Local Loop Unbundling

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Local Loop Unbundling

• PRESENTATION TO THE PORTFOLIO COMMITTEE
• 6th JUNE 2007

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Agenda

• Introduction
• What is Local Loop?
• What is Local Loop Unbundling?
• What does it Achieve?
• Recommendations

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Introduction

• LLU report is a response to the mandate by the
  Minister for the Local Loop Unbundling Committee
  (LLUC) to recommend how Telkoms last mile
  network should be unbundled
• The report has been finalised and was presented
  to the Minister on the 25th May 2007.

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What is Local Loop?

• The local loop is
• that portion of the telecommunication network
  that is situated between the end of subscribers
  telephone connection and the MDF (Main
  Distribution Frame), where all the user lines
  come together before being connected to the
  telephone exchange.
• The physical wire connection between the
  customers and owned by the telecommunication
  company

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Local Loop Diagrammatically
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What is Local Loop Unbundling?

• Is a regulatory process of allowing multiple
  locally- and national telecommunications
  operators to make use of connections from the
  telephone exchange central office to the
  customers premises. (Wikipedia definition).
• Is a process that covers a series of regulatory
  offers that is aimed at fairly providing newly
  entrant operators with access to the local loop
  in a competitive environment.

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What does it achieve?

• Lower the prices paid by customers
• Increase quantity and quality of services
• Increase the number of available business
  opportunities
• Increase innovation
• Provide affordable access to national
  telecommunication infrastructure for ICT growth
  and participation

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Achievement - Customers Perspective
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LLU Topologies
Slide 1/7

• Full unbundling
• Line sharing
• Bitstream access wholesale access
• Bitstream with collocation
• Bitstream without collocation
• Resale of local traffic services
• Resale of access services
• Sub-loop unbundling

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LLU Topologies
Slide 2/7

• Full unbundling
• The entire copper loop is assigned to the leasing
  operator

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LLU Topologies
Slide 3/7

• Line sharing
• This takes place when the incumbent retains use
  of the loop for its baseband, PSTN service, but
  unbundles the higher frequency part of the
  spectrum for use by another DSL operator.

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LLU Topologies
Slide 4/7

• Bitstream access wholesale access
• the incumbents are supposed to provide a whole
  data service for ISPs to service the fast growing
  Internet market.
• Bitstream access topology is automatically set
  when the process of LLU is done while the
  incumbent has rolled the broadband network.

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LLU Topologies
Slide 5/7

• Bitstream access wholesale access

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LLU Topologies
Slide 6/7

• Bitstream access wholesale access
• Bitstream with collocation
• access from the incumbents premises -
  collocation included.
• Bitstream without collocation
• access at a point of interconnection outside the
  incumbents premises - collocation is excluded.
• Resale of local traffic services
• access where by the incumbent sells traffic
  services to new entrants at a wholesale price for
  the new entrants to resale at a retail price.
• Resale of access services
• access where by the incumbent sells access
  services to new entrants at a again a wholesale
  price.

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Issues on Implementation

• For the case of South Africa, Telkom is the
  incumbent operator in the country. There are
  three issues that may need to be considered with
  respect to Telkom in restructuring for the
  benefits of LLU process.
• Telkom is kept away from LLU.
• Leave the local loop with Telkom and regulate its
  use.
• Telkom share the local loop with other players.

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Incumbents AttitudeForeign Experience

• Incumbent wishes to prevent or delay for as long
  as possible for arrival of LLU and DSL within its
  own or anyone elses product ranges.
• Incumbent acceptance of the technology, though
  with a determination that it will dominate and
  control the market for DSL based broadband
  products.
• Incumbents will resist to the maximum possible
  not the technology but competition and
  unbundling.
• Incumbent recognizes the new market
• view competition as a means of growing the market
  to the common benefit, and co-operate in
  encouraging it.

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Strategic Issues
Slide 1/3

• Incumbent has deployed ADSL services to
  residential and business customers
• New entrant can
• Install cables, ducts to an exchange building
• Has right to obtain information on where to place
  cables/ducts and technical standards for
  connection
• All lines must be made available for leasing to
  all new entrants
• Lines must meet any technical specifications
  imposed by ICASA
• Charges for subscriber lines must be published
• ICASA can issue orders on charging principles and
  calculation of costs

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Strategic Issues
Slide 2/3

• Provision of service can be restricted or
  interrupted for safety or public order purposes
• Must be a minimum period of notice for technical
  changes, terminating contract to other operators
  and users
• Areas of controversy
• Price different prices for residential and
  business customers
• Timescale uncertainty about whether the loop
  can be obtained makes it very difficult for the
  new entrants to market services on the basis of
  unbundled loops
• Capacity uncertainty about whether an existing
  line or a new line can obtained

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Conclusion

• The report covers issues on
• Technical aspects of LLU
• Legal/Regulation settings
• Economics of LLU
• Recommendations
• Policy concerns on implementation period by
  regulators

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Recommendations regarding policy decisions and
directions

• Three unbundling structures be implemented to
  allow innovation and through the competitive
  environment
• Requirement for immediate implementation and to
  be in the advance stage at the 2011
• Immediate finalisation of the guidelines by the
  regulator

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• THANK YOU