The missing link

WHEN a public relations company sends out a cryptic email touting an investment by "two significant players in the convergence arena" aimed at addressing prohibitively high communication costs and the lack of access to affordable, high-speed broadband, most journalists in the sector would be sceptical.

At least they'll want to know more before they commit to going along.

That's because seemingly over-hyped invitations with few facts to go on can be a waste of time. PR companies either send them out because they don't want to let the cat out of the bag and risk losing impact before the launch, or to create intrigue around a not-so-exciting event they've sold to the client.

So having convinced myself it would not be a waste of time, I went along to what turned out to be the signing of a collaboration agreement between MTN and Neotel to build a national fibre-optic long haul telecommunications network worth up to R2bn. Thankfully, I was right.

The news is particularly interesting for a number of reasons.

Firstly, as World Wide Worx's Arthur Goldstuck commented in passing ahead of the announcement, it represents the filling of a crucial missing link in the SA telecoms landscape.

While lots of companies have been rolling out fibre in metropolitan areas, and there are at least two new undersea cables coming on stream in the next two years (the international leg), there's been very little focus on connecting the various centres across the country to each other.

The other missing link is the last mile (which connects homes and offices to the metro layer) but that should be filled by new operators rolling out wireless or small, localised fibre networks, and the eventual unbundling of Telkom's local loop.

But in the long-haul space, it's either Telkom's largely copper network - if you can get it to supply the capacity you need - or else Infraco's national backhaul fibre network.

The latter was originally rolled out for the second national operator, which is Neotel (although it hates to be called that; it wants rather to be referred to as the first converged network operator). Neotel then sold to a government-owned infrastructure company called Infraco. Neotel rents the capacity from Infraco, but it would also sell this on to other operators at a later stage.

All parties should profit

So MTN and Neotel's collaboration represents two new entrants into this space (although they are sharing the cost of the build, they'll each lay their own fibre into the trenches). And, as Neotel MD Ajay Pandey said at the launch, the more networks the country has, the better. It should mean lower prices and more capacity for both consumers and businesses.

Secondly, the news points to the acceleration of the trend towards infrastructure sharing.

MTN SA's managing director Tim Lowry finally acknowledged it had been silly for Vodacom and MTN to have each built separate base stations along the country's highways. Sharing the actual structure would have meant less environmental impact and disruption.

The same goes for the laying of fibre-optic cabling. Sharing is caring for the environment, and for road users who are already sick of being delayed or diverted by road works. It's why Dark Fibre Africa should do well and why the City of Cape Town is trying to get all prospective operators to put their pipes into a single hole wherever possible.

While it is good news for consumers and corporates, the announcement does not sound like good news for Infraco.

Pandey insisted that Neotel's arrangement with Infraco remained unchanged for now. But why would Neotel continue to use Infraco as its primary source of backhaul capacity when it has its own network two years from now? At best, it would surely only use Infraco for redundancy purposes?

Altech enigma

The development also raises a question mark with regard to another prospective operator.

While waiting for the signing on Thursday, a few journalists mentioned whom they'd guessed the two cryptically referred players to be. My guess was that Altech had finally decided to go ahead and build its own network, in partnership with some other player. But that was clearly not the case.

This raises the question of why not. From being the blue-eyed boy in the sector, Altech has proven to be something of a disappointment as a player in the SA telecoms space so far. It has yet to conclude an acquisition that would make it a meaningful player in the convergence space, having missed out on both Verizon and M-Web.

The company would argue it simply refused to overpay. Shareholders would salute this approach.

But they also like to see companies take opportunities, particularly ones they've been talking about for some time. And Altech has yet to announce whether its board has decided to roll out a telecommunications network - either provincial or national.

Perhaps there's no business case to do so, unless one already has the other pieces of the puzzle - the last mile and metro layer - in place. But what about infrastructure sharing?

Maybe Altech will still pull a rabbit out of the hat. The more the merrier for us if it does.

- Fin24.com