Broadband InfraCo was established in 2006/07 by the Department of Public Enterprises as an intervention to ‘rapidly normalise telecommunications market efficiency and address the cost of broadband to other industry players and end users, by having infrastructure in the national backbone and international connectivity at reduced prices.’
According to a National Treasury Report work previously performed under the South African national superhighway project by the Department of Public Enterprises demonstrated two key findings in relation to broadband connectivity and the telecommunications environment in South Africa;
- South Africa significantly lags behind its international counterparts in terms of ICT penetration as well as the rate of new technology adoption.
- Broadband penetration relative to international benchmarks is virtually non-existent and significantly more expensive.
Government in control
The report further states that “The Department of Public Enterprises has determined that in order to achieve the goals of the Accelerated Shared Growth Initiative for South Africa (ASGISA) and ensure higher ICT penetration levels and affordable broadband connectivity, government should continue to own and invest in communications infrastructure.”
The department subsequently established an infrastructure company, Broadband InfraCo, that acquired the full services network (FSN) from Eskom and Transnet.
“Broadband InfraCo will make available communications infrastructure and a network that will provide access for undeveloped areas and bandwidth requirements for specific projects of national importance, which could include scientific initiatives such as the Square Kilometre Array Telescope project and the South African Research Network.”
Broadband InfraCo is further planning to deploy a multi-terabit/s west coast submarine cable system linking South Africa with the United Kingdom. This cable system will supplement the current SAT3 cable, which according to many reports will soon reach saturation point.
The project is a joint venture between the South African government and the private sector.
With the establishment of Broadband Infraco in 2006/07, government contributed R627 million, including the purchase of the FSN.
An additional amount of R727 mllion (R377 million in 2008/09, R210 million in 2009/10 and R140 million in 2010/11) has been allocated over the MTEF period, as transfers from government for Broadband InfraCo.
This brings the total government equity contribution in Broadband InfraCo to R1.4 billion.