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The last mile or the final straw?

Big issues in the telecoms debate are local loop unbundling, carrier preselect and co-location. What gives?

Janet Paterson
By Janet Paterson, Editor, ITWeb Informatica
Johannesburg, 14 Dec 2009

In 2007, then minister, the late Dr Ivy Matsepe-Casaburri, announced that local loop unbundling (LLU) would be achieved by 2011. While many interpreted this as an effective four-year extension of Telkom's monopoly over SA's infrastructure, others were more upbeat, not least the minister herself, who, when questioned on the issue, said the process had taken as many as 15 years in other countries, making the South African government's plans “ambitious”.

Forward to 2009, and the advent of carrier preselect (CPS), proposed by ICASA and widely seen as a precursor to LLU.

CPS has been used by many countries to kick-start the free-flowing competition that should be the consequence of LLU, allowing smaller telcos to compete with the incumbents. With CPS, there is no physical change to the current infrastructural set-up - the carrier simply pays an interconnection fee to the network provider where the call is terminated.

The main advantage to consumers is that it usually creates a bit of a price war, meaning they can shop around for the best value. Providers, rather than looking to invest in rolling out their own physical infrastructure, usually look to services as their key differentiator from the competition, leaving end-users in an attractive position.

Co-location, co-location, co-location

CPS should certainly get the ball rolling (as will liberalisation of licensing), but the fact remains that LLU continues to be a necessary inevitability - it is only when providers have equal, complete access to Telkom's infrastructure that the real games can begin. It simply does not make economic sense for new entrants to the market to roll out their own networks on anywhere near the same scale as the incumbent. Something has to give and the giver, inevitably, has to be Telkom.

A central part of the LLU issue is co-location - the opening of local exchanges to competitor's equipment. According to the Local Loop Unbundling Committee, any form of co-location should be “fully allowed as may be necessary to ensure flexibility and reasonable access to the local loop for new entrants”.

“To really bring prices down, there needs to be competition in the local loop,” says Steve Song, telecommunications fellow at the Shuttleworth Foundation. “This means unbundling Telkom's exclusive control over the copper infrastructure. It also means increasing options for wireless access by making more spectrum available to licensed operators.”

Business development executive at Umoya Networks, Dave Gale, is also adamant that last mile needs regulatory action - and the sooner the better.

“We need the local loop to be unbundled to make better use of the copper, we need spectrum to be freed up and (re)allocated, we need carrier pre-select to be made available. We also need people with money and deployment skills to take advantage of those changes. Then we'll see some real change. So, short-term, no radical change. Medium-term, yes, but never as fast as everyone wants it to happen.”

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