Is Telkom the new Broadband Infraco?

Bonnie Tubbs
By Bonnie Tubbs, ITWeb telecoms editor.
Johannesburg, 18 Feb 2015
Broadband Infraco CEO Puleng Kwele recently said the company was positioning itself to take on Telkom, thanks to its newly-upgraded high-capacity network.
Broadband Infraco CEO Puleng Kwele recently said the company was positioning itself to take on Telkom, thanks to its newly-upgraded high-capacity network.

A shadow of uncertainty has been cast over the role of the state's broadband entity Broadband Infraco in the wake of government's elevation of Telkom to the lead agency for national broadband deployment.

President Jacob Zuma's State of the Nation Address (SONA) announcement that Telkom would lead SA's broadband initiatives elicited an icy reception from industry watchers, who said the move would only entrench the company's monopoly.

Yesterday, during its post-SONA address, the Department of Telecommunications and Postal Services (DTPS) hit the nerve harder, when deputy minister Hlengiwe Mkhize said, not only had the ICT industry called for Telkom to play this lead role, but that the end result would be a new national broadband company.

"The ICT industry has during the market sounding study on broadband led by the then Department of Communications and National Treasury called for Telkom to play this lead role on broadband following on the successes in countries such as Malaysia, Singapore and New Zealand.

"This will lead to a formation of a national broadband company to build an open access network and connect all South Africans in the country."

Undefined aims

It is unclear where this leaves Broadband Infraco - the state-owned broadband company that was licensed in 2009 to carry out government's broadband objectives - and the DTPS has failed to answer any of ITWeb's queries on Telkom's role in broadband rollout sent since last Friday.

Democratic Alliance shadow minister of telecoms and postal services Marian Shinn is riled by the fact government believes it owns Telkom and can command its behaviour.

"The only SOC [state-owned company] in the telecommunications network space is Broadband Infraco. The others are the State Information Technology Agency (SITA) and Sentech. Is Telkom going to buy this entity or is government going to buy Telkom as part of its radical transformation schemes?"

Shinn says more clarity on exactly what the government has in mind is needed.

A schedule two company, Broadband Infraco was awarded an individual electronic communications network services licence in October 2009, allowing it to sell high-capacity long-distance transmission services to licensed fixed and mobile network operators, Internet service providers and other value-added network service providers. Schedule two entities are state-owned, but have to be profitable.

Moot mandate

Infaco's purpose is in line with the National Development Plan of establishing national, regional and municipal fibre-optic networks to provide the backbone for broadband access.

Mkhize said yesterday Cabinet had taken a "firm decision to designate Telkom as the lead agency for broadband deployment at national, provincial and local levels" and that the decision was an important one on government's transformation agenda.

Just over five months ago, Broadband Infraco said it was positioning itself to take on Telkom in the backhaul connectivity space, as it aimed to attract more customers onto its newly-upgraded high-capacity network. The company had at the time just completed a R100 million network upgrade.

Broadband Infraco spokesperson Sammy Mafu says it is "business as usual" at the company, until such time that government indicates otherwise.

"[The company's mandate] is to expand the availability and affordability of access to electronic communications, including underdeveloped and under-serviced areas in accordance with the Electronic Communications Act. This mandate remains unchanged and the company operates at full operational ability and focus."

He referred ITWeb's query to DTPS spokesperson Siya Qoza "for any further elaborations for statements from within the department". Qoza was not available this morning.

Broadband Infraco has, since inception, struggled to fulfil its mandate and previously implored government for more funding to help it do so. CEO Puleng Kwele said in 2013, if government wanted the company to fulfil its mandate of increasing broadband access and affordability in SA, it would have to invest far more substantially - as much as R80 billion more.

Last year, the company said it was exploring funding options as it needed additional capital to contribute to SA's goal of universal broadband access by 2020.

Mysterious study

Meanwhile, the "market sounding study" referred to by Mkhize is, on initial investigation, unreferenced.

Shinn says she knows nothing of the study that informed government's decision to designate Telkom as lead agency. "It certainly wasn't mentioned - either the study or its recommendations - when [DTPS minister Siyabonga] Cwele gave us a brief update on SA Connect's progress last year."

ICT expert Adrian Schofield says he, too, knows nothing of the sounding board. "It could have taken place years ago. It is easy for [government] to misinterpret a comment. If we all know Telkom has the most fibre in the ground, then it would be obvious to say they would be able to facilitate broadband rollout - but that doesn't mean we are endorsing Telkom as the national broadband agency."

He says SONA should not be used to spring surprises on the electorate or to blindside stakeholders who have been led to believe the government follows a consultative process when developing plans and formulating legislation.

"The government has two agencies whose mandates would probably include the procurement of an extension of broadband connectivity - SITA and the Universal Service and Access Agency of SA. Why Telkom? Is it an admission of failure in the other two? And why not Broadband Infraco? At least they are 100% state-owned."