THERE has been excitement in the market about new licences to be issued that allow ISPs and other service providers to set up their own telecommunications infrastructures. Potentially, those prepared to pay for the licences could compete head-on with the traditional fixed-line and mobile network operators, but there are differing views about the impact this regulatory change will have on the market in the short term.
“SA has now issued more telecommunications infrastructure licences than any other country to date, but all these service providers cannot just dig up the roads and lay fibre,” says Hillel Shrock, business solutions director at Internet Solutions.
He says that before setting up wireless antennas they would need lengthy negotiations to acquire rights of way. Those planning to deliver services using WiMAX will also need to obtain licences for scarce spectrum. Internet Solutions plans to roll out a wireless network infrastructure and to lay fibre to connect its bigger customers to its network.
“For the rest, we will negotiate wholesale prices to lease fibre infrastructure from the likes of Dark Fibre Africa.”
Once the recent regulatory changes bed down there will be consolidation in the market, says Shrock. At the top end a few ISPs will metamorphose into full service telecommunications companies on their own or through partnerships. At the other end, small providers will offer specialised services for specific industries.
“The ones in the middle will not survive,” says Shrock.
Thomas Makore, MD of Spescom Telecommunication, says no more than 20 of the service providers that have been issued with the new licences have the financial muscle to build their own telecommunications infrastructure, but it may be worthwhile for smaller service providers to build infrastructure in remote areas where there is a need for broadband connectivity but that is not viable for the bigger operators.
He says the rest will buy wholesale capacity from bigger players, put their services on top and resell it to consumers and businesses. This will open up opportunities for network equipment suppliers to take over the servicing of their network infrastructure.
“It is a growing trend worldwide for operators to outsource the running of their networks in this way.”
Local network equipment systems integrators like Spescom are in a good position to take on this type of outsourcing service, says Makore.
Rudi Jansen, CEO of MWEB, says those service providers that are prepared to pay for a full service network licence will be allowed to lease capacity directly from undersea cable operators for international data traffic, but the data will still need to be transported between the landing stations, the service provider’s network and the end customer.
“In this case, the constraints will be on the national telecommunications grid provided by Telkom and Neotel.”
He says ISPs in outlying areas are likely to build wireless networks that can be operated in the unlicensed spectrum to link customers to their service. “Some are already doing this illegally.”
An alternative is VSAT satellite capacity, which they will be able to buy direct instead of buying it wholesale from local operators.
“VSAT provides speeds up to 32 megabits per second, depending on the size of the dish.”
He says MWEB has corporate customers in Africa that are using VSAT connections at speeds of five to 10 megabits per second.
Arthur Goldstuck, MD of research company World Wide Worx, says many of the ISPs that hold the new licences will become attractive acquisition targets for companies looking to fill gaps in their service portfolios.
He says a major positive for the market is the Seacom undersea
Unlike Telkom, the owners of Seacom will be selling raw bandwidth capacity wholesale and not competing against ISPs and other service providers by selling services directly to end customers, says Goldstuck. “Seacom will create real competition and customers will get more bandwidth for the same price.”