The Independent Communications Authority of South Africa (ICASA) said that the thorny issue of Telkom’s Access Line Deficit must be concluded before it can move forward with a working group on bitstream services.
On 30 November 2011 ICASA said in its “Presentation of the findings note on the ICASA framework for introducing Local Loop Unbundling” that it will “engage with industry to ensure that a true bitstream product is introduced, by the 1st November next year ”.
This deadline was not met, and various Internet Service Providers (ISPs) confirmed that they do not have access to any bitstream access offering.
Telkom said that “as per ICASA’s Findings document on the LLU enquiry, LLU was to be introduced in a phased approach starting with IP Connect price reductions and the launch of Bitstream subject to the recovery of Telkom’s Access Line Deficit”.
Telkom cut the price of IPConnect by 30% on 1 April 2012, and Telkom said that teams from the regulator and Telkom have been engaged in discussing an Access Line Deficit recovery scheme which is a precursor to Bitstream implementation.
According to Telkom documentation, its Access Line Deficit in 2012 was R8.7 billion. The company said that in 2010 it charged, on average, R112 per month for a fixed line. Telkom’s cost for this line, the company said, was R256 per month, leaving an access deficit of R144 per month.
Telkom also previously said that they make virtually no money on their ADSL service either. The document states that their ADSL access cost is R166.98, only slightly lower than their charge of R174.56.
According to Telkom they have a total annual access line deficit of R8.7 billion in 2012.
ICASA explains bitstream delay
ICASA explained that ensuring that fixed line access prices are fairly addressed is a necessary precondition to any successful form of local loop unbundling.
ICASA said that it continues to work with Telkom to develop a mechanism to address the Access Line Deficit, such that this mechanism has as little impact on all industry stakeholders as possible.
“This includes evaluating and addressing any unnecessary regulatory burdens that increase the cost of service provision,” said ICASA spokesperson Paseka Maleka.
“The Authority is also aware of discussions regarding the future role of Telkom in South Africa, including the recommendations made in the National Development Plan, and eagerly awaits conclusion on this matter.”
Maleka said that as soon as a position on the Access Line Deficit has been concluded, ICASA will move forward with a working group on Bitstream services.
Telkom Access Line deficit conundrum
According to a well placed industry expert, who asked not to be named because of his standing in the telecoms sector, the reason for this access line deficit may well be because of inefficiencies on Telkom’s side.
However, the problem of the access line deficit is not easy to solve. Telkom cannot improve its efficiency without cutting staff (and hence increase its subscriber to employee ratio), and this is not possible in the current political climate.
Another option is for ICASA to scrap Telkom’s annual spectrum fees to compensate the operator for its fixed line deficit, but with less than R1 billion in spectrum fees there will still be a significant deficit.
The problem, explained the source, is exacerbated by the fact that there is no political will to implement LLU. “Unless Telkom decides to implement LLU, it is unlikely to happen,” said the source.