Venter’s dilemma
Altech CEO Craig Venter did SA’s telecommunications sector a big favour when he took on and defeated communications minister Ivy Matsepe-Casaburri in court. Altech now has a licence to build a network. The question is, will it use it?
Venter has been reluctant to talk about Altech’s plans ever since Pretoria high court acting judge Norman Davis found in favour of the JSE-listed group in August last year. The judgment has effectively thrown open the market to anyone who wants to compete with licensed operators such as Telkom, Vodacom, MTN, Cell C and Neotel.
Matsepe-Casaburri had wanted to maintain executive control over the licensing of new, national infrastructure operators. But Davis ruled that the minister had in fact already given hundreds of Internet service providers and other communications companies the right to build their own networks years ago. He then denied her leave to appeal.
So the market is open and a range of companies that until recently were forbidden from building networks now have the right to lay their own cable, and, if they can get access to scarce radio frequency spectrum, to build base stations to provide wireless services.
It’s still not clear, though, if Altech, which owns the country’s largest independent cellular service provider in Autopage Cellular, will actually do anything with its new licence. It ran a test WiMax wireless broadband network in Gauteng for a while, but that pilot has long since come to an end.
Venter was brave to take on Matsepe-Casaburri in court. It’s risky for a company legally to contest government policy and so it’s logical to draw the conclusion that Altech must have big plans to become a telecom operator with its own large-scale network.
But that’s not necessarily going to happen. A price war is looming between the three giants of SA telecoms — Vodacom, MTN and Telkom — that could make the new infrastructure licensees, including Altech, think long and hard before committing significant capital to building their own networks.
The FM’s cover story this week examines how the impending divorce of Telkom and Vodacom — the former will dispose of its stake in the latter in early May — will transform the communications landscape.
There is going to be an epic battle between the big three operators over broadband. Vodacom’s Pieter Uys, who succeeded Alan Knott-Craig as CEO last year, has made it clear that the next big battleground in SA telecoms is broadband. He says it will be one of the most important growth areas for operators as the voice market matures.
Vodacom says prices will plummet as new undersea cables come ashore and new national fibre infrastructure allows it and other operators to bypass Telkom.
The first big price cuts in broadband since 2007 could be coming within months, if not weeks, as operators choose to take a short-term financial hit in an effort to build market share ahead of the landing of the Seacom undersea cable system in June. Bandwidth costs on Seacom, which is the first new cable system to reach SA shores since 2002, are a fraction of what Telkom charges for access to the Sat-3 cable system on the west coast.
New terrestrial infrastructure is also being built. Vodacom is already talking about deploying fourth-generation mobile technology based on Long-Term Evolution. And it has teamed up with Neotel and MTN to build a national fibre network that will connect the country’s cities and bigger towns.
With prices set to plummet, and the big three operators, all of whom have very deep pockets, keen to become market leaders in broadband, one has to ask whether smaller players like Altech should even consider building their own national networks.
It’s a question that is surely occupying Venter’s mind.
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