Neotel has fired the first salvo in what could quickly become a ferocious battle over access to Telkom’s copper cable network. TechCentral can reveal exclusively that Neotel has filed a complaint with the Independent Communications Authority of SA (Icasa) against its rival, asking the authority to give it access to the fixed-line incumbent’s local loop.

In a submission to Icasa, dated 23 March, and which includes copies of full correspondence between the two operators, Neotel has set out the reasons it believes it should be given immediate access to Telkom’s “last-mile” infrastructure of copper cables into businesses and residential homes.

A lot is riding on the outcome of Neotel’s submission because it could mean the difference between local-loop unbundling taking place in 2011 and a lengthy, drawn-out process that could take years.

The telecommunications industry has been awaiting Neotel’s complaint to Icasa with bated breath as it represents a litmus test for using facilities-leasing regulations as a way of achieving local-loop unbundling. It’s believed Icasa will use the complaint to force unbundling to happen in the short term, instead of having first to go through a process of developing detailed regulations to manage the process.

Icasa dropped a bombshell on the industry last year when it said Telkom’s copper infrastructure represented an “essential facility”, meaning its competitors could request access, using regulations that were published in 2010.

Essential facilities include any telecoms infrastructure that is required to provide services to customers. Undersea cables and the local loop are specifically mentioned in the Electronic Communications Act, which governs the sector.

In many markets, incumbent operators like Telkom have used their control of this infrastructure to squeeze out competition by charging high prices for access.

Icasa’s facilities-leasing regulations are meant to prevent abuse by dominant players.

Communications minister Roy Padayachie wants the local loop unbundled by November, and if Neotel’s complaint is upheld by Icasa, the process can begin in earnest.

Neotel was always the most likely candidate to test Icasa’s facilities-leasing theory, and it first made a request to Telkom to access the local loop in November 2010.

Telkom's Andrew Barendse has rejected Neotel's request

According to Neotel’s complaint, it has requested that Telkom give it access to two telephone exchanges, one in Benmore Gardens in Sandton and the other in Rosebank, Johannesburg. Within these exchanges, Neotel has requested that certain aspects of the local loop be made available to it, including termination equipment, the main and handover distribution frames, and tie circuits.

It has also requested that Telkom make space in the exchanges for Neotel’s own equipment racks, either in cages or in a separate room. It wants to connect to its own fibre infrastructure located outside the exchanges.

Neotel made the request in terms of processes stipulated in the facilities-leasing regulations.

Telkom, however, appears to be steeling itself for a fight. It has clearly stated that it does not agree that facilities leasing is a means for other companies to gain access to the local loop and has declined Neotel’s request.

In a letter signed by Telkom’s wholesale account manager, Johan Botha, the operator argues that local-loop unbundling is “still enjoying the attention of the regulator, but is some way from being finalised”. He adds that Neotel is acting prematurely in requesting access to the infrastructure.

Neotel made a second and third request to Telkom in December and January, pointing out that the facilities-leasing regulations cover the local loop and that fuller local-loop unbundling regulations are not required.

However, Telkom isn’t relenting. In correspondence to Neotel, it insists that the access its rival is requesting falls under local-loop unbundling, not under facilities leasing.

“The entire purported request for the lease of copper last-mile facilities is a frivolous attempt on the part of Neotel to impress upon Telkom a convoluted interpretation of the facilities-leasing regulations in a manner that gives credence to the erroneous belief that facilities-leasing regulations contemplate the instigation of a regulatory process culminating in the unbundling of the local loop.”

Telkom has long argued with Icasa about the classification of the local loop as an essential facility and pushed the same argument in its responses to Neotel. Its understanding of the legal definition of an essential facility is a facility that “cannot feasibly be substituted”. However, Telkom maintains that the mobile operators have created a substitute, which it calls the “wireless local loop”.

The operator has also slammed Neotel for “persisting in formulating speculative requests which are clearly beyond the contemplation of the applicable regulatory dispensation”.

Icasa has previously indicated to TechCentral that it will apply its mind to Telkom’s argument that the local loop is not an essential telecoms facility.

In a last ditch attempt to get Telkom to reconsider, Neotel sent a letter to Telkom’s group executive for regulatory affairs, Andrew Barendse, on 2 March. “Having exhausted all available means to resolve this request amicably, Neotel offers Telkom one final opportunity to respond favourably to our facilities lease request within the next five working days, failing which Neotel will have no alternative but to refer the matter to the regulator.”

Barendse declined the request two days later, prompting Neotel to file its complaint late last month. An Icasa spokesman was not immediately available for comment. However, it is likely the authority’s complaints and compliance committee will hear the case. — Candice Jones, TechCentral

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