Cheaper bandwidth – fact or fiction?

At the Broadband Summit held recently in Sandton controversial MyADSL owner Rudolph Muller made sense when he said that fast access makes new content delivery and new services possible. Users must have complete freedom to surf the net, download movies or songs, play online games, chat with friends using VoIP technologies or become involved in social networking sites without being concerned about high internet fees.

“Unless all of the components of a broadband service are present, it can be seen as a crippled service which reduces its positive impact on internet usage and the effectiveness of broadband as a whole”, he said.

In South Africa broadband penetration rates are low because of high prices, poor fixed line penetration rates and poor service delivery. Broadband services have restrictive usage limits which equates to nearly the same as paying per-minute dial-up rates which inhibit leisure internet usage.

Minister Alec Erwin’s announcement that a new company, Infraco, would be up and running and offering cheaper broadband by March was welcome news. However the excitement lasted only a few minutes when the realisation dawned that there are many hurdles to be overcome. It took three or more years to get Neotel licensed. What hope do we have to get the Independent Communications Authority of South Africa (Icasa) to license Infraco in days?

The Electronic Communications Act stipulates that as part of the licensing process, all interested stakeholders including competing telcos will be able to make submissions before the granting of a third fixed line licence. From past history that can take a long time, particularly as at the time of writing Icasa indicated that they had not yet received an application.

Another element in the equation is the cost of international connections. Telkom still owns the landing rights for the SAT 3 undersea cable. If VSNL – who has capacity on the cable – gets landing rights, Neotel predicts a 40% drop in the cost of international bandwidth. If we are talking about cheaper bandwidth will that be enough? I don’t think so, as international bandwidth is only a portion in the equation.

After the announcement, the public enterprise department said that Infraco would initially sell its bandwidth to Neotel. So where is the cheap broadband? Neotel is on record saying that the company will not start a price war with Telkom. When EngineerIT asked Neotel MD Ajay Pandey if the huge expectation of lower prices did not put his company under pressure, he said “I don’t believe we are under any pressure, we know exactly what we are doing and how we are doing it.”

Other speakers at the summit echoed Rudolph’s assertions. Dave Gale of Storm said that “broadband changes people’s lives.” We are starting to do things differently. My kids have uncle Google living in the house. When they have a question uncle Google helps them to find the answer. The PC is connected to a broadband connection and always available”.

Infraco will be offering their services on the Eskom backbone, a fibre network that was designed to carry communication and data between Eskom sites. What capacity is free to be allocated to public broadband services? Is the network stable and can it deliver a guaranteed level of service?

Minister Erwin reportedly said that Infraco could play an important part in the Square Kilometre Array (SKA) project by supplying bandwidth. The statement is worrying. Do the minister and his advisers really understand what broadband and bandwidth represent? Clearly not! The SKA requires more bandwidth than the total bandwidth currently available in South Africa. Infraco’s contribution would be less than minimal. If Infraco is to supply broadband at cost plus 4%, it is difficult to visualise how the company can sustain itself. Will the government subsidise?

Are we being led by the nose and given pie in the sky to eat?

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Cheaper bandwidth – fact or fiction?