Least cost routing is a process that carriers put in place to try and deliver to customers the lowest possible rates in the industry. Now, least cost routing players, according to this IT Web report, are arguing that local loop unbundling (LLU) is not only long overdue, it has passed its technological expiration date.
The process has actually been repeatedly delayed, prompting analysts to argue that by the time LLU is actually complete, it will no longer matter. Operators, frustrated with delays as they continue to try to optimize on least cost routing, have rolled out their own infrastructure to satisfy the need.
The reality, however, is that this approach to least cost routing may be the case for bigger players in the global market, but smaller providers still need to rely on the local loop to effectively compete. According to Murray Steyn, chief commercial officer at Vox Telecom, it is very difficult to build a business case for laying down brand new infrastructure when an existing infrastructure – even if it is old – is already deployed in the ground and is working.
A November deadline has been committed to by the Department of Communications for unbundling the local loop. This process is likely to include the completion of the necessary regulations to facilitate this undertaking, as well as how to develop a model for the facilitation of the process. Even with such dedication, however, the actual unbundling process will take considerable time. Consider the fact that it took British Telecom 10 years to unbundle its local loop.
On the flip side, Absa Investments analyst, Chris Gilmour, suggests that ICASA has dragged its heels so long on the issue that there is no real need to unbundle the last mile. He argues that it will become a deteriorating asset in the ground and that competitors will either roll out fiber or wireless to connect to achieve least cost routing initiatives.
Telkon currently owns the last mile, or local loop, which is the copper link between the end-user and Telkom’s network. Steyn noted that the rationale between LLU is to foster competition and reduce the costs of telecommunications through the elimination of large investments by competitors to build their own infrastructure for last mile of connectivity. This access to the last mile helps to break the current monopoly on the copper-based infrastructure.
Whether or not activity emerges quickly to unbundle the LLU remains to be seen and least cost routing providers may be forced to implement their own solutions to achieve competitive differentiation in the market. If so, costs could be passed along to customers and in the end, there may be no winners.
Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.
Edited by Jaclyn Allard