The whole IECS debate now seems pretty irrelevant given that the Minister of Comms has decided they will not get one ..

To allow ~500 licensed operators (including Telkom, which is also partially state-owned) to be vertically integrated, and to deny this to Broadband Infraco seems inconsistent (and unfair?).

Then I read this in an ITWeb article:

ITWeb is in possession of an advance copy of the department’s new draft broadband policy, which is expected to be gazetted in the next few days.

The new draft policy has realigned the state’s role in the provision of broadband. It specifically states that “government should not operate directly in retail service provision, but leave these markets to the private sector players”.

Does that mean the state will dispose of their Telkom shares?

Perhaps the future holds something even more interesting. To quote Gartner analyst Will Hahn commenting on the Competition Commission’s recommended R3.6 billion Telkom fine:

In most mature telecom regimes, the company in Telkom’s shoes has had to undergo either rigorous functional separation between network ops/wholesale on the one hand and retail on the other, or it has gone further, approaching structural separation (where these functions would be vested in completely separate companies).

Although highly unlikely, if there is a coherent government plan to put an end to the turf war between the DPE and the DOC and get their telecoms house in order, it might be in the form of what Hahn is talking about.

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?