Monday, March 03, 2008

South Africa - reducing prices

Icasa finally answers call to cut fixed-line costs

The telecommunications industry is a step closer to significantly decreasing the price of fixed-line phone calls and bringing real competition to the sector.

The Independent Communications Authority of South Africa will this week invite the public to participate in the unbundling of the local-loop, or fixed-line, infrastructure currently held by state-owned monopoly Telkom.

Icasa spokesman Sekgoela Sekgoela said: “At this stage we are still looking to set dates of the first meetings where we will engage with the various stakeholders in the industry and appoint sub-committees to handle the various aspects of the process.”

In 2006, the department of communications announced the appointment of a committee to investigate and recommend models for the unbundling.

The process was slowed by rumours that the committee chairman, Tshilidzi Marwala, plagiarised vast sections of the document outlining recommendations from European policy papers.

In Europe, unbundling of the local-loop infrastructure is a requirement of policy on competition in the telecommunications sector, and has been introduced at various stages of development in different countries.

By the beginning of 2006, the UK had unbundled 210000 connections of the local loop from British Telecom .

Its competitor Ofcom wanted one million connections to be unbundled by June 2006, but at that time the figure had reached only 500000. AOL UK became the biggest single unbundling operator in the UK in 2006, with 100000 connections unbundled.

Recently, the local department of communications promised the process should be completed by 2011.

Rudolph Muller, MyADSL director said: “People need to be aware that this is going to take a long time, and Telkom will fight the transition the whole way. Even after the initial stage of the phased roll-out, Telkom will still have a firm grip on the network.”

Icasa has proposed a framework under which consultations with key stakeholders will take place. An overall co-ordinating committee will be formed, along with subcommittees that will investigate aspects of the unbundling process.

“It’s a positive step, but it may be a case of too little too late,” said Muller.

He agreed, however, that if the unbundling process was completed today, it would have a major impact on the market.

“By the time the unbundling is rolled out, other technologies will have advanced very far to take the place of the copper network.

“In Japan, copper-based broadband technologies are already being phased out, and telecommunications companies in South Africa are developing their own wireless and fibre-optic networks.”

Sekgoela indicated that the initial forum would be held within the next two months, but could not confirm this.

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