western cape broadband strategy (industry briefing)

Western Cape Broadband strategy and plan Industry Briefing March 2012

Why we are here

“Zille promises 100Mbit/s broadband for Capetonians”

“Zille reveals ‘game-changing’ plans for Western Cape”

“Broadband boost for Western Cape”

“Ambitious plans to make W Cape technology hub”

“Zille’s plan for Cape to ‘go live’” “Affordable broadband on cards for

rural SA”

1. Increasing opportunities for growth and jobs 2. Improving education outcomes 3. Increasing access to safe and efficient transport 4. Increasing wellness 5. Increasing safety 6. Developing integrated and sustainable human settlements 7. Mainstreaming sustainability and optimising resource-use efficiency 8. Increasing social cohesion 9. Reducing poverty 10. Integrated service delivery for maximum impact 11. Increasing opportunities for growth and development in rural areas 12. Building the best-run regional government in the world

Economic Development is at the centre of the provincial strategy,

Cost Efficiency

Increased Effectiveness & improved Government

Service Delivery

Economic and Social Development

“Economic development is key to addressing the many challenges facing the Province. Strategies adopted must subscribe to the paradigm that there cannot be development without economic growth”

Presenter

Presentation Notes

The objectives of the Western Cape Broadband strategy and plan include: Driving cost efficiency – ensuring that scare financial resources are utilised for maximum benefit. Increasing effectiveness of government and improving Government Service Delivery to citizens and business. Providing a catalyst for Economic and Social Development An important point to note is that Broadband is a KEY enabler of the provincial strategy. It provides linkages to all of the PSOs. 1. Increasing opportunities for growth and jobs Direct jobs will be created during the creation and maintenance phases of building the provincial backbone network, the building of the mesh network and the various pilots. Many studies by organisations such as the World Bank and OECD have shown a strong correlation between investment in broadband, an increase in broadband penetration and resultant economic growth. Hence there is that expectations that indirect job creation and employment will be observed. 2. Improving education outcomes Improved connectivity to schools will allow for more reliable and efficient administration of schools, FETs and tertiary education facilities. Concepts such as remote curriculum and content delivery can become a reality. This has been recognised by the WCED who are actively pursuing projects to connect all schools across the province. 3. Increasing access to safe and efficient transport Improved communications between the various transport offices and facilities will allow for improved licensing and other administration of transport. Since many of the proposed routes follow the provincial roads, increased use of remote speed cameras, average speed systems and CCTV will improve visibility of road usage. Integration of various systems is made possible through broadband connectivity. Mesh networks will improve and offer new possibilities. For example, systems that provide real time bus timetables can be economically deployed using wireless mesh as the communications bearer. 4. Increasing wellness The Department of Health is expected to be the largest long-term beneficiary of the project. Improved administration for patient management will increase responsiveness and cut costs. Concepts such as telemedicine and telehealth can be implemented allowing, for example, centralised review of X-rays. Again, broadband is the cornerstone for such advancements. 5. Increasing safety Improved communications for the Department of Community Safety and the Department of Transport & Public Works will allow for new opportunities in public safety. The availability of more and better resources for the Department of Local Government and the Disaster Management facilities will also improve the overall safety of citizens across the Western Cape. Would also allow for costly cameras to be easily redeployed to crime hotspots. 6. Developing integrated and sustainable human settlements The availability of provincial backbone networks will mean that more communities are "connected" and "on net". This has impacts in terms of where people work and live. Also supports concepts like telecommuting, work from home, driving local economic development, etc. to integrate distant communities into global information economy. Place becomes more irrelevant. 7. Mainstreaming sustainability and optimising resource-use efficiency Design ensures that reuse of assets and facilities is maximised. Components of the project such as the duct infrastructure will have a lifespan of, perhaps, 50 years or more. Co-ordination and infrastructure sharing is a key objective – reduces enviromental impact and maximises resource usage. Telecommuting, increased digitisation, etc. reduces carbon footprint 8. Increasing social cohesion Increased communications channels, increased opportunities for dialogue. Promotes inclusivity and access to opportunities. Place becomes more less important 9. Reducing poverty See 1. Also links to 11. A key part of the project is to spread growth and development across the entire province. If PGWC does not do this, no one else is 10. Integrated service delivery for maximum impact See Point 12 11. Increasing opportunities for growth and development in rural areas See 1. Also links to 11. A key part of the project is to spread growth and development across the entire province. If PGWC does not do this, no one else will 12. Building the best-run regional government in the world True integrated service delivery and “no wrong door” strategies is impossible without integrated ICT systems. Provincial wide broadband is the key enabler of integrated systems and processes across the province. Will allow for the driving of efficiency, effectiveness, increased governance and accountability to improve service delivery across the province – at all levels.

