R3-4bn needed for Western Cape telecoms build

Helen Zille: Ambitious plans in her state of the province speech to make the Western Cape SA's most connected province. (Image: GCIS)

On Friday, 17 February, Zille outlined ambitious plans in her state of the province speech to make the Western Cape the most connected province. It included the rollout of a broadband network to connect provincial and municipal buildings throughout the province.

However, the most controversial aspect would be the creation of a wireless mesh network that could be the largest of its type in the world to offer cheap "last mile" access to people living in the economically depressed areas of Khayelitsha and Mitchell's Plain.

The creation of this network could potentially put the provincial build in direct competition with Telkom, as the partially state-owned provider still has an effective monopoly in providing fixed-line telephone services directly to consumers.

Zille made it clear in her speech that the telecommunications build should be completed by 2014, the year in which the next national and provincial elections are due to be held.

Independent political analyst Daniel Silke said that the telecommunications build was part of the Democratic Alliance's strategy to differentiate the Western Cape from the rest of the country.

Trump card

"This will be their trump card. If they can make the Western Cape a shining star in terms of service delivery, they will also want to make it a shining star in terms of competitiveness not only nationally, but globally as well. This is where the rollout of a strong telecommunications infrastructure comes in," Silke said.

Sooful, who led the City of Cape Town's ICT transformation when he was the chief information officer there, said the provincial model was an extrapolation of that used by Cape Town with some differences.

"Both are cost substitution models. Province wide we have found that all the municipalities and the provincial government spend R335m per year on telecommunications costs. If we can save on that by building our own network, then we can lease spare capacity to other service providers who can deliver services to businesses and consumers," he said.

Sooful said that while Cape Town was spending R45m per year in slowly building its own infrastructure, the provincial plan was to build far quicker and to get services running thereon as soon as possible.

He described the model as being similar to that of a road system in which a transport company doesn't own a road, but pays license fees for its trucks to use it.

"It is a model that has been used successfully in many other countries and we believe it will be one that can be used in the rest of SA," he said.

Open access model wanted

Sooful said it was different from the "Bewired" system that was currently being used by the City of Johannesburg as that model was essentially outsourced and controlled by giant telecommunications equipment provider Ericsson.

"That mode is still valid as it gained National Treasury approval. However, we want our model to be an open access model," he said.

By open access, Sooful meant that other telecommunications companies could use the broadband network and pay some kind of usage fee to the special purpose vehicle that would be set up to manage the process.

"The special purpose vehicle would itself be a public private partnership to build the broadband network. Each will provide 50% of the funding," he said.

Sooful said companies participating in the project would sign 10 to 20 year lease deals with the provincial government and this would enable them to raise the funds they need on the basis of that.

"This way we can stimulate long-term private investment and innovation," he said.

Cheap alternative required

The wireless mesh network was still being worked out, but Sooful said it was an attempt to get cheap direct telecommunications access to consumers' homes.

"In those areas that we are targeting it is very difficult to get direct and cheap telecommunications access to the homes, even to our municipal libraries and clinics," he said.

Sooful said the idea was to get real cheap connectivity to about one million people who live in a 72km² area - something that has not been done in SA before.

"We have to find a cheap alternative," he said.

Sooful said the telecommunications build programme would kick-off in the new financial year on 1 April with the establishment of a provincial office to manage it to be constituted on 1 July.

A telecommunications consultant who asked not to be named said the main criticisms of the plan were that the time table was too ambitious and that the provincial government would now be involved in a business which was not at its core.

"Essentially the Western Cape government would become a tier one service provider buying bandwidth from the international operators and this is not really their core business," the consultant said.