“It is Telkom’s contention that the wireless local loop these days is more than a substitute for both voice and broadband communications,”
- Techcentral’s Candice Jones quoting Telkom’s chief of corporate governance, Ouma Rasethaba.

I doubt they believe that (which wireless local loop technology available today is as scalable and robust as ADSL2+ for the provision of fixed broadband?).

In fact, if I were Telkom, I would downplay the value of the copper local loop and encourage my competitors (like these guys) to invest in WLL alone for home/SME customers instead of a mix of mobile and fixed line infrastructure.

Prior to ADSL, the amount of upstream bandwidth required by an ISP to service N users was naturally limited by the fact that telephone calls are expensive: users dialed up, did what they needed to do, and hung up. One line was required for every M users. If more than M/N users tried to connect simultaneously, some of them got busy tones. Busy tones are normal on the PSTN, and users just lived with it. The cost to an ISP for terminating calls was also fixed, irrespective of the minutes, or Megabytes used, and the worst case bandwidth demand was M/N times the maximum speed of their modem (assuming no bandwidth contention).

ADSL massively increased the access circuit speed of Internet users, and traded per-minute surfing for an always-on technology at a time when the cost of IP transit remained high. Permanent connectivity was now affordable for the consumer, but Telkom SA began charging ISPs expensive per-Megabit rates for access to their ADSL network.

The only way for ISPs to provide ADSL-based Internet access at affordable rates was to control the demand for bandwidth by artificially imposing the natural contention inherent in the good old dial-up business model they knew and loved. They did this by putting a cap on the amount of data users were permitted to transfer over their shiny new ADSL circuits. In effect, surfing per-minute was replaced by surfing per-megabyte.

The low barriers to entry in the dial-up ISP game resulted in many competitors in the market. When ADSL was launched, some of these ISPs were better at implementing the broken always-on model than others, and this resulted in a consolidation phase in the first part of the last decade. Many smaller ISPs (Netactive, Yebo, etc) were gobbled up by larger ones (like MWeb).

With the landing of the SEACOM cable, it became possible for ISPs to eliminate data caps, although apparently just barely. Some people I know have speculated that uncapped ADSL is not sustainable, and that MWeb is running their ADSL operation at a loss because their real play is to become a content provider.

I believe uncapped ADSL is sustainable for those ISPs who have enough customers to allow them to buy sufficient capacity on SEACOM. Furthermore, I think this will lead to a second consolidation phase, where the big players will buy up the customers of smaller ones who can’t quite pull uncapped off (like these guys).

In the meantime, I’m seeing some exceedingly idiotic stuff coming from the telco world regarding uncapped Internet. These companies desperately want to stop being dumb pipes. Their reasoning is that users don’t want packets, they want services and content. This is true, but the users want Google and Facebook’s content and services, not the telcos’ half-baked copies. Since the incremental cost to a telco for providing another 1GB on existing infrastructure is near zero, the only logical reason I can think of for wanting to break the Internet by discontinuing uncapped access would be so that they can provide their mediocre and un-competitive services, exempt from user traffic quotas. This strategy will fail.

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.

This is what Roelf Diedericks of Neology had to say about it:

Neology supplies IAP services to ISP’s in the local market, this includes radius, billing and RealSoon(tm), ADSL IPConnect termination for multiple ISP’s.

We will be offering the first consumer ADSL service with differentiated local, versus international radius accounting, and many other cunning differentiated traffic billing plans which cannot as yet be revealed :)

Simply awaiting Telkom to do their bits at the moment.

So, while their AS is new to the routing tables, Neology is certainly not new to the local telecoms business.

It’s good to see someone has solved the (non-trivial) problem of accounting national and international traffic separately… this is something that IS wasn’t willing (or able) to do even when their customers specifically asked them for it on IS Labs.

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?