Mbeki signs Infraco laws

By Damaria Senne, ITWeb senior journalist

Johannesburg, 17 Jan 2008

President Thabo Mbeki has approved the laws enabling the formation and licensing of the Broadband Infrastructure Company (Infraco), which is intended to lower telecommunications costs in SA.

The company, which was allocated funding of R975 million by government last year, was announced by public enterprises minister Alec Erwin, in 2006. It will provide national backhaul infrastructure and international gateway facilities at a fraction of current costs.

On 8 January, the Government Gazette announced Mbeki had assented to the Electronic Communications (EC) Amendment Act of 2007 and the Broadband Infraco Act of 2007.

The EC Amendment Act 2007 empowers communications minister Ivy Matsepe-Casaburri to initiate and facilitate strategic government ICT infrastructure investments such as Infraco.

The company has been operational since May, rolling out fibre optic cable infrastructure in various parts of the country. The signing of the Infraco Act will allow it to now operate as a fully-fledged broadband provider to SA's second national operator.

This would lower the cost of connectivity for local telecoms operators, which would, in turn, pass the benefits to their customers.

Ready to go?

It is not yet clear when both Acts will go into effect. Department of Communications spokesman Albi Modise says the department will propose the date of commencement of the EC Act to the presidency for approval. The Infraco Act relies on the EC Amendment Act being in effect, he explains.

The Infraco Act allows for the transfer of shares, loan accounts, liabilities and guarantees to be used to kick-start the company from Eskom assets. Transnet and Eskom subsidiaries Transtel and Esitel last year handed over their network infrastructure to Infraco.

Infraco is currently being run under the auspices of the power utility, with Infraco CEO Dave Smith at the helm.

Lower costs

The promulgation of both Acts brings SA closer to government's goal of lowering telecommunications costs, and increasing productivity and economic growth, says the Department of Public Enterprises.

Seeking the approval of the National Council of Provinces, in November, Erwin said: "This broadband capacity is so strategic to our economy that the state is intervening through the formation of Broadband Infraco. The intervention seeks to address the high cost of broadband in SA, by making infrastructure in the national backbone and international connectivity available at cost-related prices."

Erwin says the high cost of broadband in SA, and the limited access of this technology to all South Africans, hampers the country's participation in the global economy.

Telecoms and Internet connection charges have been identified as key barriers to doing business in SA, and attracting more investment into the country, he says.

"If nothing is done about this, our country will get left behind, and we may miss out on key investment opportunities which could further accelerate economic growth, and create more employment opportunities for our people."

Addressing the criticism against government for intervening in a telecoms environment that is undergoing de-regulation, Erwin says government's intention is not to operate Infraco on a long-term basis.

Infraco is expected to exclusively provide services to second national operator Neotel for a period of four years.