Bill could cut cost of broadband

Legislation paving the way for much cheaper broadband internet access is likely to be approved in the National Assembly on Wednesday.

According to a memorandum attached to the Broadband Infraco Bill—up for debate on Wednesday afternoon—the high broadband costs in South Africa compared to international counterparts have been investigated.

It revealed that connectivity providers other than Telkom have a cost structure where up to 80% of costs comprise those attributable to Tier One national backbone connectivity and Tier Three international connectivity, both of which are supplied by Telkom.

The logical conclusion, said the memorandum, is 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 Two (the local metropolitan area network and last mile) connectivity providers will quickly pass this on to the market as a result of competitive pressure.

The government intends expanding the availability of broadband access to underdeveloped areas, thereby ensuring that the bandwidth requirements for specific projects of national interest are met.

To achieve this, Alec Erwin, the Minister of Public Enterprises, will acquire shareholding in Broadband Infraco from Eskom Holdings Limited.

The Bill also seeks to create flexibility for funding and private sector involvement by providing for the possibility that Infraco may be converted into a public company.

Public companies are generally recognised as the optimal corporate form to access capital markets and enable future private sector investment.

Thus, the Bill provides for transferring Infraco shares and Infraco interests from Eskom to the state, licensing Infraco under the Electronic Communications Act, and converting Infraco into a public company with share capital.

In terms of the Bill, the state will provide capitalisation for Infraco to the amount of R975-million. - Sapa

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