It seems I was overly optimistic about the conclusion of Broadband Infraco’s licensing when I blogged about it back in March this year. The process is stalled in a dispute:

During the regulator’s public hearings, ISPA (among others) objected to the issuing of the IECS license, due to fears that Infraco will turn into another anti-competitive vertically-integrated government telco. I agree, that wouldn’t be good for the country.

On the other hand, ISPA’s members now have their own happy-meal licenses, enabling then to operate national networks. This they couldn’t do before, but the problem is, they don’t have national networks. Instead, they want to restrict market access of the only organization (other than Telkom) that has a national network, to themselves. As middle-men this would guarantee them fat profit margins, and it would not guarantee the intended outcome of cheaper telecoms for the rest of us.

So how about a compromise: ICASA issues Broadband Infraco an IECS license with a condition that permits them to provide optical transport services to everyone (including the retail market), but no higher level (IP transit) services. ISPA can’t object, because they’re supposed to represent Internet Service Providers.

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?