Government planned to create a broadband infrastructure company based on the long-distance, fibre-optic network developed by Eskom and Transnet, Public Enterprises Minister Alec Erwin said last week in a written reply to a parliamentary question.

The formation of the company, provisionally called Broadband InfraCo, is intended to reduce rapidly one of the key costs of broadband, namely national long-distance connectivity.

Erwin said the company's formation would fast-track the emergence of a globally comparable information and communications technology (ICT) market in SA. While liberalisation would achieve this over a few years, InfraCo would achieve it by early next year, he said in reply to Democratic Alliance communications spokeswoman Dene Smuts.

Liberalisation of the local telecommunications market was decreed by Communications Minister Ivy Matsepe-Casaburri earlier this year to allow private operators to provide more services.

"InfraCo will be specifically focused on long-distance infrastructure, and will not be involved in the urban or last-mile infrastructure, where the Electronics Communications Act will promote strong competition," Erwin said

Broadband InfraCo would be registered as a schedule two public company under the Public Finance Management Act, he said. It would be a commercial enterprise with a strategic intent designed to deliver a return to fund its expansion but with no intent to maximise profit.

"The move is expected to result in a rapid movement towards an international comparable ICT market, where operators compete for customers based on service and prices, while using significantly common infrastructure."

Erwin said that internationally, ICT infrastructure was increasingly treated as a commodity with "differentiation being achieved through services and or content offerings".

Three challenges had to be addressed for SA to participate in the global information communications technology sector: limited access to and the high cost of broadband in SA; the lack of international competitiveness of broadband; and the digital divide between the first and second economy.

Business Day