Lies, damned lies, and statistics

Whether local loop unbundling (LLU) will actually achieve what the regulator wants it to is probably neither here nor there any more, after such a long time. However, trying to debase the regulator's arguments with statistics that are irrelevant, at best, is not the way go about it.

If you want to argue against LLU, do so by providing proper figures.

Nicola Mawson, deputy news editor, ITWeb

LLU has been on the cards for what feels like forever. Actually, it's only been about a decade.

The Independent Communications Authority of SA (ICASA) is finally moving ahead with unbundling, and is determined to get a regulatory framework out next month, which will enable the much-debated change in SA's landscape.

However, Telkom seems determined to block the regulator from freeing the last mile, saying it will cost jobs, and will not increase broadband penetration.

Alternative operators have been waiting for years to have access to the last mile, because it will allow them to go straight to people's homes, cutting out an expensive part of the network. This, they argue, will introduce more competition and push costs down.

Cheaper telecommunications can only be a good thing.

However, while LLU may well have been on the cards for about 10 years, operators have not been sitting back and waiting for it to happen.

In fact, so much has happened in the past 10 years that many are asking whether there is even a point any more. Neotel has gone to market, so have mobile operators, our roads have been dug up and fibre put down, and every man and his dog has a cellular phone.

Companies have innovated to get around Telkom's grip on the last mile, and are using wireless technology to get into consumers' houses.

While the sector has flourished thanks to technological and regulatory changes, Telkom hasn't. The company has seen voice revenue dwindle, failed investments, a series of retrenchments, and finally, the admission that it needs to act to become more agile to counteract competition.

However, despite coming across as wanting to be more nimble, the operator is throwing everything it has at the regulator to stop LLU from happening.

Last week, ICASA held hearings on how best to free the last mile, and Telkom's position was made abundantly clear. Not that there was any doubt about where it stands.

What came out of those presentations was not surprising. Internet solutions providers want access to all possible types of access technology, mobile operators argue their networks should be left out of it, unions argue there will be job losses, and Telkom says it just won't work.

The second national operator, Neotel, argues a position that is completely opposite to Telkom. Local loop unbundling will create jobs, it will expand broadband access and it will push prices down, great news for the end-user.

Neotel also says Telkom will not be forced into a position where it loses out on a wad of revenue. Instead, as ICASA doesn't want to regulate wholesale, it can charge pretty much what it wants.

Typically, Telkom hit back at all of these arguments. Its regulatory team termed all of these bonanza outputs myths with no basis in fact.

Telkom's argument is that no one has done any proper research into what exactly will happen if it is forced to allow every Tom, Dick and Harry to access the copper line between the exchange and end-users. Fair enough.

However, to then pull out what ICASA called misleading research and argue that it is the only empirical data available is really twisting statistics to suit your own agenda.

This is especially true when the company claims to be running an access deficit because it subsidises the last mile, but refuses point blank to clarify what that amount is, where it came from, and whether it is growing.

Telkom asked Africa Analysis MD Andre Wills to present on its behalf. Wills chose the case of what happened when BT unbundled its last mile in 2005, a case study that almost every presenter used to highlight the benefits of freeing the last mile.

However, Africa Analysis chose to focus on job growth and broadband penetration at the operators' UK-based subsidiaries.

He argues that jobs were not created because of unbundling. Instead, the operator went from having a workforce of 93 000 to 77 000 between 2007 and 2011. Wills said these jobs were not absorbed by the rest of the sector.

However, Wills' info included the last three years - which was when the worst of the losses took place. That was also the timeframe during which the worst global recession since the Great Depression hit the world.

That recession hit developed markets especially hard and resulted in several banks collapsing in Europe and the US. Bailouts became the order of the day. Recently, the UK printed more money to pump into the economy, showing the after-effects of the recession are far from over.

Frankly, I don't see how Wills can blame the loss of those thousands of jobs on LLU. I don't even think it's possible to strip out how many jobs were lost because of the recession, and how many went because of LLU.

In fact, according to the Telegraph, thousands and thousands of jobs were cut just because of the recession. And another article says at least 10 000 of those BT jobs were lost directly because of the recession.

That trims Wills' figure to 6 000 and not 17 000 lost jobs, doesn't it?

Wills also argued that broadband penetration had not increased since the last mile was freed. This statement was made after Telkom's regulatory team said SA should not be compared to the UK because the country, unlike ours, has almost 100% penetration.

Where then, dear Telkom, would you have expected more broadband users to come from in the first place?

Seriously, if you want to argue against LLU, do so by providing proper figures. Surely a company as large as Telkom must have done some models on how much it will cost it, how may jobs will be lost, and what the spill-over economic effects would be?

I'm quite sure those numbers have been run again and again. Perhaps they do show a bleak picture, perhaps LLU won't benefit SA.

We will never know because Telkom could conveniently hide behind the closed period argument. Yes, JSE rules are strict, but surely they are only applicable when looking at the financial period that has just ended, and not some - as yet - uncertain future date?

Without all this information, there is no way of knowing whether SA will benefit, whether jobs will be created, and whether costs will come down. As Telkom says none of this will happen, and that LLU will fail, does it not bear the burden of proving this?

SA has waited so long for alternative operators to have access to the last mile. Not sharing that information and instead using irrelevant arguments is not in this country's best interests.

Although, quite frankly, by the time all the arguing is over, it just won't matter anymore as competitors will have gone around the problem. And that will be a bigger issue for Telkom because it needs to encourage more use of its network, not less.