After years of delays, communications regulator Icasa finally launched its public hearings into the local loop unbundling, but the process is likely to be tied up in lengthy legal battles.
The local loop, also referred to as the last mile, is the telecommunications infrastructure that is used to deliver broadband or telephonic services from the nearest telephone exchange to consumers’ homes and businesses.
It is expected that unbundling the local loop will increase competition and bring down prices, but this could still be a distant reality.
Traditionally, the local loop was considered to be the copper-cable network owned by Telkom. However, with technology providing alternatives, Icasa wants to expand that scope to include wireless and fibre networks.
But the regulator looks set to face some stiff legal challenges if the written and oral submissions from the hearings, which started on Tuesday, are anything to go by.
“I think we are all quite comfortable that it is not going to happen by November 2011,” said Dominic Cull, the lawyer representing the Internet Service Providers’ Association, in reference to the deadline for local loop unbundling set by Communications Minister Roy Padayachie.
“Local loop unbundling is legally defensible and judging by what Telkom says in its submission, it will be tested sooner rather than later,” said Cull.
“We don’t want this process to drag on for decades.”
Fixed-line incumbent Telkom has vehemently opposed any form of local loop unbundling, arguing that there is an access line deficit on the existing copper network.
This means that the money invested in the network has not been recouped.
Access line
Other stakeholders have argued that it is almost impossible to determine whether the access line deficit as stated by Telkom is an accurate reflection. They’ve urged Icasa to undertake a thorough investigation.
Access-line deficit is a shortfall between what is spent on a network and what is being recouped through rental charges.
However, many have argued that if the access-line deficit exists as stated, they are not averse to paying for access to the local loop.
“No one is asking for a freebie,” said Cull. “If there are costs involved and those costs have been demonstrated and defended, then we’d be happy to pay.”
Other interest parties, such Internet Solutions, have argued that Telkom has not used its existing network efficiently and this has contributed to a higher cost base.
“Telkom is not adequately making use of existing infrastructure,” stated the Internet Solutions submission.
“According to market research, Telkom has eight million physical lines deployed, of which only four million are ADSL-ready and less than half of these ADSL lines are being used for broadband.”
If local loop unbundling is enforced, Internet Solutions believes that the lower prices — which will come from increased competition — “will dramatically increase the uptake of those lines”. It said it was “prepared to contribute to an access-line deficit recovery scheme to the extent that the access deficit costs are calculated based on the access line deficit for an efficient operator or even a reasonably efficient operator and not the deficit that Telkom currently claims”.
Mobile giants Vodacom, MTN and Cell C argued that the local loop should be unbundled but it should not include wireless.
Icasa has signalled its intentions to use its facilities-leasing regulations to unbundle the local loop. But there has been some fierce resistance from the mobile players, which argued that the radio spectrum used to deliver wireless services cannot be classified as a telecommunications facility.
During his presentation this week Cull said the issue over whether radio spectrum could be classified as a facility was one that was set to keep some of the finest legal minds in South Africa occupied for some time.