South Africa has extensive fibre-optic networks connecting its cities and suburbs, and even the country to the rest of the world, but largely lacks the last-mile infrastructure to connect commercial businesses to these networks, says Conduct MD Johan Pretorius.
“Fibre-optic networks are typically very expensive, so you would often find that only large corporates have the budget to lay these networks into their buildings.”
However, what do you do if you are a small business, but would also like access to services such as fast, reliable, cheaper Internet?
“We looked at the connectivity gap, and came up with a business model we think provides the answer,” says Pretorius.
Conduct is a member of the Birchman group, started in the UK by two South Africans in 2003. Today the company, specialising in information and communication technology, has 14 offices in 11 countries, including South Africa.
Conduct specifically “plays in the so-called last-mile market”, says Pretorius. “To put in the last mile of fibre-optic cabling is very expensive – from a capital perspective almost ten times less efficient than long-haul networks.”
What Conduct does, is to proactively install fibre-optic networks in certain selected high-density business precincts. All Service providers, such as Internet Solutions, Vodacom, Vox or MTN, then use this infrastructure and offer businesses in the precinct their various services.
“We provide the network on an open access basis,” notes Pretorius. “Any service provider can use the infrastructure to service their clients. We make our money from the service provider paying us to use the network.”
Pretorius says the idea of an open access network ensures that competition among service providers intensifies, enabling lower-cost services. This becomes increasingly important when considering that data demand doubles every 18 months.
Other benefits include access to tools and services that can “change your business”, such as cloud computing and video conferencing, he adds.
A simply explanation is to say that service providers would often offer a client a pipe with only one offering available in there, explains Pretorius – “orange juice, for example” – as the infrastructure belongs to the service provider. However, if the pipe is made available on an open access basis, the client can choose exactly what service and what service provider it wants – “champagne, orange juice or Fanta.”
Conduct has already installed four networks in South Africa, and is busy with another four. The Industrial Development Corporation is a funding partner for the venture.
“We should have eight networks up and running by the end of September,” says Pretorius.
Of the eight networks, seven are located in Johannesburg, and the remaining one in Cape Town.
“We are looking at rolling out networks in a 100 more areas over the next 18 months,” says Pretorius.