Geoff Rehmet <geoffr@is.co.za>

1. internet solutions SAT3 – 2007 and beyond Geoff Rehmet <geoffr@is.co.za>

2. IS Market position • Over 24% market share in leased line internet access market* • Over 6 300 leased line connections • 18 000 ADSL lines (4000 uncapped & 14 000 capped) • Over 700 000 dial up connections (incl. MWeb, ABSA & VISP’s) • 65% market share in corporate Complex Managed Hosting* • 23% market share in Co-location Hosting* • Over 80% of the top 250 listed companies use IS as their network service provider • 3500 corporate customers • 300 Channel partners • IS is the de facto online business community in South Africa • ITIL compliant service provider * BMI - SA Internet Services Market 2005

3. IS Infrastructure Investment • Privately owned and managed network – MPLS core • Internet network • MPLS VPN converged network • African Satellite network • International backbone • Local and International data centres • International partners for VPN reach, Internet and Voice peering • Over 1Gbps international bandwidth

4. Impact of High International Bandwidth Prices • Internet Access • E.g. ADSL • International telephony • Contact Centres • Competition issues

5. ADSL – Service structure • International bandwidth is a significant cost element for internet access, especially ADSL

6. ADSL Internet Cost Breakdown • National: R 33.57 / gigabyte • IPC: R 11.47 / gigabyte • International: R 78.64 / gigabyte • Overall: R 67.58 / gigabyte • 50% national / 50% international • USA: $ 2.00 / gigabyte

7. Telephony and Contact Centres • Telephone calls to and from African countries directly impacted by bandwidth pricing • Contact Centres • High cost for connectivity • Uncompetitive against the likes of India, Phillipines

8. Competition issues • Incumbents abuse monopoly on SAT3 through exclusionary behaviour • Competitors cannot buy facilities on a wholesale basis and compete against incumbents’ retail products • Telkom SA: • Sells ADSL accounts @ R57 / gigabyte via SAIX • Competitors’ cost is closer to R68 / gigabyte • Using facilities, sourced at wholesale prices from Telkom • End users suffer as a result of no competition

9. Minister’s budget speech “In accordance with the spirit of Section 3(2) of the ECA we will ensure affordable access to international broadband infrastructure. I will be consulting shortly with ICASA on my intention to issue a policy directive to the Authority regarding this matter. This relates to the time-frame within which ICASA will ensure that, amongst others: • all arrangements regarding access to, or use of, international cables and/or facilities do not unfairly exclude others, • access to such cables and/or facilities is provided on a cost basis • and access is duly regulated as access to essential facilities as provided for in section 43 of the new Act. I hereby declare that as a matter of policy all holders of licences that will qualify to be converted into individual electronic licences will have the ability to self provide with respect to their international traffic within six months of the promulgation of the ECA.”

10. 2007 and beyond • Access to landing stations • All licensees in each country • All consortium members • Collocation in landing stations • Declaration of landing stations as essential facilities • Ability for all licensees to buy capacity from any consortium member • Access to capacity at cost-related prices • Fair access to all licensees