South Africa’s Maboneng Project offers a clue to potential urban regeneration strategies for Africa using high speed broadband

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This week’s TV content market DISCOP in Johannesburg saw Neotel and property developer, the Maboneng Project promoting their joint fibre-to-the-home service aimed at attracting high-end media users to this pioneering downtown development. South Africa has found it hard to bridge the cost gap between the curb and the premises and this joint development may yet spark an increase in the roll-out of high-end fibre connections. Russell Southwood looks at what this development might have to do with the rest of Africa.

When Apartheid ended, the rigid rules about where people could live went with it and the downtown core of Johannesburg, its Central Business District, went into steep decline as new centres like the glossy home of the ICT industry, Sandton were built. The same problem is occurring in places like Nairobi, where most of the property investment is made on the edge of town, because the road infrastructure cannot take the volume of traffic and there is poor public transport. 

Indeed too many African cities lack any sense of being planned and very few seek to regenerate run-down areas. Instead, they create small islands of high-end development like Victoria Island in Lagos, leaving other districts to suffer with much poorer infrastructure. African Governments have begun to understand broadband as a national development tool but not yet something that can be used as part of an urban regeneration, wealth strategy.

Pioneering property developer Mark Seftel has worked together with Jonathan Liebmann of Propertuity Property Management to create a mixed-use development consisting of art galleries, restaurants, loft-style apartments and office space. Seftel himself is a former telecoms initiative.

Part of the development’s strategy is to attract media and technology users to what are premises with high-design values. A thread in this strategy is to offer some of the highest broadband connectivity at a reasonable price in a country where it is still difficult to get the magic combination of high speed, reliable and affordable bandwidth.

The provider they joined with to find a solution to this problem, Neotel, has already been rolling out fibre to the curb for two years. It has 6,500 kilometres of metronet fibre and has extended this into 14 business areas with curb access points. The stumbling block has been getting it from the curb into the premises: currently the cost is a shade over US$1,100 per connection but could come down to more globally comparative levels of US$700 per connection with greater volumes.

The business model has been for both the developer and the provider to jointly bear the connection cost, which then allows them to offer a competitive, high-speed connection at what are current ADSL connection prices in South Africa. For the property developer, the relatively small cost of the connection can be rolled into the apartment or office lease price. Many African cities are seeing a building boom in both these categories and are ripe for this kind of broadband provision. However, given that the number of users in new developments is relatively small, it would make sense to apply some subsidy to this connection gap for targeted, existing buildings in a specified geographic area. 

But as Angus Hay, Head of Strategic Business Development, Neotel says:”This isn’t part of a large, commercial roll-out, it’s a pilot to see what’s possible. However, it’s the direction things should go.” But it’s hard to believe that once you’ve created a very small island of globally competitive bandwidth – which is vital for industries like media – that it will not begin to start a trend that will unblock the barrier created by the high cost of the local access link.

“This is not a contended, leased line service, it’s a contended broadband service but we don’t shape it. It’s part of a GPON network and there’s significant bandwidth behind it, with the contention happening in the core network.” Connection speeds could go comfortably as high as 40 mbps per user and higher if needed:”On pricing, it will compete with DSL but give fibre performance.”

“It’s important to establish this kind of pilot to find models that work. Where business and high-end consumers are competing globally, you have to have service that works for them. It won’t solve all of Africa’s connectivity problems like those found in rural areas, but it will make a difference to a country’s competitiveness. From the commercial standpoint, Africa doesn’t have a lot of (usable) copper and this is a way for telcos to ensure they become part of the data-enabled services future.”

Outside of South Africa, this kind of approach would accelerate African users to the next level of broadband, rather than them having to remain on the lower rungs of the digital divide. It can be targeted at key sectors of the economy to ensure that they remain globally competitive. But most importantly, high-speed broadband becomes an urban regeneration tool that (along with many other tools) can create the means to spread wealth into formerly declining urban areas.

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