Lack of Infraco clarity ‘disconcerting’

5 February 2007

The Internet Service Providers’ Association of SA (ISPA) is concerned by uncertainty surrounding the exact role of the new majority state-owned broadband company, Infraco.

While there is great hope amongst ISPA members that the emergence of Infraco on the local telecoms landscape will be a positive development, it is disconcerting that government could end up having a stake in another telecommunications operator.

Government already owns 100 percent of Sentech, a 38 percent stake in Telkom and it has a 30 percent stake in Neotel through Eskom and Transtel.

ISPA remains hopeful that Infraco will potentially open up new opportunities for its members because the adjusted estimates of national expenditure released last year stated that “The intervention in national long-distance and international connectivity infrastructure should significantly reduce SA’s broadband costs.” This appears to suggest that Infraco will break Telkom’s stranglehold on the market by allowing ISPs (Internet Service Providers) to purchase capacity directly from it.

According to Greg Massel, Joint Co-Chair of ISPA: “Specifics that need to be ironed out before ISPA can wholeheartedly lend its support to the establishment of Infraco relate to licensing issues, shareholders, last mile access and particularly the relationship between Infraco and other state-owned enterprises.”

Trade & Industry Minister Alec Erwin said last year he planned to set up Infraco using the long-distance fibre optic networks of Eskom and Transnet. Minister of communications Ivy Matsepe-Casaburri had earlier stated that Sentech would be used by her department to roll out wireless broadband services in rural areas.

Possibly the most urgent Infraco issue to be addressed is the fact that the license conditions for Neotel would have to be changed. Neotel’s license conditions had assumed that Eskom and Transtel’s transmission assets would be owned by Neotel.

“Infraco is not necessarily a bad development but we have to guard against an excessive government presence in the market. While it’s encouraging that private players could be brought on board as shareholders and that government is serious about boosting SA’s global broadband standing, a R627 million state intervention would make any industry nervous,” explained Mr Massel.

Mr Massel added that there was also the issue that government had created the legislative framework for liberalisation followed soon after by the creation of a massive state-owned infrastructure company.

The Internet Service Providers’ Association is a South African Internet industry body incorporated not for gain. ISPA currently has over 120 members, comprised of large, medium and small Internet service and access providers in South Africa. Formed in 1996, ISPA has historically served as an active industry body, facilitating exchange between the different independent Internet service providers, the Department of Communications, ICASA, operators and other service providers in South Africa.