Broadband Infraco outlines its plans to compete - TechCentral

Broadband Infraco outlines its plans to compete

Dave Smith

Newly established state-owned telecommunications infrastructure provider, Broadband Infraco, will build five points of presence in SA’s major centres this year and will begin offering national backhaul connections on its fibre network at speeds ranging from 155Mbit/s to 10Gbit/s.

The company, which received a licence from the Independent Communications Authority of SA (Icasa) in October last year to provide wholesale infrastructure services, has promised to provide an alternative and cheaper national network for other communications companies.

Infraco CEO Dave Smith, speaking to TechCentral in an exclusive interview ahead of the company’s planned launch in the second quarter of 2010, says the planned points of presence will be built in Johannesburg (which will have two), Pretoria, Durban and Cape Town.

“We are going to provide managed bandwidth services of various capacities in increments of 155Mbit/s up to 10Gbit/s,” says Smith. “We are deploying an IP (Internet Protocol) core network for providing IP services at the same locations.”

He says Infraco will opt to lease rather than buy space where it can, preferably in areas where other operators already have facilities, such as in the Johannesburg and Cape Town Internet exchanges.

“There are other carrier-neutral facilities being developed and we are evaluating those options, too,” Smith says. “If they are not ideally suited we will build our own. But co-locating makes sense because it’s where other operators, our customers, already have a presence.”

Once all the points of presence have been established — some time in the second quarter — Infraco will declare itself open for business.

Infraco, which is 26% held by state-owned investment company, the Industrial Development Corp, and 74% by the public enterprises department, has nearly 12 000km of fibre-optic cable connecting SA’s towns and cities. It will add between 350km and 500km of fibre in 2010.

It is also one of the main investors in the West African Cable System (Wacs), a high-capacity submarine system being constructed on Africa’s west coast. Wacs, with a design capacity of 5,1Tbit/s, will be the first rival to the Sat-3 system, access to which is controlled by Telkom. The cable is expected to be ready for service in July 2011.

Infraco, which was the brainchild of former public enterprises minister Alec Erwin, was established as a means of reducing backhaul bandwidth costs and breaking Telkom’s near-monopoly of national fibre infrastructure.

However, its creation has proved controversial from the start. The Independent Communications Authority of SA (Icasa) has not given it a telecoms service licence, only a network licence, meaning it can’t provide services to retail end users.

Communications minister Siphiwe Nyanda has also resisted calls for Infraco to get a service licence, saying it can deliver on its mandate with a network licence only.

The concern is that if Infraco is given a service licence it will end up competing in retail telecoms.

But Smith says the company has no intention of competing in the consumer and business markets.

He says Infraco requires a service licence to provide bandwidth to science projects like the proposed Square Kilometre Array (SKA) radio telescope, which will require enormous amounts of bandwidth. SA is competing with Australia to win the SKA project.

“The Electronic Communications Act is clear that you cannot provide services directly to the state without a [service]licence,” Smith says. “The SKA will make up huge portion of the traffic [on Wacs]and it’s one of the primary reasons for us investing in the system.”

Neotel is Infraco’s only customer so far — it provides all the company’s national backhaul needs, including the connection between Johannesburg and Mtunzini on the KwaZulu-Natal north coast, where the Seacom undersea cable lands on SA shores.

However, he says there has been “enormous interest” from other companies wanting to purchase wholesale bandwidth, including from Internet service providers that recently had their licences converted to provide network infrastructure for the first time.

Infraco has 85 staff and expects to double that number in 2010 as it sets up field service operations around the country. Smith admits that finding telecoms skills is tough, and there’s a lot of poaching going on between operators. He says Infraco has no option but to offer market-related salaries and benefits.

Even though it’s mandate is to reduce national and international bandwidth costs, government has told Infraco that it must make a profit and generate a return. He says he can’t he say what return is expected of the company. “However, the returns that they require are definitely lower than what private equity companies would expect.”

Infraco has an ongoing capital investment programme, allocated on a priority basis among various initiatives, of between R500m and R700m a year.  — Duncan McLeod, TechCentral

See also: Icasa resists pressure over licensing of Infraco

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