Infraco leaves industry parched

Johannesburg, 13 Feb 2007

The ICT industry has mixed feelings about Infraco's imminent arrival, with competition and enhancements to infrastructure being welcomed, and government's strategy questioned.

Public enterprises minister Alec Erwin yesterday said Infraco would launch in March to provide long-distance connectivity on a cost-plus basis to the market through an initial arrangement with Neotel.

Erwin added "some exciting developments with regard to undersea cables" are in the pipeline, without giving specifics. His spokesman, Gaynor Kast, says more details will be forthcoming next week when Parliament is briefed.

Infraco, which is based on the telecommunications infrastructure originally built by Eskom and Transnet, will reportedly receive an investment of R1.4 billion from government in the next three years.

Still thirsty

Telkom has welcomed the competition, saying it is good for the industry as well as customers.

However, other stakeholders question government's strategy of broadening broadband penetration.

While any investment in infrastructure is to be welcomed, government should play a facilitating role, says DataPro CEO Douglas Reed. He questions why companies that have invested in infrastructure, such as Internet service providers and illegitimate WiMax operators, were not rather legalised and given policy support. "Those who don't want state help are not allowed to operate."

Erwin said Infraco will supply broadband on a "cost-plus" pricing basis, as government has a policy that state-owned-enterprises should be commercially viable and require little further funding after the initial cash injection.

Storm's director of new business development Dave Gale says Infraco is akin to a "warm beer on a hot day". "If we weren't so thirsty, it might be amusing." Gale also called on government to create an enabling environment and foster liberalisation through the private sector. "Government must stick to its knitting and leave telecoms to the private sector."

Incomplete puzzle

Bill Hahn, principal analyst of carrier operations and strategies at Gartner, calls Erwin's news "weak tea". While Erwin's premise that government can serve as an anchor tenant, to pull demand and reassure investment, is valid, Hahn fails to see "how the construction of Infraco adds anything to the picture".

Hahn notes that Erwin failed to mention the regulator, implying it has "run out of steam". The Department of Public Enterprises is working on draft legislation to govern Infraco and while this will not be a "big law", it will cover issues such as how the company will be run and technical issues.

Viola Manuel, executive director of the Cape IT Initiative, calls for fixed targets and deadlines. "Promises need to be translated into something tangible. The fact is that the SMEs need this infrastructure now."

Hahn says all is not lost, and SA will make progress in meeting its broadband and bandwidth needs. "On balance, I think SA will make greater progress somewhere between late 2008 and 2010, because this proud and important nation will eventually do whatever it takes to avoid embarrassment on the global stage when the World Cup comes. Clearly, earlier is better than later."

Who's who

Erwin said the new broadband operator would fulfil a complementary role to Sentech. "I want to make this very clear: Infraco will be a fibre optic landline operator, while Sentech will supply government's broadband needs wirelessly."

After yesterday's briefing, Department of Communications director-general Lyndall Shope-Mafole told ITWeb: "Sentech is our obvious choice to roll-out government wireless broadband and while its focus will be on that, Sentech will be able to roll-out commercial services in areas where normal commercial companies find they cannot do so."

Erwin said Infraco will have points of presence in all of the country's cities and towns, and will supply broadband to whoever needs it, including Neotel, Telkom and the value-added network service providers. Infraco's assets are housed within an Eskom subsidiary and will stay there until the company is fully incorporated, he noted.

(Additional reporting by Bandile Sikwane)