Infraco to lay submarine cable

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 25 Oct 2006

Government-owned Infraco will lay a submarine cable from SA to Europe that will compete with Telkom`s SAT-3 cable, high-level government sources have revealed.

This follows an announcement by public enterprises minister Alec Erwin that government would use the telecoms infrastructure company to drive down the cost of broadband in the country.

Yesterday, deputy president Phumzile Mlambo-Ngcuka summoned the departments of communications and public enterprises to brief her on the proposed submarine cable plan, the government sources say.

Senior officials from both departments have confirmed that a Cape Town meeting was scheduled for late yesterday afternoon with communications minister Ivy Matsepe-Casaburri, Erwin and the deputy president. Also present were directors-general of the two departments and representatives of Indian conglomerate Tata.

A key issue of the meeting, according to officials, was to iron out a Department of Public Enterprises (DPE) plan that would make Infraco a public-private partnership using Eskom`s fibre optic network and lay a submarine cable between SA and Europe to bring down the cost of international bandwidth. The plan would include Tata, which owns 26% of the second national operator, Neotel.

Around Cape Point

The proposed submarine cable would land at the Mtunzini landing site, the same place as for the East African Submarine Cable System, and then transverse southwards around Cape Point and onto the Azores islands to meet up with other international systems. It would skip the Telkom-controlled SAT-3 cable, landing at Melkbosstrand, near Cape Town.

Yesterday`s meeting occurred one day after Erwin issued his reply to questions from opposition MP Dene Smuts, of the Democratic Alliance, on the Infraco issue. Her questions were sent to him on 23 October, and the deputy president`s office originally asked for this meeting on 11 September.

Another issue is that of departmental boundaries, as the Department of Communications feels the DPE is treading on its turf, the sources say. The departments are part of the economic cluster of departments and, according to government`s programme of action, have a joint responsibility for bringing down the cost of telecommunications.

Going mad

Smuts says if the Infraco proposals were genuine, "...then it is a case of the developmental state gone mad. The Electronic Communications Act lays the groundwork for competition in this market and here is government proposing another intervention."

A Department of Communications official says: "Such a project, as proposed for Infraco, is beyond the framework of our current law. The company would have to get a proper licence to operate. They [DPE and Tata] could not just start it up. It has been a long and painstaking process to create the right environment for managed liberalisation of this sector."

Criticism of the slow pace of telecommunications liberalisation and the resulting high cost of connectivity for SA, especially on international links, has been high on government`s agenda ever since president Thabo Mbeki mentioned it in his opening of Parliament speech two years ago.

Local loop nonsense

A senior Telkom manager says the question to be asked is: "Where will the funds for another submarine cable come from?"

The manager also says he is glad Erwin believes there is enough competition in the second and third tier telecommunications arena. "Maybe now they will stop all this nonsense about unbundling the local loop," he says.

A senior Sentech official says there is also a question about Infraco`s incorporation under the Public Finance Management Act, because Eskom`s network would be its core. "It, therefore, should be a section 3(b) company that would have to go to the National Treasury for funding approval," he says.