State-owned telecommunications infrastructure operator Broadband Infraco will “consider all its options” in the wake of a decision by its regulator not to grant it a service licence.

Infraco CEO Dave Smith (pictured) says the decision by the Independent Communications Authority of SA (Icasa) not to grant it an electronic communications service (ECS) licence in terms of the Electronic Communications Act could have serious implications for the company.

Icasa last week published a notice in the Government Gazette, in which it set out its reasons for not granting Infraco an ECS licence; instead the company has only received an electronic communications network service (ECNS) licence, which allows it to build a network but not provide services to companies and consumers.

Communications minister Siphiwe Nyanda has resisted calls for Infraco to get an ECS licence, saying it can deliver on its mandate of reducing national telecoms costs with a network licence only.

The concern is that if Infraco is given a service licence it will end up competing in retail telecoms with operators like Telkom and Neotel and with Internet service providers. However, Infraco has denied it has any plans to compete in this space.

In its “reasons and rulings” document, Icasa says Infraco “failed to demonstrate how its strategy of targeting large entities … would lead to affordability”.

“The authority’s view is that provision of services to large corporate and government department’s is at odds with … the Infraco Act and do not meet the requirements of the invitation to apply.”

Icasa says also that Infraco’s “failure to provide a detailed plan of its ECS coverage meant that it failed to comply with the requirements of the invitation to apply”.

But Smith has hinted that Infraco could fight Icasa in the courts. He says he will table a recommendation soon to Infraco’s board of directors. “This is going to be a sensitive matter going forward.”

Smith says Icasa’s decision not to grant Infraco an ECS licence could imperil its plan to provide high-speed connectivity to science projects like the Square Kilometre Array (SKA) — SA is competing with Australia to win the multibillion-rand SKA radio telescope bid.

Government established Infraco, in part, to provide connectivity to the SKA and similar projects that will require huge amounts of international bandwidth.

There is also concern that without a service licence, Infraco won’t be able to bundle traffic from international operators, carried on undersea cables, and package this bandwidth with its local offerings.

One option might be for Infraco to buy another ECS licensee (there are hundreds of them, and some of them are dormant), but Smith says the transfer of an ECS licence has to be approved by Icasa.

Infraco, which is 26% held by state-owned investment company, the Industrial Development Corp, and 74% by the public enterprises department, was established principally as a means of reducing backhaul bandwidth costs and breaking Telkom’s near-monopoly of national fibre infrastructure.

The company is one of the main investors in the West African Cable System (Wacs), a high-capacity submarine system being constructed on Africa’s west coast. It also operates about 12 000km of fibre-optic cables connecting SA’s towns and cities. — Duncan McLeod, TechCentral