Electronic communications network service NewTelco South Africa, a strategic partnership between Germany-based NewTelco and Spescom, aims to provide a carrier-neutral telecoms hub, where network infrastructure serves multiple service providers, says telecoms consultants Spescom MD for telecommunications Thomas Makore.

NewTelco South Africa aims to tap into the outsourced infrastructure telecoms market, where service providers use a telecoms network managed by a different company instead of developing their own network. This enables smaller businesses to be competitive in the telecoms marketplace and larger telecoms companies to gain efficiencies in their core businesses.

The potential increase in outsourcing is made possible partly 
by the increased deregulation of telecoms in South Africa, from 2009.

More than 80% of the voice traffic generated in the Southern African Development Community (SADC) region goes through South Africa. This new hub will offer local, regional and international carriers a fast, cost-efficient, carrier-grade, reliable presence in South Africa to switch customer traffic seamlessly and inexpensively in the 
region and provide a transparent connection to international destinations, Makore says.

“That is why NewTelco South Africa was established. If customers have more choices and are better able to afford services, 
they will use telecoms services more often. Further, if prices become more affordable, people will use telecoms to start more businesses from home and, thus, connectivity encourages growth,” he explains.

As seen in US, European and South-East Asian companies, 
prices that decrease owing to an increase in competition are more than offset by the increased 
uptake of users, meaning more revenue for the companies, he adds.

Growth and Efficiency Gains

Makore predicts that, in the short term, more companies will seek to outsource their high-level and specialised internal support ser-
vices as well. These services manage the technology systems used by companies. It is often difficult and expensive to keep the expertise necessary to manage technological systems internally in a company, he adds.

“The main value that Spescom can add to a telecoms business is to deliver specialised services. The company builds specialised skills internally, firstly, to develop 
the skills and capacity in the country and, secondly, to provide high-quality services to clients,
resulting in the efficienct running of their networks. Spescom’s role is to enable and encourage competition and choice in the marketplace,” he says.

Spescom reports noticeable growth and investment in the spheres of international, national 
and metropolitan connectivity, and believes that more investment will be made into last-mile infrastructure in 2011. 
Makore also predicts that the company’s traditional business of supply and installation of technologies will see increased 
demand in 2010 and into the near future.

Last Mile and WiMax

Last mile connectivity, which links individual consumers with the broader network, is still dominated by broadband and wireless connections and there are many companies offering wireless services. 
Broadband use has increased by 50% since 2009, with an 
estimated 1,5-million users. Wireless broadband is the pre-
dominant last-mile service 
because it is cheaper for companies to provide than fixed-line services, and is quicker and 
easier to release onto the market.

A recent example of the 
demand for broadband is WiMax, which was developed and released in the past five years. It is a next-generation technology that supports Internet-protocol data transfers. 
It is more efficient than, and competes directly with, other wireless technologies, such as 3G, Makore says.

However, whereas 3G uses 
cellular technology and networks to transfer data, WiMax makes more efficient use of a frequency 
spectrum because it uses complex and efficient multiplexing technologies. 
A frequency spectrum is a 
limited commodity and should be used in the most cost efficient way to take advantage of economies of scale. This means that there is a need for regulatory body Independent Communications Authority of South Africa (Icasa) to develop a policy that reallocates the frequency spectrum to licensed 
operators in the most efficient and equitable way.

Icasa announced, in March 2010, that, as part of the new 
frequency spectrum regulations, companies that request the WiMax frequency spectrum, and present a business plan 
covering the use of the spectrum to the regulator, will be considered on the merits of the business case, he explains. 
Currently, Telkom, Sentech and iBurst have been allocated the necessary frequency spectrum to build a fixed or mobile WiMax network.

Makore believes that the correct way to use the WiMax frequency spectrum would be to allocate a national frequency spectrum to larger companies that have the capital neces-
sary to develop national networks and then to allocate the regional 
frequency spectrum to the 
medium-sized and smaller companies that have targeted and 
regionalised operations.

“South Africa has to be creative and innovative in its allocation of the spectrum to allow more players into the marketplace to increase competition. With this reallocation of the WiMax frequency spectrum, we should see more businesses 
deploying the WiMax technology. This, again, means more choice for consumers and greater coverage of broadband,” he says.

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