Cheaper broadband, not just faster

It’s no use to just roll out faster broadband in South Africa, prices have to come down to 1–2% of what they are today.

This is according to Alan Knott-Craig, CEO of Cell C, who was addressing industry stakeholders and the Department of Communications (DoC) at a South African Communications Forum (SACF) breakfast event in Sandton last week Monday (15 October 2012).

This isn’t something that will be easy to achieve, Knott-Craig said, as mobile data was already being sold on relatively thin margins and the prices have to come down further.

Wholesale mobile network needed

One of the ways to decrease the input costs faced by operators, which Knott-Craig explained would result in lower prices, is to have one national wholesale operator.

Alan Knott-Craig
Alan Knott-Craig

“And I’m not talking about Telkom,” he said when questioned about the issue.

Knott-Craig said that a wholesale model has been implemented in Russia and appears to have been successful.

“I haven’t found anyone who thought it’s a bad idea,” he said. “We just need to do it.”

No government control

When Knott-Craig said that the wholesale network should not be government owned or controlled, however, the CEO of state-owned network provider Broadband Infraco, Puleng Sejanamane, balked at the suggestion.

Sejanamane expressed concern that private players may not wish to cover rural areas with this network as it is not economically feasible to do so.

Dina Pule, Minister of Communications, echoed this worry and agreed with Sejanamane’s statement that public-public and public-private partnerships should work to make a wholesale network a reality.

Puleng Sejanamane
Puleng Sejanamane

Former Vodacom CEO Pieter Uys previously argued that such a wholesale network, provided the right frequency spectrum is made available to it, is actually particularly suitable to cover rural areas.

Uys said that since it is hardly profitable for operators to roll out data networks in these areas, a combined effort will make the most sense to operators and South Africa as a whole.

Responding to Pule and Sejanamane, Knott-Craig said that it is quite do-able for government and private sector to get together in a consortium to roll out the national wholesale network.

He said that anyone who wanted to invest in the network should be allowed to do so.

“It’s too big and too expensive for one operator to do alone,” he said.

Asked about how he envisaged the regulation of the network, Knott-Craig told MyBroadband that the Independent Communications Authority of South Africa (ICASA) would regulate the wholesale pricing.

Dina Pule
Dina Pule

ICASA can also specify the footprint that the wholesale network must cover when they assign the spectrum to it, he said.

“They have the spectrum,” Knott-Craig said, “and that’s the most valuable thing.”

Shameel Joosub, group CEO of Vodacom, said that if the areas that must be covered are agreed upon, government could also set milestones with the wholesale network to make sure the coverage targets are met.

This would allow the network to be rolled out in a co-ordinated way.

“We should use the same approach for both LTE and fibre-to-the-home,” Joosub said.

Universal service obligation funding

Another method to speed up the broadband coverage of rural areas, according to Joosub, is for government to use universal service obligation (USO) funds to do so.

Shameel Joosub
Shameel Joosub

Joosub, who previously headed up Vodafone Spain, said that one of the lessons South Africa could learn from Spain is how to allocate USO funds.

Under-serviced areas are identified and their coverage put out to tender.

Joosub said that these tenders could deal with rolling out voice services, backhaul infrastructure, or target specific under-serviced areas that fall outside the scope of the wholesale network.

MTN SA boss Karel Pienaar previously suggested a similar solution, saying that the USO money could be used to lay or repair the pipes needed to put fibre in the ground.

According to Pienaar, the USO fund is sitting with over R2.5-billion that is unused.

Responding to questions on Pienaar and Joosub’s suggestion, the Minister said that as government, before the money can be spent a plan and strategy must be put down first.

Draft Broadband Strategy and Implementation Plan

The DoC has finalised its Draft Broadband Strategy and Implementation Plan, Pule announced, adding that they would like to set aside a day to discuss it with industry.

Addressing the SACF, Pule said that the sooner such a meeting happened the better, and asked the forum to see if they could make arrangements before the end of October 2012.

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Cheaper broadband, not just faster