Local loop unbundling recommendations – what does it mean for an ordinary person?
The LLU process will in fact have far-reaching implications for the way in which we do business in South Africa, on the reduction of unemployment, on the cost of phone calls and many other factors. This article serves to communicate to the general public the advantages that would accrue as a result of this process, as recommended to the Minister of Communications on 25 May 2007.
The LLU committee was tasked with coming up with a solution that would facilitate the attainment of the telecommunication sector that has the following characteristics: affordable prices paid by customers, increased quantity and quality of services, increased number of available business opportunities, increased innovation and provision of affordable access to national telecommunication infrastructure for ICT growth and participation.
The local loop is that portion of the telecommunication network that is situated between the end of subscriber’s telephone connection and the main distribution frame, where all the user lines come together before being connected to the telephone exchange.
Currently this infrastructure is owned and operated by one entity, Telkom. It must be noted here that Telkom did a sterling job in ensuring that the quality of our telephone line is one of the best in the world.
However, the fact that only one operator owns and operates the local loop means that as customers we have no alternative. The presence of only one operator necessarily results in prices that are far from the equilibrium price where the degree of competition through better service, fair telephone costs and latest technology is achieved through a delicate balance of economic forces.
This process is expected to be completed by 2011. Considering that many other countries have taken on average of 10 years to complete their unbundling processes makes this is a very optimistic time-frame.
It must be noted here that saying the process will be completed in 2011 is not effectively giving Telkom another four years of monopoly as reported in the media. Unbundling of the local loop is not an event but a process and therefore it takes a certain period of time and we expect four years to be a reasonable frame.
Much has been written on the local loop unbundling (LLU) process and to many it may seem as though it has no bearing whatsoever on reality.
The unbundling committee has recommended that customers have choices and by implication pay a price that is competitive, with world-class quality of service. Customers will choose the telephone line and internet provider based on how fast the service provider can supply the line, how cheap the line rental is as well as how good the line is in terms of efficiency and reliability.
It has been recommended that models that will allow customers to have both voice and data (e.g. videos for school children) be supplied by as many different companies as is possible.
The reason why the committee recommended more than one model is because of the gap in our country between the rural and urban areas, between the formal and informal settlements, as well as between the old and newly established residential areas. The three models recommended will ensure that the quality of service and other relevant factors are uniformly supplied on a fair basis throughout the country.
It is proposed that customers should be able to switch between service providers as effortlessly as possible. In other words a customer will have many prices and quality of services to choose from.
If customers are not satisfied with the service they are receiving from a particular service provider they should be able to switch to another company without any inconvenience whatsoever and this requires a strong regulator.
It is recommended that a third party organisation be created. This organization should be responsible for the management of the local loop including the switching from one company to another by customers, ensuring the operation of the local loop on a fair access basis and optimising the unbundled loop for regulation and management.
The committee recommended that this organisation should fall under the regulator ICASA. It is suggested that that Independent Communications Authority of South Africa (Icasa), – responsible for regulating the telecommunication sector – be capacitated in terms of resources.
This would allow it to be able to hire the best skilled people, to use the best systems for regulation and to be able to have the most up to date research on the current and future direction of the sector.
The committee also recommended that any service provider appropriately approved by Icasa should have access to the telephone exchange infrastructure and area as appropriately as possible. This would ensure that all the service providers that are able to supply competitive voice and data services are not unnecessarily prevented from doing so.
The committee recommended that such access to the telephone exchange be regulated by Icasa.
The unbundling committee recommended that a regulatory guideline be developed and be overseen by Icasa to ensure that strategic issues such as the quality of the local loop, its maintenance and technical compatibility are optimised for regulation and service delivery.
This would ensure that the quality of service does not deteriorate during the unbundling process.
Based on these recommendations the committee expects that customers will be able to select carriers of their choice for the transmission of voice and/or data as well exercise a choice as to which company they deal with as effortlessly as possible.
Prof. Marwala is chair: Local Loop Unbundling Committee and chair of Systems Engineering.
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