SA cities stand firm

Johannesburg, 24 Apr 2008

South African municipalities have a strong case for investing in municipal broadband networks, as they are driven by a social development agenda, rather than a profit-making imperative, say market watchers and the cities themselves.

This is despite EarthLink's recent withdrawal from the Philadelphia municipal WiFi project and some speculation that enthusiasm for such projects is waning.

"Cities make lots of investments that don't directly bring them any money," says Radian senior consultant Mark Neville.

"Municipalities are not businesses; they are there to provide services and stimulate economic development. If telecoms infrastructure investments meet these criteria, then cities are right to consider them," he says.

BMI-TechKnowledge MD Dennis Smit concurs. "The use of municipal networks to replace Telkom data connections is very, very warranted as almost all cities which have installed wireless backbones generally paid them off in three months."

"The anticipated impact of the network on productivity and job creation makes the business case impressive," says GCIS spokesman Emmanuel Mdau.

Separating the issues

<B>Progress report</B>

Gauteng
The project: Integrate municipal and provincial government into a consolidated entity.
* The business case and design elements are close to being concluded.
* Co-operation agreements between the local and provincial tiers have been clarified.
* The funding mechanism has been set up.

eThekwini
The project: Roll-out a R501 million fibre architecture to all municipal offices, with excess capacity used to provide citizens with broadband access.
The city is in the process of selecting a final vendor for its initial roll-out. A decision is to be made by mid-June.

Cape Town
The project: Roll-out fibre to all its offices, with the initial outlay of fibre estimated to cost about R300 million.
The city is finalising the selection of its preferred candidate for the installation of fibre. The decision is to be made in May. The business plan is out for public comment.

Johannesburg
The project: Use existing fibre optic cable for its R500 million broadband network to self-provide communication services. The city will also provide services to citizens in due course.
Short-listed candidates are testing their proposed networks. There is no input as to when this will be finalised.

Knysna
The Knysna municipality has already rolled out its broadband services to citizens.

Tshwane
Failed to respond to ITWeb's media enquiry.

Neville concedes that enthusiasm for municipal WiFi projects was always misplaced. However, there are other ways for cities to intervene to bring cheap broadband services to citizens.

It is possible to enforce a structural separation between the fibre network infrastructure and network services, just like many competing vehicle transport services all use the same infrastructure, he says. This has been done internationally for telecommunications, power grids and even railways, he adds.

Cities also cite the economic impact that easier access to broadband will bring to the local economy as a strong reason for investing in the ICT infrastructure.

"At this stage you can't rent fibre from anyone, so if we can lower the operating costs of service providers, we can hopefully stimulate the market and economic development as a whole," explains Leon van Wyk, project manager for Cape Town's broadband project.

Cape Town is rolling out a citywide R300 million fibre network, which will connect its municipal infrastructure and be used for internal communications. It plans to rent out excess capacity to telecoms providers, says Van Wyk.

Knysna municipality's IT head, Isabel Nel, argues that providing a broadband service to citizens is a justifiable cost.

Knysna has rolled out fibre to all its municipal offices and other significant locations, such as libraries. It has also set up 400 wireless Internet hotspots, providing 35MB free data to its citizens.

"You have to provide service to your municipal workers anyway, so you might as well expand on that. The municipality considers it to be part of its service delivery responsibilities to roll-out such services," says Nel.

Cautious approach

eThekwini's head of geographic information and policy, Jacquie Subban, says the city is being cautious about its expenditures. "We are not taking a big bang approach." eThekwini set out a strategy in 2005/2006 to make the City of Durban a smart city.

Johannesburg spokesman Virgil James notes the city is re-using existing fibre-optic cable for its R500 million broadband network to self-provide communication services.

The city is also looking for partners to help carry the operational costs of bringing services to citizens. An ideal corporate partner would view the partnership as part of its corporate social responsibility investment, he adds.

Smit also notes that municipalities have to comply with the onerous requirements of the Municipal Finance Management Act and National Treasury rules, which are in place to ensure the viability and sustainability of the projects.

"These rules present almost impossible hurdles and make the whole timeline very, very lengthy."