By Duncan McLeod
Attention was focused on the telecommunications regulator last week as it held three days of public hearings on local-loop unbundling, a process to open up Telkom’s copper-cable access network. But the intervention may be coming too late to matter.
Local-loop unbundling is a regulatory remedy used in more than 20 countries to open incumbent fixed-line operators’ last-mile access networks to rivals. It’s meant to make fixed-line communications more competitive and in some markets, like the UK, works well.
But whereas many developed markets, such as those in Europe, opened the “last mile” a decade or more ago, SA is coming to the party late. Technology moves at lightning speed and newer access technologies based on fibre-optics could make the whole unbundling debate irrelevant within a few years.
The copper local loop has inherent limitations. Unlike fibre, it’s not able to deliver the broadband speeds consumers will be demanding — and expecting — by later this decade. In many developed markets, especially northern Europe and parts of Australasia, there is a concerted effort to deliver ultra fast connections into businesses and homes offering speeds of up to 1Gbit/s, or 100 times the speed of the fastest copper-based solutions available from Telkom.
An ample supply of submarine capacity is being built around Africa — with redundant links serving SA from both the west and the east — and billions of rand are being poured into national and metropolitan fibre networks; so the next big push will be in building fibre into homes. It’s here where the regulator and government should be focusing more of their efforts, making it much easier for companies — including Telkom — to invest.
Local-loop unbundling is a complex process that has challenged much stronger telecoms regulators than SA’s. I’m not arguing that intervention is not required to deal with the high wholesale charges Telkom imposes on competitors wanting access to its last mile; I just wonder if unbundling is the best way of achieving the desired outcomes.
Surely it would be easier to use existing regulations to tackle the high wholesale fees Telkom charges Internet service providers and the double line rental it imposes on customers, and at the same time make it easier for competitors to deploy fibre networks. Uniform regulations among local authorities and provincial governments should be created, the red tape involved in getting environmental impact approvals should be cut and ducts should be opened so that new players can “blow” fibre through them and into homes.
If SA wants to compete in the global information economy, it must encourage new investment in faster broadband, especially in urban areas where it makes economic sense to do so. Rural areas can also be served, but by opening up radio frequency spectrum in the so-called digital dividend bands to existing and new wireless broadband operators.
News last week that KT Corp, Korea’s biggest telecoms operator, was in talks to buy 20% of Telkom is an exciting development. Korea is one of the world’s most-wired nations and KT has built next-generation fibre at gigabit speeds into millions of Korean homes.
As competition from mobile rivals continues to grow — Vodacom and MTN are both moving to next-generation networks based on a technology called long-term evolution — Telkom has to start investing in last-mile fibre if it wants to remain relevant in fixed lines.
No operator in SA is better placed to do this than Telkom and, with KT Corp, the company would have access to the intellectual property and skills to make it happen.
Regulatory intervention is needed to facilitate new entrants and to bring down Telkom’s high wholesale charges, but local-loop unbundling is not the cure-all many people think it is.
- Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail
- Read more columns by McLeod