The issue of Broadband Infraco getting a license has been dragging on since 2007. In a nutshell, this would enable them to provide services directly to the industry as opposed to just being a sub-contractor for Neotel. Finally this saga is nearing it’s conclusion, as Infraco has to submit it’s application to ICASA by 20 April, and now I read this:
Public hearings over the licence conditions for Broadband Infraco will probably provoke a storm of protest from industry, if the state-owned entity does not stick to its original mandate, sources say.
– ITWeb
So what is Infraco’s original mandate?
Investigations into the high broadband costs in South Africa compared to international counterparts revealed that connectivity providers other than Telkom Limited (‘‘Telkom’’) have a cost structure where up to 80% of costs comprise costs attributable to Tier 1 national backbone connectivity and Tier 3 international connectivity, both of which are supplied by Telkom. The logical conclusion was to intervene to address the national backbone and international connectivity cost structures. This is based on the assumption that if these costs are addressed, Tier 2 (the Local Metropolitan Area network and last mile) connectivity providers would quickly pass this on to the market as a result of competitive pressure.
– Memorandum on the objects of the Broadband Infraco Bill, 2007
It turns out this assumption was false. The graph below shows how Neotel’s national backbone pricing is very similar to Telkom’s.
Clearly the DPE’s plan didn’t work, so Infraco now needs a license to fulfill it’s original mandate!
I would like to know from who in the industry (other than Neotel and Telkom) this move will “provoke a storm of protest”, and why they are opposed to lower cost national backbone bandwidth?
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Infraco always intended for Neotel to apply a fixed markup to Infraco’s supply price, and to supply other networks if this condition was not adhered to.
Chalk one up to understanding human & corporate nature…
Agreed. National backbone pricing is crazy.
I’d like to see a similar graph, comparing something like..
CPT-JHB (1000km link) vs CPT to London (10000km link).. with Mbps on the x axis.
I’m pretty sure the national pricing will be similar or more expensive than the international pricing.
We’ve seen 2Mb International pricing between JHB and London at between $7500 and $11000 per month. Certainly with SEACOM and Neotel, the availability of city-to-city higher capacities improves.
Does anyone have a view on the cost of IP Transit in CPT or JHB? We’ve seen low commits as high as $2700 to $3000/Mb but would like clarification as to what local ISPs / Hosting centers are paying.
Thanks for your assistance.
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