The national treasury has reinforced Communication Minister Roy Padayachie’s call for Telkom’s local loop to be unbundled by November this year.
The local loop is the copper-cable network that Telkom uses to deliver internet and telephony services to homes and businesses around
the country. Unbundling the local loop would allow all operators in the internet and telephony markets cost-based access to the copper-cable network.
In the Budget Review the treasury states that unbundling the local loop will happen by November 2011 and that it will “encourage competition and stimulate growth” in the sectors.
The Budget Review also shows price comparisons with Korea, Norway, Australia, Germany, Chile, Mexico and Turkey to show that South Africa’s costs are substantially more expensive, with a lower broadband penetration rate than all these countries.
The treasury says that because of Telkom’s “monopoly of the local loop”, fixed-line prices remain high.
Telkom’s chief of corporate governance, Ouma Rasethaba, says Telkom does not believe that the November 2011 deadline for local-loop unbundling is realistic but that it will continue to cooperate with the Independent Communications Authority of South Africa on the matter.
Telkom has raised a number of issues against the unbundling of the local loop, including that the Electronic Communications Act has no enabling legislative provisions for this to happen and that local loops are not defined as essential facilities in the Act.
“There is much uncertainty on the regulatory process which should or could be followed to deliver local loop unbundling, presuming that a legitimate process exists in the first place,” says Rasethaba.