre-to-the-home, when you have an existing, albeit older infrastructure, such as copper, already deployed in the ground and working,” argues Murray Steyn, chief commercial officer at Vox Telecom.
The Department of Communications has committed to a November deadline for the unbundling of the local loop. This is likely to include the completion of the necessary regulations to facilitate the process, as well as a model on how the process should be managed.
However, ICASA councillor Thabo Makhakhe explains that, while the authority is committed to having resolved the regulatory issues, and the possible publication of LLU regulations before November, the actual unbundling process will take time.
Makhakhe would not indicate how long the implementation would take, but stated it is a complicated process. He pointed to the 10-year period it took British Telecom to unbundle its local loop.
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 roll out fibre, or wireless to connect.
The last mile, or local loop, is the copper link between the end-user and Telkom's network and is currently owned by Telkom.
“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,” notes Steyn.
“Being granted access to the last mile is important, because it breaks the current monopoly on the copper-based infrastructure. This infrastructure has been subsidised by the taxpayer so the wire in the ground is paid for (or at least subsidised) and new entrants can offer a variety of new services over that infrastructure, where they haven't been able to in the past,” he continues.
Providing these services still requires a substantial investment in other forms of infrastructure such as DSLAM equipment. This will limit the amount of licensees that can actually offer “naked DSL” type services, as one example, but it does open up the market and allow licensees to compete on a more equal footing, as it puts pressure on incumbents to open up their networks to wholesale offerings.
Wayne de Nobrega, CEO of Altech Technology Concepts, says that although LLU is not imperative to the company's business, it would allow a much higher penetration of ADSL in the market.
He believes that a quicker solution to full unbundling would be to create a wholesale model which should include bitstream access.
“Service providers would choose the consolidated handover points for their service. These handover points can be at the DSLAM, regional node, provincial node, or any combination thereof,” he suggests.
“We do not believe that service providers should be managing the physical local loop, but would rather see this function managed by a single company with the appropriate service level agreements,” concludes De Nobrega.