Hon Chairperson, members of the National Assembly and the people in the gallery, I'm very pleased to be able to introduce the debate on the Broadband Infraco Bill in the National Assembly.
In the modern industrial economy, the existence of high speed, high capacity telecommunications infrastructure is a major driver of economic growth and more accessible socioeconomic services such as health and education. In fact, there is little doubt that this is a strategic necessity for contemporary growth and development.
It is this understanding that led the government to decide to obtain a key fibre optic national network, developed originally by Transnet and Eskom, and put it in state hands. This will allow for a strategic investment programme to take place according to a clear timetable and with a clear intent to modernise our broadband infrastructure and lower the cost to the economy of such capacity.
This will be achieved not through some form of subsidy but by a long-term strategic investment by the state, where our pay-back periods are longer and the rate of return required, determined by a number of economic calculations rather than profit maximisation, is the prime determinant.
If these objectives of high speed, high capacity and internationally competitive telecommunications pricings are met in the medium to long-term, the state can then reconsider the need to retain total or partial ownership of such infrastructure.
The background to the decision to retain the long-range fibre optic assets of Eskom and Transnet in state hands spans some years and takes place after many complex negotiations. I think the difficulties that this presented in the processes related to consultation, licensing and scheduling in terms of the Public Finance Management Act are fairly commented on in the portfolio committee report on the Broadband Infraco Bill.
There is no doubt that everything could have been smoother. However, this is rather an unusual situation not fully envisaged in our legislation which is relatively youthful in implementation. Accordingly, I would like to thank the portfolio committee for the long hours and intense work they put into the processing of the Bill.
The fact that the Portfolio Committees on Communications and Finance were consulted on many matters and, in the case of Communications, participated actively, was additional testimony to both the complexity of the policy issues that arose and the amount of work this relatively short Bill entailed.
I would like to thank the former chairperson of the Portfolio Committee on Communications for the support he gave the DPE, the Department of Public Enterprises, and the Portfolio Committee on Public Enterprises.
Let me deal very briefly - I'm sure members of the committee will do so in some detail - with the key issues that have arisen in the inputs to the portfolio committee hearings.
Broadband Infraco is a precise intervention in our telecommunications sector. Whilst South Africa's telecommunications industry is well established with world-class companies, it is characterised by a limited number of incumbents who hold significant market power, and the size of our economy is likely to make this a relatively permanent feature of this economy.
This means that simply licensing additional players does not significantly alter the market structure, and global market forces may lead to an underinvestment in large-scale national infrastructure within such a compact market as ours. Accordingly, leaving such critical investment purely to market forces was too risky, given our urgent need for greater and more internationally competitive broadband capacity.
However, we are confident that the new Electronic Communications Act and licensing conditions now in progress will lead to active private sector development in the multiplicity of value-added services that utilise broadband.
It is important to note that Broadband Infraco will not enter these areas in competition with the private sector. It seeks to ensure long-range broadband capacity that will liberate such value-added services from the constraints of capacity and cost.
To this end, it will focus on intercity, national networks and undersea cables. In the latter case we will work with other players to ensure that a timely and large capacity broadband connection to the world is available. By making long-distance connectivity available to the private sector on a cost-plus basis, Infraco will commoditise long-distance infrastructure and will bring the South African telecommunications market in line with others worldwide.
There is general agreement that Broadband Infraco should be licensed as soon as is practical. Indeed, this is important if we are to achieve our objectives. Following the debate on possible options, I am certain that we should follow the processes preferred by the Department of Communications and Icasa.
From the side of the Department of Public Enterprises, we will work actively with the Department of Communications and Icasa to facilitate progress in this regard since, at the end of the day, the real strategic objective is to transform South Africa's telecommunications sector into a highly competitive player in the interests of our economy and society.
Other strategic projects such as the SKA, the Square Kilometre Array, Sanren, the SA National Research Network and the university network, will be almost impossible to achieve without the capacity we need - and of course we will need a great deal of capacity for 2010 in the form of broadband.
Let me say that many submissions made in the portfolio committee raised what I believe were legitimate interests, but I think that at the end of the day there was very clear consensus that this intervention was useful and was an important strategic intervention.
The issue of the scheduling of the Public Finance Management Act for Broadband Infraco did bring to light many different viewpoints and I value the process adopted by the portfolio committee to inform themselves on the issues and indeed to come to some clear views on their part.
However, as the portfolio committee indicates in its report, the executive have to give the lead on the matter. This matter has now been resolved through a consultation process in the executive and Broadband Infraco will be a Schedule 2 entity with specific reporting and monitoring requirements.
The completion of this legislative process will allow for the establishment of a company that we believe is set to revolutionise the ICT sector and move us one step closer to making more affordable broadband access a reality.
I would like to thank the leadership of Neotel, Violesh Sanchar Nigam Limited, VSNL and the Tata Group for their farsightedness and support for South Africa's long-term strategic interests in telecommunications. In doing this, they have often been prepared to accommodate us rather than insist on immediate commercial requirements. Such an approach is highly valued and we have undertaken to continue to work together to meet these strategic needs.
I have a very high regard for the work of the Portfolio Committee on Public Enterprises. The debates in the hearings on the Bill have been rigorous and engaging and the DPE has learnt and benefited from the vigilance and full commitment to this process on the part of the committee members.
All the stakeholders I have talked to have expressed their respect for the committee and the process. Accordingly, I would like to express my thanks and admiration to the portfolio committee for a job well done and for putting up with some of the unusual circumstances I referred to earlier.
In particular, I would like to express a special word of thanks to the outgoing portfolio committee chairperson, Yunus Carrim. We will indeed miss you but we know that you will add value wherever you'll be. I know that I will still turn to you for advice from time to time, not only on political matters.
I would like to welcome hon Fatima Chohan-Khota as the new chairperson, and she is rapidly informing herself on the intricacies of this new challenge. The manner in which these two experienced comrades have handled the changeover has been excellent. I'm sure that this very strong portfolio committee will continue to go from strength to strength as we deal with the interesting and important challenges ahead in Asgisa. With the support of the portfolio committee, I commend this Bill to the House. I thank you. [Applause.]