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May 01, 2009

Telecoms operator takes to the sea as competition heats up

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Fixed line operator Neotel is the only telecommunications operator in South Africa that is involved in all of the current and planned submarine telecommunication cable systems confirmed to land in the country.

The SAT-3/WASC/SAFE is a submarine communications cable linking Portugal and Spain to South Africa, with connections to several West African countries along the route. The Seacom cable is an optical fibre submarine communications cable that will link South Africa, Madagascar, Mozambique, Tanzania, Kenya, India and Europe. The cable is expected to be completed in June 2009.

As part of its efforts to increase international connectivity, Neotel has signed a cable development agreement with Seacom under which Neotel will own the cable landing station, in Mtunzini, KwaZulu-Natal, and all facilities within South Africa. Neotel will provide the backhaul connectivity to Johannesburg while Tata Communications Transformation Services (TCTS) will operate the entire cable system for Seacom.

Neotel has previously announced an investment of R20-million in the landing station and facilities necessary to land Seacom. However, this does not include backhaul connectivity, which makes use of a portion of Neotel's national and metropolitan network build.

Tata Communications, Neotel's major shareholder, recently announced that the group would be an anchor tenant on the SEACOM cable, but the amount of the deal has not been disclosed.

The Seacom cable has a total capacity of 1,2-trillion bytes a second, roughly ten times the total amount available on SAT-3 today. As with all cable systems, only a portion of this will be used initially, and more will be provisioned over time.

It is expected that this capacity will be sufficient for a number of years. Seacom will be the first truly competitive submarine fibre cable system landing in South Africa, offering open access to the market.

"Perhaps more importantly, it will represent a cost-effective and physically independent alternative to the current SAT-3/SAFE system, and hence offer choice to telecoms providers, as well as improving the overall reliability of South Africa's connectivity to the world," says Neotel chief technology officer Dr Angus Hay.

The company's access to Seacom, SAT-3, as well as optical fibre and wireless networks is aimed at providing businesses and consumers increased international and national connectivity.

While Neotel has deployed wireless 3G CDMA2000 to deliver its wireless NeoConnect and voice and data service NeoFlex to consumers and small medium enterprise services, the company is typically delivering services to larger enterprises in the larger metropolitan areas using optical fibre or microwave links. Neotel is also rolling out wireless technologies such as wireless broadband WiMAX

"Although Neotel already has its services available within the major metropolitan areas, the company is accelerating the deployment of its wireless and optical fibre networks. Existing wireless coverage in target cities will double over the next year and the deployment of fibre optic access is ongoing," says Hay.

As part of its initial deployment of telecommunications services, Neotel established the Next Generation Network (NGN) project, which is the basis of all its services today. The company delivers converged voice, data and internet services over a single connection carried on the internet protocol (IP) and resulting in a network that is flexible enough to meet growing customer requirements.

Neotel continues to gain ground in the consumer and small business market, signing up about 150 new NeoConnect and NeoFlex subscribers a day and has over 100 active code division multiple access (CDMA) towers. The core of Neotel's NGN is complete with most of the current work being done on wireless and optical fibre access networks, in order to reach more customers. "Neotel is on track to meet its licence obligations of population coverage of 50% of the population of 14 metropolitan areas within five years," says Hay.

Neotel is also collaborating with telecommunications company MTN South Africa on a fibre-optics cable network. The network will cover a distance of 5 000 km, connecting the major centres across South Africa using optical fibre, capable of carrying many gigabits a second of bandwidth.

The deployment of high-speed, quality voice and data transmission is seen as important to remaining competitive within the industry and to improving the overall customer experience in the converged mobile and fixed line arenas for both MTN and Neotel .

"The partnership enables both parties to enhance shareholder value and substantially reduce infrastructure and operational costs, while achieving the independence of having a new backbone network," says Neotel head of business support services Imran Abbas.

The first route of the national fibre network will extend from Gauteng to KwaZulu-Natal, incorporating Pietermaritzburg and Durban. The construction of the first phase of the network began in April 2009 with a completion date scheduled for before the 2010 FIFA World Cup. The total project will span two to three years.

Currently one of the biggest telecommunications projects in Africa, the project is expected to cost R2-billion. While rough terrain, mountainous areas, weather and materials being shipped from other countries are proving to be huge challenges, the project is a significant achievement in terms of infrastructure partnership in the telecommunications market.

"This will not only have a financial benefit to the consumer, but also an environmental benefit, in that, operators don't have to dig up roads again," adds Abbas.

"Historically, bandwidth take up in South Africa was constrained by price as a result of an existing monopoly, but this has changed with Neotel now offering competitive, independent access to SAT-3.

Seacom will add yet another alternative to the market and customers will benefit from the resulting competition; and take up will typically be much higher, in such a competitive market," concludes Hay.


Edited by: Laura Tyrer
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