LLU set for yet more delays

A proposal by the department of communications that a comprehensive regulatory impact assessment be conducted ahead of local-loop unbundling once again looks set to delay the process. By Craig Wilson.

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Is the department of communications trying to delay the unbundling of Telkom’s local loop? Industry insiders believe its proposal that the Independent Communications Authority of South Africa (Icasa) first conduct a regulatory impact assessment, or RIA, suggests just that.

The purpose of the RIA would be to gauge the likely effect local-loop unbundling (LLU) — opening Telkom’s “last mile” of copper-cable infrastructure to its competitors — would have on the South African telecommunications sector. But doing so could stall the process, possibly by years. Unbundling is already years behind schedule and was meant to have taken place by 2011.

Last week, Icasa confirmed that it had finalised draft regulations on LLU, but said it wouldn’t publish them until communications minister Yunus Carrim looked them over and provided feedback. This followed a meeting with Icasa at which both Carrim and communications department director-general Rosey Sekese were present.

Icasa was meant to have published the draft regulations last month.

The authority, which is meant to be independent of the executive arm of government, does not require the minister’s approval before publishing regulations. However, it said it did not want to have to withdraw or review the regulations later should Carrim have “another view”.

Unbundling was originally meant to be completed by November 2011 following a policy direction issued in 2007 by then-communications minister, Ivy Matsepe-Casaburri. Now Icasa says it wants to complete the regulations for LLU by March 2014.

Carrim’s spokesman, Siya Qoza, says the department of communications is “in discussions” with Icasa about conducting a RIA as part of “evidence-based policy and regulatory work”.

“In this instance, we believe that a RIA study would help establish an understanding of the evolution of the market after LLU,” Qoza says.

Such a study would benefit the department’s policy review process and the cost-to-communicate programme, he says.

“We fully respect the independence of Icasa. Our engagements with them are designed to facilitate progress on key issues,” Qoza adds. “Icasa is not objecting to a RIA study but has indicated that it does not have sufficient funds for such a study. We are also discussing how the department can assist.”

However, one senior Icasa insider, speaking on condition of anonymity, tells TechCentral that LLU is “not optional” and that the RIA is just meant to stall the inevitable.

“These are delaying tactics. Everyone is telling us we have to do a RIA, but that’s just so we can postpone the entire thing,” the source says.

Icasa spokesman Paseka Maleka says the authority doesn’t think a RIA is necessary. Under the Electronic Communications Act, LLU is “not optional”, while a RIA is not a requirement. He says Icasa’s view that a RIA is not necessary was “articulated to the department of communications”.

“It is not only due to lack of budget that Icasa is not doing a RIA, but because we are guided by the act,” Maleka says. Icasa has not made a request to the department for funds for a RIA.

The original instruction to unbundle the local loop came in Matsepe-Casaburri’s policy direction, which still stands. The source says that even if Sekese persuades Carrim to withdraw the 2007 policy direction, Icasa remains “legally obliged” to continue with the process under a ruling issued by the authority’s complaints and compliance committee (CCC). “The CCC has instructed us to write the regulations.”

Last May, the CCC found in Neotel’s favour in a dispute over gaining access to two of Telkom’s Johannesburg exchanges. This ruling appeared to imply that Neotel could use existing facilities-leasing regulations to get access to its rival’s last-mile network, preempting LLU.

Telkom has long argued that it faces an “access-line deficit”, in terms of which it loses money on every line in service before value-added services are sold. Icasa, it argues, must take this deficit into account before implementing any form of unbundling.  — (c) 2013 NewsCentral Media

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