In February, Western Cape premier Helen Zille said she wanted to ensure every citizen in the Cape Town metropolitan area had access to 100Mbit/s broadband by 2020. Though some critics have dismissed this as political posturing, advertisements seeking a project director suggest there is more to it than just more hot air from politicians.

An industry briefing presented in March outlines some of the Western Cape’s plans. It quotes Zille’s presentation to parliament where she said SA must learn from countries like Kenya where technology is driving economic growth.

She says the provincial government wants to emulate this by building a fibre network — complemented by a wireless mesh network — to connect government buildings and provide ordinary consumers with affordable, high-speed broadband access.

Jo-Ann Johnston, chief director for strategic initiatives in the Western Cape department of economic development and tourism, says R12m has been allocated to the project for its early, developmental stages.

National government has set a target of achieving universal broadband access by 2020, but Zille says she wants 70% of government buildings and all schools in the Western Cape connected within two years. Furthermore, she says a wireless network is to be deployed by this time in Khayelitsha, Mitchell’s Plain and Greater Saldanha Bay as alternative “last-mile” access infrastructure.

Johnston says the proposed wireless mesh network will be based on an open-access model, meaning it’s open to anyone who wants to use it to provide services. It’s being driven by the City of Cape Town, which has allocated budget to the project.

She says the province doesn’t want to compete with Internet service providers (ISPs) or network operators, but wants to act as a wholesaler.

“Some of the network’s capacity will be used by government to connect clinics, libraries and other facilities, with the spare capacity available to ISPs to resell,” Johnston explains.

“In our investigations — looking at ISPs and their cost structures — 90% of their costs go to Telkom, which makes their margins very thin. If you can reduce those costs and provide alternative last-mile access, more ISPs can deliver services and compete. Libraries and the like will provide free access via government facilities, but for other services we must turn to private sector.”

In order to achieve these goals, various bodies will need to be established, including a broadband advisory council to drive the project’s strategic direction and ensure ongoing investment in broadband in the province. Also, a broadband programme office is being created to direct the entire programme along, with a “wayleaves” co-ordination office to fast-track applications. Wayleaves are rights of way that are granted for the deployment of fixed-line infrastructure.

The first part of the project entails creating a provincial network of more than 1 000km of fibre and more than 30 points of presence — with support from microwave services for outlying areas — to which provincial government buildings and schools will be connected.

“With respect to schools, what we’ve done is a two-step process,” Johnston says. “One is the big, holistic project, which is going through a PPP (public-private partnership) process; the other is the procurement process.”

Johnston says there are steps underway to created a “transaction advisor” or board that will involve a consortium of legal, financial and technical people who will do due-diligence assessments of the whole project and which the province hopes to have concluded by the end of 2012.

There are short-term measures in place so that “time is not wasted”. These include the goal of connecting government buildings and schools. Johnston says the procurement process for schools will be a “collaborative affair” and that the project involves the State IT Agency and provincial departments.

She says there has been a huge response from the private sector to the project and a great deal of interest in participating in it. This is perhaps not surprising when one considers that a project of this scale will cost hundreds of millions if not billions of rand.

Johnston says the private sector has to be kept informed, but at arm’s length until the PPP process is finalised so that the process remains neutral. “All the information we provide is very transparent. We want industry to know what we’re doing, but can’t share all of information until the PPP process is concluded.”

A week ago, the provincial government advertised the position of programme executive, a three-year contract position that Johnston says will require someone who can “spearhead the process” and who understands that they will not be working in isolation. “This is a very collaborative affair; it has to be for it to be effective.”

Asked whether the project’s timelines are too ambitious, Johnston says the “process and timelines are on track” and the provincial government has opted to be “very aggressive” in meeting its targets. “Often, government comes up with grand schemes, but this is a number of smaller projects.”

She says she hopes there is a great deal of interest from the private sector so that competition is fostered, particularly because the PPP is most likely to go to a consortium rather than a single entity on account of the scale of the project.

State-owned Broadband Infraco will supply some of the infrastructure, particularly when it comes to points of presence where service providers can connect to the infrastructure. “We don’t want to compete with the private sector, and Infraco is already rolling out some of the infrastructure this project needs”.

Market failure
Johnston says SA is falling behind not just the rest of the world when it comes to connectivity, but even other African nations. “This points to market failure,” she says. “The idea is not to intervene and become a competitor or a monopoly — there are too many [failed] examples of where governments have interfered — but we want to reduce barriers to entry and the cost of new telcos coming into the market.”

Johnston says the high capital cost of building networks often puts off newcomers and even existing ISPs are not particularly interested in creating their own infrastructure, but want to sell services. “This is why we’re advocating open-access models across the network.”

Asked what the likely ultimate cost of the project will be, Johnston says she “has an idea of what the project figures will look like, but I can’t disclose those yet”. She says the figure is high and that the more private-sector involvement there is the better.

“Part of the motivation for the project is that government spends ‘X amount’ on broadband and data for its own use and, if you aggregate those costs across the province, it’s a fair chunk. You can then negotiate better deals or provide sufficient scale to justify bigger things.”

Johnston points to the Tertiary Education and Research Network (Tenet) model used by SA universities. “SA universities aggregated their demand for international access and then, instead of each paying for their requirements alone, they pooled their demand for a better deal on international connectivity. The impact of that was enormous – it brought down costs significantly while increasing their speeds and capacity.”

Ultimately, Johnston says the model the project is based on is “a procurement model” and concedes a “fair amount” of the inspiration” for the project has come from the BWired model that seeks to create a metro fibre network in Johannesburg in a partnership between the city and Ericsson. “Effectively you go through a PPP process, then hand back the infrastructure to government after around a decade and use it as an open-access network.” — (c) 2012 NewsCentral Media