Gauteng’s R 35-Billion municipal network digital dream

Internet

Gauteng’s provincial government plans to build a province-wide telecommunications network at a cost of up to R35bn. Officials want the project, which requires the approval of the national cabinet, to be completed by 2010.

But the undertaking, known as Gauteng Link, is already coming under fire from the private sector, with one telecom industry executive labelling it a “waste of money”.

The intention is to build a high-capacity network to bridge the “digital divide”, reduce communication costs, especially for broadband access, and give citizens access to an array of online government services.

Gauteng’s head of e-government, Warren Hero, says rudimentary estimates show the cost of the project could be anything from R15bn to R35bn.

Telecom industry executives are not prepared to comment officially, because of political sensitivities. But the head of a large Internet service provider has labelled the plan “a recipe for disaster” that will undermine planned investments by the private sector.

However, Hero says economic value comes from services provided on top of the infrastructure, not in the provision of the network itself.

“Once you connect communities, you are laying the basis for commerce to take place,” he says. Besides, the Gauteng government is willing to work with the private sector to build infrastructure. But where private operators won’t build, government will.

The project involves big investments by the provincial government and municipalities but will also rely on the support of the private sector. The province hopes companies will get involved in extending the network into homes and businesses.

The scale of the project is enormous: Gauteng wants to spend more on this project than Telkom rival Neotel will spend in the next decade on its national network deployment.

However, sources in the private sector question whether the project will get off the ground. They say national treasury is likely to block funding in the same way it has questioned planned telecom investments by state-owned companies Sentech and Broadband InfraCo.

Gauteng finance MEC Paul Mashatile is championing the project, for which the business plan will be sent to the cabinet in the next few months. The document will not be released publicly before then.

Lemmy Chappie, chief information officer at the Gauteng Shared Service Centre, says Gauteng Link will be run as a public-private partnership. “When we get to implementation we will see how we draw it out,” he says. “We intend having the network up and running by 2010 having used all the [telecom] assets that government owns.”

He says the province and larger municipalities already have extensive infrastructure. Gauteng’s three biggest municipalities — Johannesburg, Ekurhuleni and Tshwane — have thousands of kilometres of fibre-optic cable in the ground. Johannesburg also has a well-developed wireless network which can be used for “backhaul” — the transport of telecom traffic between different parts of the network, typically from points of access to more centralised locations.

In outlying areas, however, infrastructure is barely developed. Chappie says Gauteng plans to bridge gaps in existing infrastructure and extend the network to lesser-served parts of the province.

He says commercial telecom operators such as Telkom have shown unwillingness to provide services in economically depressed areas such as Vereeniging, Sebokeng and parts of the West Rand. “Can we ask Telkom to help us? No, because it won’t. Are we going to sit back and wait for Telkom? No, we’re not.”

Without adequate telecom infrastructure, Chappie says poorer parts of the province will remain under developed. The funding plan is sketchy, but government may raise debt to build the network. Chappie promises the project won’t become an expensive white elephant despite industry scepticism.

“We won’t go with models that have failed,” he says. “We will work with funders and ensure we bring down the cost of broadband in Gauteng while at the same time repaying [the funders].” Access to the network will be subsidised for consumers but it won’t be free.

A special investment vehicle, the Gauteng Fund, will be used to finance the network. The provincial government has already contributed R500m. Most of this will be used for the deployment of the network. The fund is expected to grow rapidly if the cabinet approves the Gauteng Link project.

Chappie says government’s focus is on building a robust network: providing access to consumers will be left mainly to the private sector. “The distribution network will be operated by different companies that will provide last-mile services to citizens, creating jobs and ensuring the economy grows.”

But, Chappie cautions: “It’s too early to go into detail and I don’t want to raise too many expectations in the private sector.”

Financial Mail