The Department of Public Enterprises (DPE) today proposed Infraco continues to operate as a sub-contractor under the Neotel licence for up to two years, until it can obtain its own licence.
Public hearings into the law that will govern Infraco as government's broadband infrastructure supplier continue today before the Parliamentary Portfolio Committee on Public Enterprises.
No presentations were made. The discussions centred on Infraco's licence and the exclusive access second national operator Neotel would have to it.
Public enterprises committee chairman Yunis Carrim directed the discussion. He suggested the proposed "deemed" licensing provision be scrapped due to its problematic implementation.
The DPE originally proposed Infraco be deemed to be licensed in order to fast-track the process, due to the country's urgent requirement to have a cheaper and more accessible broadband network.
"It [would] not be the end of the world if we had to drop the licensing provision entirely from the Bill. And could Infraco still do what it had to do under its current arrangement?" Carrim asked DPE director-general Portia Molefe.
Molefe replied that under the current arrangement, the licence is the exclusive property of Neotel and subject to the commercial agreement between the two. This implies Infraco would be vulnerable to any change in this arrangement. If the partnership collapsed, Infraco would not be able to resell its broadband unless it found another partner with a similar licence. The only other company with such a licence is Telkom. One of Infraco's stated objectives is to break Telkom's stranglehold on the broadband market.
Transparency
Molefe also said the exclusivity agreement with Neotel is an important part of Neotel's business case and it is not being stopped from building its own national network.
Infraco incorporates the full network service assets of Easitel and Transtel. These were originally earmarked for Neotel, but were withdrawn by the DPE two years ago. The department was concerned a duopoly in the telecoms market would not necessarily lead to a substantial fall in broadband prices.
Molefe agreed Infraco could continue to operate under the current arrangement.
Independent Communications Authority of SA chairman Paris Mashile said, as long as Infraco continued to operate under the Neotel licence, the exclusivity agreement could stay in force. However, once it was licensed, it would have to provide services to all, as stipulated in the Electronic Communications Act.
Molefe noted the fundamental issues regarding exclusivity and the licence is that Neotel's prices for reselling broadband had to have some kind of transparency and that no one was excluded from buying the services.
In terms of the current commercial agreement between Infraco and Neotel, the latter acts as the agent through which any other company would have to go to buy Infraco's broadband.
The public hearings will continue tomorrow, and again on Friday. The committee is scheduled to vote on the final draft of the Infraco Bill on 14 September.
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