Sentech needs R250m more for broadband

Sentech CEO Setumo Mohapi

Sentech says its national broadband network will cost between R1,1bn and R1,2bn over the next three years, leaving the company short of R250m in financing to build the infrastructure.

The state-owned company has set aside R814m over the medium-term framework period (the next three years) to bring Internet access to schools, clinics and underserviced rural and municipal areas.

CEO Setumo Mohapi says schools and clinics have long been neglected by the private sector. “We have so many children across the country that have never even seen the Internet,” he says. “How can we release them into the broader economy without that access?”

He says the private sector has mostly neglected to provide Internet access in rural areas because they struggle to recuperate capital expenditure.

“We need government intervention that says we don’t need to recover the capital investment, but only make sure that operational expenditure is sustainable,” Mohapi says.

The network will give school pupils and rural doctors the access they need and allow the private sector to lease the infrastructure for their own services without incurring the full capital costs normally associated with such deployments.

“We can only afford to do this project if government agrees to intervene. But if we don’t do anything about our broadband penetration, we will continue to fall behind the rest of Africa and our people will not be uplifted,” says Mohapi.

Sentech has come under fire over its decision to provide broadband services given that its first foray into the space was a total failure. The company pulled the plug on its MyWireless business in 2009 after demonstrating it was incapable of running a retail consumer-facing business.

However, Sentech chairman Logan Naidoo says this project will not face the same problems as MyWireless because Sentech is not rolling out a retail consumer service. “This project will be aimed at completing government projects and bringing access where the market has failed,” he says.

Sentech wants to provide services at the lowest possible cost to underserviced areas. Low wholesale costs should encourage other providers to use the infrastructure to build their own services in those areas.

Sentech wants to use the money it has already been granted by government — R500m plus interest — to begin building the network, which will probably use WiMax technology. — Candice Jones, TechCentral

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http://otelafrica.com Mohammad

This is history repeating itself. Sentech do not have the vision or the stability to provide such services.
Wayne

Sentech are holding out the cup again. No surprises there…
TMan

Will people stop with these condescending remarks & give this new Sentech leadership a chance & support? As a rural dweller I support this move to bring broadband access to all, instead of it being a priviledge of the urban upper middle-class only. Commercial operators have shown little interest in reaching the rural kid for 17 years, so the anti-Sentech chorus by selfish people sitting in air-conditioned offices in Jhb-North is really tiring now!!!!!!!!!!!!!!

My advice to Icasa would be to exchange the sprectrum allocation Sentech has (2.5+) for the so-called ‘digital dividend’ spectrum that’s apparently suitable for sparsely-populated rural areas.
Jim

“that have never even seen the Internet” – like it is some tangiable, touchable thing?! Surely he means “world wide web” or something similar…

I think we need more investment into fibre, and getting cheaper faster Internet connections into the social-economic powerhouse area’s rather than the rural area’s – the whole point of course being that with the increased speeds and cheaper costing, there will be new businesses and more money made as a result. Imagine if we could make use of the host of foreign streaming services – or locally produced “spin-offs”. It takes spending money to make money – (and hopefully this isn’t offensive) but you kind of need the Internet in area’s that have a higher disposable income in order to ensure that more money is spent online – its a bit of a vicious cycle I guess.

The sad reality is that while I don’t doubt that rural area’s can do with the Internet, when one looks a the problems already existing in them (electricity, water, sanitation) surely the Internet is not a priority?
TMan

Hi Jim, I see your ‘commercial’ point of view but obviously disagree with you vehemently. Firstly, just like water & electricity, communications network is a Utility service that everyone should have access to, at cost of course. Secondly, information services have an exponential growth rate & gearing to skills/economic prospects. Therefore, deliberately leaving out any section of the community will have adverse effect for some time in that that particular generation will never quite catch-up. It’s the same with the schooling system that’s gone wrong . . . its tragedy is not just the current poor graduations (both i.t.o. quantity & quality), but more the fact that whatever improvements are made now will only yield results in 10 – 15 years’ time.

Btw, the social vs commercial trade-off is a sign on short-termism, because the 60% or so of youth growing up in rural & peri-urban areas is a future market despite their current poverty. So biz orgs would do well to nature that market & encourage across-the-board growth in per capita income (and therefore desire/ability to consume).
Jim

TMan – sure, I get you.

Ultimately things would actually work out better for all if Telkom simply lowered their prices. I don’t know if they’re familiar with the phenomenon known as the economy of scales…

lower the price of connectivity, stop charging us for analog lines we aren’t using (with data connectivity) and more people will purchase lines, meaning more money for Telkom – win win situation for everyone.

Of course Sentech really just creates some competition, but I still don’t think its enough (look at Telkom’s internet – they are still charging the same prices per GB as they were two years ago – when all the competition is charging drastically reduced rates). More business to the companies that actually provide the lower cost service!
Zweeee

Telkom internet would never work in the rural areas where there is no cable infrastructure… thus in steps Sentech.

I think the provision of Internet in an underserviced community can only benefit its members, think of the thousands of school kids leaving school never even experiancing the wonders of the information age! The clinics could have access to new treatments and medical procedures, etc.

Sentech needs R250m more for broadband

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