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InfraCo plans to break Telkom stranglehold on bandwidth2007-05-24 InfraCo, the new state owned broadband company, plans to break Telkom’s stranglehold on local and international backhaul bandwidth to drive down broadband prices. From their investigations InfraCo concluded that the cost of both local and international backhaul bandwidth, both supplied by Telkom, is a major reason for the high local broadband costs. “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 Broadband InfraCo Bill said. InfraCo said that it plans to step in to rectify this situation. “The logical conclusion was to intervene to address these 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 onto the market as a result of competitive pressure.” InfraCo will be using the fiber optic network from Eskom and Transnet to bring more affordable bandwidth to the local telecoms market. Initially Neotel will have a 4 year exclusivity agreement with InfraCo, but the state may feel that it can influence the pricing levels of bandwidth by controlling a national fiber backhaul network. InfraCo further showed interest in building their own submarine fiber cable on the West Coast of Africa which will compete with SAT3. InfraCo will require an investment of R 975 Million from Government. Source: My Broadband |
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