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Adequate
bandwidth
ADSL
South Africa (Broadband South Africa), 19 April
2007
Neotel made it
clear that they’re ‘…considering all options to ensure that
they have adequate national and international bandwidth, both
in the short and long term. This may include competing with
Telkom on SAT3’ (Neotel plans for bandwidth needs, MyADSL, 16
April 2007).
Adequate bandwidth is the
name of the game and Neotel is leaving nothing to chance. In
regard to Neotel’s national bandwidth needs, it seems that all
loose ends are covered for
now:
-
Own
network – ‘Neotel has a well
established inner-city fiber network, and through
its recent agreement to acquire Transtel it will
gain some inter city capacity. It will however
still rely heavily on InfraCo for inter-city
capacity for the first few years of operation’
(Neotel plans for bandwidth needs, MyADSL, 16 April
2007).
In
other
word, Neotel will use its own network for its
national bandwidth needs despite its reliance
on InfraCo the first few
years.
-
InfraCo
–
‘Neotel has a four year exclusivity agreement with
InfraCo, and has further reached an agreement which
gives them the option to maintain this network,
although they are not under obligation to do so.
Neotel said that they are currently exploring an
outsource model for this part of their operations’
(Neotel plans for bandwidth needs, MyADSL, 16 April
2007).
In other words,
Neotel will for the first four years at least use
InfraCo’s network as well for its national
bandwidth needs.
Will
Neotel consider building their own network after their
exclusivity agreement with InfraCo
expires?
Yes.
According to MD at Neotel, Ajay
Pandey, ‘…it will depend heavily on the business case at that
time’ (Neotel plans for bandwidth needs, MyADSL, 16 April
2007). Also, ‘…it is even possible to acquire capacity from
Telkom if it makes business sense for the second national
operator’ (Neotel plans for bandwidth needs, MyADSL, 16 April
2007).
In other words, if it makes
business sense Neotel will consider building their own network
or even acquire capacity from Telkom.
What about Neotel’s international bandwidth
needs?
Neotel sees the most practical
option, over the short and medium term, as the instance where
the SAT3 landing station is declared as an essential resource,
enabling Neotel to compete with Telkom head on in the
international bandwidth space.
It clear that Telkom’s
stranglehold on the SAT3 submarine cable system presents the
biggest obstacle at this stage. The good news is that ‘Telkom’s
SAT3 exclusivity agreement is however about to expire, and this
may give Neotel the opportunity to compete with Telkom through
their shareholder VSNL which is also a shareholder in SAT3.
Pandey said that Neotel, through their partner, has raised this
issue at the appropriate level but that they unfortunately have
not received any positive news to date’ (Neotel plans for
bandwidth needs, MyADSL, 16 April 2007).
In other words, Telkom’s
stranglehold on SAT3 might soon come to an end.
Pandey ‘…pointed out that he
feels strongly that Government and ICASA should declare the
SAT3 landing station an essential resource, this will give
Neotel the opportunity to compete head on with Telkom in the
international bandwidth space. Pandey noted that this move will
allow the second national operator to provide a full
international circuit to clients, and while this is not the
only option it is the most practical, especially in the short
and medium term’ (Neotel plans for bandwidth needs, MyADSL, 16
April 2007).
In other words, even if Neotel
can’t compete through its shareholder VSNL another option will
be to take Telkom head on when the SAT3 landing station is
declared an essential resource. This is the best practical
option according to Neotel.
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