SA has a new telecommunications network exchange aimed at assisting smaller Internet service providers to reduce costs and compete more effectively with larger players in the industry.
The exchange, called Africa.Inx, claims to be SA’s first wholesale network exchange that is independent of the big operators. Its objective, it says, is to leverage economies of scale to provide key underlying telecoms infrastructure to retail service providers so they can gain low-cost access to the Internet and other services and networks.
This is essential to drive down the cost of broadband in SA, says Africa.Inx’s director of strategy, Mike Brierley, pictured. The aim, he says, is to give small and medium-sized service providers access to the Internet at levels previously enjoyed only by larger, tier-one providers.
Africa.Inx claims it will bring down costs for small service providers by as much as 50%. However, it has not disclosed its rates publicly.
The company, which will begin operating commercially in March 2010, will only sell bandwidth to other service providers and licensed telecoms operators and will not compete in the retail market. It is a wholly owned subsidiary of Ensync Network Solutions, an Internet service provider. The company is headed by Ensync CEO Eduard du Plessis and Brierley, who was the founding CEO of MTN Network Solutions (now MTN Business following MTN’s acquisition of Verizon Business).
Du Plessis says the idea behind Africa.Inx is to provide smaller service providers with cheaper access to backhaul telecoms infrastructure. This includes offering capacity on the Sat-3 and Seacom undersea cable systems. It is also leasing terrestrial fibre capacity from Dark Fibre Africa.
Initial capital outlay is not huge, however. “We’re not talking hundreds of millions of rand here,” says Brierley. “We want to make sure we find enough customers to scale up from day one. This requires some cash but we’re not looking to raise funding other than from the shareholders at this stage.”
Brierley says there are only a few big players in the telecoms service provider space in SA. Most Internet service providers simply resell capacity from tier-one providers such as Telkom and Dimension Data division Internet Solutions.
Africa.Inx hopes to improve peering (interconnection) between smaller players and in the process drive down peering costs.
Brierley says the changes happening in the telecoms industry in SA will result in strong growth in the Internet in SA in the next few years. “The growth of the Internet in SA was good at one stage but has been stifled for the past 10 years,” he says. “I expect the market to grow at 50%/year for the next couple of years.” — Duncan McLeod, TechCentral
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