Infraco gets political nod

By Paul Vecchiatto, ITWeb Cape Town correspondent

Johannesburg, 18 May 2007

Politicians from all parties gave a cautious thumbs up for the establishment of government's new broadband supplier Infraco yesterday, during the debate on the Department of Public Enterprises budget vote.

Public enterprises minister, Alec Erwin, presented his 2007/8 budget vote to the Parliamentary Public Enterprises Committee and in it he emphasised the importance of the future role of Infraco to reduce connectivity costs in the country.

"SA's economic growth remains constrained by patchy, high-cost broadband availability. This excludes key stakeholders from full participation in this important domain of global activity. Whether in education, research and innovation, business process outsourcing, leading-edge design and access to services, our model can no longer depend on the environment of the early to mid-nineties," Erwin said.

Yunnus Carrin (ANC), chairman of the public enterprises committee, said that, while his party welcomed the formation of Infraco as it will contribute to the economy over time, the questions of cost and how it will be funded still have to be answered.

Incremental approach

"This is a huge and very new project and so there is a possibility that it could be some kind of joint public-private partnership," he said.

The lesson learned with the mobile operators was that competition between the incumbents was possible, but that it did not necessarily lead to a significant reduction in call costs, Carrin said.

He is advocating an incremental approach to the establishment of Infraco where the benefits are in line with the cost of establishing it.

Manie van Dyk (DA) said there is a need for a company such as Infraco, but the Department of Public Enterprises still has to prove that it is economically viable.

"We are going to demand that the department reports back to the committee on a quarterly basis, not annual as with other projects," he said. It is still early days for Infraco and, therefore, it must be monitored very closely.

The Public Enterprises Committee is scheduled to hold public hearings on the draft law that will govern Infraco from 20 June and the deadline for the submissions is 11 June.