PRESENTATION TO COMMUNICATION WORKERS UNION

1

• PRESENTATION TO COMMUNICATION WORKERS UNION
• INITIATIVES TO LOWER THE COST
• OF ICTs
• SEPTEMBER 2007

SECRET
1
1
1
2
CONTENTS
Vision
Cost Reduction
Increase Uptake Usage
Interventions
South Africas Position
Domestic Backbone
Market Structure
Robust Infrastructure
International Marine Cable
SECRET
2
2
3
CABINET APPROVED THE COUNTRY VISION FOR BUILDING
AN INCLUSIVE INFORMATION SOCIETY
Establish South Africa as an advanced
Information Society in which ICTs tools and
information are key drivers of economic and
societal development
SECRET
3
SECRET
3
4
South Africas position
4
SECRET
5
OUR INTERVENTIONS HAVENT YET REDUCED THE COST
OF DOING BUSINESS SIGNIFICANTLY
Demonstrates that policy is ok, but we need to
work on other interventions
Performance rankings - Global IT Report
2006-2007
SECRET
5
5
6
POOR INDIVIDUAL AND GOVERNMENT ICT USAGE
SUBOPTIMAL SERVICE DELIVERY
Government usage of ICT is poor
Performance rankings - Global IT Report
2006-2007
SECRET
6
6
7
Interventions

• Reduce cost to communicate
• Increase uptake usage

7
SECRET
8
InterventionInfrastructuredomestic
international
8
SECRET
9
DOMESTIC BACKBONE, WIRELESS, MOBILE BROADBAND
NETWORKS THE LOCAL LOOP
Sentech
Sentech
Telkom Neotel
Sentech
Exchange
Vodacom/ MTN/Cell C
Exchange
Vodacom/ MTN/Cell C
Sentech
Vodacom/ MTN/Cell C
Vodacom/ MTN/Cell C
Sentech
Telkom Neotel
Vodacom/ MTN/Cell C
Sentech
Vodacom/MTN Cell C
Vodacom/ MTN/Cell C
Vodacom/ MTN/Cell C
Infraco Telkom
Vodacom/ MTN/Cell C
Vodacom/ MTN/Cell C
SECRET
9
SECRET
9
9
Local loop
10
DOMESTIC INVESTMENTS INFRACO LAUNCH NETWORK
SECRET
10
SECRET
10
11
DOMESTIC INVESTMENTS INFRACO NEOTEL PHASE I
EXPANSION
Musina
Phalaborwa
Polokwane
Witbank
Pretoria
Komatipoort
Nelspruit
Sandton
Johannesburg
To Swaziland Mozambique
Ermelo
Kroonstad
Bethlehem
Kimberley
Bloemfontein
To Namibia
Richards Bay
Maseru
Pietermaritzburg
Noupoort
Durban
Legend
East London
George
2 X 10 Gbit/s Links
Cape Town
1 X STM-16 Link
Port Elizabeth
SECRET
11
SECRET
11
SECRET
11
1 X STM-16 Link
12
DOMESTIC INVESTMENTS INFRACO SANREN EXPANSION
Musina
Phalaborwa
Polokwane
University of the North
Witbank
Pretoria
Komatipoort
Nelspruit
Haartebeeshoek
Sandton
Johannesburg
To Swaziland Mozambique
Ermelo
Kroonstad
Bethlehem
Kimberley
Bloemfontein
To Namibia
Richards Bay
Maseru
Pietermaritzburg
Durban
Grahamstown
East London
George
Cape Town
Port Elizabeth
SECRET
12
SECRET
12
SECRET
12
13
DOMESTIC INVESTMENTS INFRACO KAT PROJECT
EXPANSION
Musina
Phalaborwa
Polokwane
Witbank
Pretoria
Komatipoort
Nelspruit
Sandton
To Swaziland Mozambique
Johannesburg
Ermelo
Kroonstad
Bethlehem
Kimberley
Bloemfontein
To Namibia
Richards Bay
Maseru
Pietermaritzburg
Noupoort
Durban
KAT / SKA Core
Grahamstown
East London
George
Cape Town
SECRET
13
SECRET
13
SECRET
13
Port Elizabeth
14
INTERNATIONAL INVESTMENTS
The high cost of international connectivity in
Africa is a result of limited African investment
in submarine cables
SECRET
14
SECRET
14
15
INTERNATIONAL INVESTMENTS SOUTH AFRICA LAGS
South Africas current rate of growth in
international bandwidth usage is HALF the GLOBAL
AVERAGE It should be DOUBLE for emerging markets
SECRET
15
SECRET
15
16
PROPOSED INTERVENTION ULTRA-CAPACITY MARINE
CABLE - WEST COAST CABLE
Proposed Routing Cape Town Forteleza
(3Terrabits) Cape Town London
(3Terrabits) Mtunzini Cape Town (6 Terrabits)
SECRET
16
SECRET
16
17
PROPOSED INTERVENTION Cont.

• If government had to fund the entire cable, it
  would have to generate its return from a margin
  on the cost of the infrastructure
• If we use this method, there is (currently)
  insufficient demand (or lack of data that
  predicts the demand) to make a business case
  work.
• The only other way is to transfer the onus of
  generating a return on the investment to the
  private sector.
• This is better, because whilst government can
  only generate a return by selling use of the
  infrastructure for a higher price than the
  investment cost, private sector can generate its
  return from applications that use the bandwidth,
  rather than from the infrastructure itself.
• The secret to making this work however is to make
  it affordable for small, medium and large private
  sector players to buy into the system.

18
INNOVATIVE FUNDING STRUCTURE JOINT
PUBLIC-PRIVATE FUNDING
TOTAL SYSTEM CAPACITY 6 TERRABITS
InfraCo 20 1.2 Terrabits US116m
Shareblock A Private 40 2.4 Terrabits 15x
Blocks 160 Gbits per block US16m per block
NEPAD B 30 1.8 Terrabits 40x Blocks 45
Gbits per block US6m per block
Shareblock C Private 10 0.6 Terrabits 100x
Blocks 6 Gbits per block US0.9m per block
SECRET
18
SECRET
18
SECRET
18
19
SHARE BLOCK FUNDING MODEL EXPLANATION

• The proposed scheme creates an international
  bandwidth market that would need very little
  regulation by virtue of the fact that 150 market
  players would be offering bandwidth, i.e. a
  highly efficient market with very little
  opportunity to abuse market power.
• The new company will manage the system of
  allowing shareholders access to bandwidth, and
  will run the system on an ongoing basis.
• A joint DPE-DOC proposal on this initiative will
  be brought to Cabinet

SECRET
19
SECRET
19
20
THE WEST COAST AND NEPAD CABLES INCREASE AFRICAN
PRESENCE IN SUBMARINE CABLES
Proposed Routing Cape Town Forteleza Cape
Town London Mtunzini Cape Town
Operational 2010
Operational 2009
Operational 2009
NEPAD NETWORK SUBMARINE CABLE
SECRET
20
SECRET
20
SECRET
20
21
Update

• Infraco Bill draft complete
• ECA amendment approved by cabinent and now in
  parliament
• Enable state investment and thus licensing in
  sector
• Licensing of Infraco a priority
• Exclusivity with Neotel as long as unlicensed

SECRET
21
SECRET
21
22
Thank you
22
SECRET