MPs serving on the National Assembly public enterprises portfolio committee have been told that the establishment of a new state-owned company, Infraco, would allow for massively reduced costs of access to broadband in future.
An IT consultant to the Department of Minerals and Energy, Cornelius Groesbeek, told the multiparty committee that South Africans at present pay up to 10 times more than the international average for broadband access.
He argued that if the Infraco model were adopted it could cut prices immediately by 65%, and by up to 95% within a five-year period. This is because the broadband market is dominated in South Africa by Telkom — the now privatised but partly state-owned telephone operator.
The committee — headed by African National Congress MP Yunus Carrim — was briefed by the Public Enterprises Department on the Broadband Infraco Bill on Wednesday.
It was noted that Eskom Holdings — through its subsidiary Eskom Enterprises and Transnet — developed and deployed a national long-distance optic-fibre network in anticipation of the establishment and licensing of Neotel, South Africa’s second national operator.
The government determined that instead of disposing of the network to Neotel, it should continue to own and invest in critical infrastructure such as communications infrastructure “in order to leverage such infrastructure for economic growth”.
Investigations into the high broadband costs in the country have revealed that the largest connectivity costs are attributable to “national backbone connectivity” and international connectivity.
“Therefore, as part of its strategy to accelerate economic growth, government has decided to expand the availability of broadband access to bridge the digital divide and contribute to lowering the costs of doing business in South Africa,” said the report.
The model proposed is that the state-owned enterprise Infraco should own the network and that the minister of public enterprises agree with Eskom and Transnet to consolidate the network into an Eskom subsidiary, Rosherville Vehicle Services, and for the government to purchase the shares of the latter. It would then change its name to Broadband Infraco, or simply Infraco.
This would provide access in particular to underdeveloped areas and cater for the bandwidth requirements “for specific projects of national importance, including scientific initiatives and video streaming of international events”.
On April 18, a full Cabinet meeting confirmed these steps and agreed to the forwarding of the Infraco Bill to Parliament for adoption. Among the measures provided for in the Bill is an authorisation to the minister to appropriate land on behalf of Infraco and pay compensation as contemplated in the South African Constitution. — I-Net Bridge