Mayoral nod for R400m Cape network

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 23 Nov 2006

Cape Town's executive mayor, Helen Zille, has given approval for the city to lay its own broadband network that will be built on an open infrastructure model, giving equal access to its services for all.

The total cost of the network is estimated to be around R400 million, with 80% of that being spent on laying fibre optic cables. An initial expenditure of R18 million will be for the planning of the project, equipment costs are expected to account for R66 million, the first year of operations will cost R6.2 million, and specialist technical and other fees will be R7.5 million.

The mayor and her committee have given their approval based on a report compiled by the city's Information Systems and Technology Department, headed by CIO Nirvesh Sooful. The next step is final council approval, which should happen within the next week.

According to the department's proposals, there will be limited public participation in laying the infrastructure in order to keep access costs as low as possible and to ensure everyone who wants to use it may do so on an equal basis.

This will mean the network is kept under the control of the City of Cape Town so it can use it for its own communications requirements and service delivery.

"This is probably the biggest metropolitan network of all the projects being undertaken by local governments in the country," Sooful says.

The recommendations say the most significant benefits will be that the network will allow for a variety of inexpensive competing services to be offered to residents and businesses in the city.

These include information-intensive sectors, such as financial services, the film industry and call centres. Direct revenues from third-party use of the network could exceed R12 million per annum within the second year of operation, the report concluded.

Apart from the revenue-generation, the proposal also says the city could save R40 million a year in telecommunications costs.

While the total return on investment is difficult to estimate, the proposal states international experience suggests the deployment of such a network could stimulate the local economy by about R1 billion.