By Jennigay Coetzer – Business Day – 12 November 2009

Within the next few months, government-owned Broadband Infraco will become a major wholesale provider of national telecommunications capacity, which bodes well for increased competition in the local market. Infraco has a national fibre backbone network that links all major cities across the country and is currently only used by Neotel.

But it has recently been granted a license that will enable it to sell capacity on a wholesale cost plus basis directly to other licensed operators and service providers, which currently only have access to it through Neotel.

Infraco was set up by government in 2007 and acquired the national fibre infrastructure originally set up by Eskom and Transtel that is today 50% attached to the power grid, 40% installed along railway tracks and 10% laid underground. “Since 2007 the capacity of the network has increased three-fold and the footprint increased by nearly 6,000 kilometres,” says CEO Dave Smith.

He says the network is currently provisioned with 10 gigabit per second circuits and will be offering multiple capacity increments of 155 megabits per second up to 10 gigabits per second to operators and service providers. “We are planning for this and expect to make an announcement about offering open access in the next few months.”

The lowest capacity of 155 Mbps would support the streaming of about 20 high definition TV (HDTV) movies. The network is currently made up of 11 765 kms of fibre cable connecting Johannesburg, Pretoria, Cape Town and Durban and other metropolitan centres, including Bloemfontein, Kimberley, Port Elizabeth, East London, Nelspruit and Polokwane.

It also extends to the borders of Namibia, Botswana, Zimbabwe, Mozambique, Lesotho and Swaziland. Smith says its existing fibre cables will scale up to hundreds of gigabits per second, to cater for future growth.

He says Infraco’s 10 year view of required financial investment includes hundreds of millions of rands in capital expenditure, which will cover the ongoing upgrading of the technology and network expansion during that period. Infraco will be run as a commercial business, and the only funds that will go back to government will be in the form of dividends.

Its mandate is to charge wholesale prices on a cost plus basis, allowing for infrastructure and service provision costs and financial sustainability, and its pricing structures will be publicly available, says Smith. “We will be continually benchmarking our prices against commercial market offerings.”

He says Infraco’s network infrastructure cuts across many of the under-serviced areas and it is planning to create additional points of presence to enable micro operators to provide affordable services in these areas.

There has been some controversy about Infraco’s application for an additional individual electronic communications network services (I-ECS) licence, which it is yet to be granted. There are fears that this would allow it to provide services directly to consumers and businesses in competition with private sector service providers. But Smith says it was never Infraco’s intention to do this.

“We only have a long distance network and have no metro or local access networks to service customers directly,” he says. However, in terms of the Infraco Act, the company does have a mandate to directly support projects of national interest developed under the auspices of the department of Science and Technology, and to do this it must have an I-ECS licence.

“The Square Kilometre Array (‘SKA’) telescope is an example of projects of national interest, that we would like to get involved with,” says Smith. The SKA has been described as the world’s largest scientific instrument and South Africa is competing with Australia to host the telescope.

“For South Africa to compile a compelling bid, we need to be able to supply the project with several gigabits per second of national and international connectivity,“ says Smith. Infraco is an anchor investor in the West African Cable System (WACS) undersea cable, which is due to go live in the third quarter of 2011.

Part of the rationale behind this investment was to have enough affordable international bandwidth capacity to support the bid to host the SKA telescope project. Infraco also plans to on-sell WACS cable capacity to operators and service providers on the same open access wholesale cost plus basis as its national network, which will help to lower the cost of international bandwidth.

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