Local Loop Unbundling

PRESENTATION TO THE PORTFOLIO COMMITTEE 6th JUNE 2007

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

Introduction LLU report is a response to the mandate by

the Minister for the Local Loop Unbundling Committee (LLUC) to recommend how Telkom’s last mile network should be unbundled

The report has been finalised and was presented to the Minister on the 25th May 2007.

What is Local Loop? The local loop is

that portion of the telecommunication network that is situated between the end of subscriber’s 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

Local Loop Diagrammatically

TDM Network

Laptop

Customers premises equipment

MDF

Modem

Splitter

DP SDC Splitter

ATM Network

DSLAM

Voice

Data

Voice(Low frequency)

Data(High frequency)

The incumbent premises equipment

Local Loop(The last mile)

DP – Distribution PanelSDC – Street Distribution CabinetMDF – Main Distribution FrameDSLAM – Digital Subscriber Line Access MultiplexerTDM – Time Division MultiplexerATM – Asynchronous Transfer Mode

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 customer’s 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.

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

Achievement - Customers Perspective

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

Slide 1/7

Full unbundling The entire copper loop is assigned to the leasing

operator

MDF

Laptop

Customers premises

equipment

DSL ModemSplitter

New entrants switch

DSLAM

Incumbent’s switch

Tie cable

PSTN

PSTN – Public Switched Telephone Network

Slide 2/7

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.

MDF

Laptop

Customers premises

equipment

DSL ModemSplitter

New entrants DSLAM

Incumbent’s switch

broadband

PSTN

PSTN – Public Switched Telephone Network

DataNetwork

Splitter

Voice

Slide 3/7

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.

Slide 4/7

Bitstream access – wholesale access

MDF

Laptop

Customers premises

equipment

DSL ModemSplitter

Incumbent router

Incumbent’s switch

PSTN

PSTN – Public Switched Telephone Network

ISP RouterInternet

DSLAMSplitter

Slide 5/7

Bitstream access – wholesale access Bitstream with collocation

access from the incumbent’s premises - collocation included. Bitstream without collocation

access at a point of interconnection outside the incumbent’s 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.

Slide 6/7

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.

Incumbent wishes to prevent or delay for as long as possible for arrival of LLU and DSL within its own or anyone else’s 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.

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

Slide 1/3

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

Slide 2/3

Conclusion The report covers issues on

Technical aspects of LLU Legal/Regulation settings Economics of LLU Recommendations Policy concerns on implementation period by

regulators

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

THANK YOU