World Bank - in low- and middle-income countries every 10% increase in broadband penetration accelerates economic growth by 1.38%—more than in high-income countries. Similar studies by McKinsey & Company and Booz & Company The development of an inclusive information society is a key part of our national growth and development strategy

Broadband stimulates economic growth

“However, concern with the slow pace of South Africa’s transition to the information

society is growing. South Africa continues to slide

relatively rapidly down most global indices relating to ICT

or related information society issues raising serious alarm bells about current

approaches and strategies.”

Presenter

Presentation Notes

There is growing evidence that the diffusion of ICT is an accelerator of economic growth in a country (studies by the OECD, World Bank, Economic Commission for Africa, etc.). ICT is being identified as a key contributor to productivity growth and offering “opportunities for employment generation, creation of new sources of innovation and enhancement of industrial competitiveness”. It is also important to realize that the Western Cape economy is moving from one based principally around the production and distribution of physical goods to one driven primarily by the production and application of knowledge. As such, the Western Cape is currently characterised by many initiatives in the ICT/ Knowledge economy space. In many of these initiatives, the presence of a well-functioning, robust and accessible telecommunications infrastructure is a prerequisite. However, at present, there does not appear to be a coherent response or framework for the development of a telecommunications infrastructure in the Western Cape that would support and enable these initiatives as well as the drive for economic growth as envisaged in the provincial strategy. Indeed as shown in the Network Readiness Index, South Africa is slipping in the international standards.

Staggering growth in number of Internet users in the rest of world (1991 – 2010) There is growing evidence that the diffusion of ICT is seen as an accelerator of economic growth in a country. The growth and productivity enhancing effects of well-implemented investments in ICTs can lead to increased trade and to more and better employment (OECD).

In the animation, the redder a country is, the

higher the Internet penetration is.

White means there is no

data from the World Bank, or it’s less than 1 Internet

user per 100 people.

Context Last year, the Premier announced that a plan was being formulated

The Western Cape economy is moving from one based principally around the production and distribution of physical goods to one driven primarily by the production and application of knowledge. As such, the Western Cape is currently characterised by many initiatives in the ICT/ Knowledge economy space. In many of these initiatives, the presence of a well functioning, robust and accessible telecommunications infrastructure is a prerequisite.

“A growing economy must connect people through transport and technology. We have to learn from places like Kenya where an ICT revolution is driving strong economic growth. To emulate this, we are developing a telecommunications strategy, based on a fibre optic network infrastructure that connects government, citizens and the economy to improve productivity and access to new markets. The World Bank has calculated that the economy of a developing country grows by 1.38% for every 10% increase in broadband penetration. We cannot afford to get left behind.”

Premier Helen Zille, State of the Province Address, 2011.

Presenter

Presentation Notes

his view was endorsed by the Premier in her 2011 State of the Province Address: "A growing economy must connect people through transport and technology. We have to learn from places like Kenya where an ICT revolution is driving strong economic growth. To emulate this, we are developing a telecommunications strategy, based on a fibre optic network infrastructure that connects government, citizens and the economy to improve productivity and access to new markets. The World Bank has calculated that the economy of a developing country grows by 1.38% for every 10% increase in broadband penetration. We cannot afford to get left behind." In response, the Department of Economic Development & Tourism (DEDAT) chose to drive the creation of a broadband framework / strategy which is based on international best practice frameworks and indicators.

Process Map – a fast-track 12 month programme

Project Initiation Implementation Plan

Ratifi-cation

Problem statement defined

Prepare TOR Appoint Technical

Advisor Develop Draft Position

Paper Establish Provincial

Steering Committee Identify stakeholders –

industry, municipalities, NGOs

Establish Industry Advisory Forum

Preparation of cabinet submission

Distribution of approved strategy and implementation plan

Launch of strategy

Terms of reference for appointment of service providers

Service providers to undertake Business case development for prioritised interventions

Costing and operating models

Additional research where necessary

Stakeholder consultation (ongoing)

Oversight of service providers and researchers

Draft Position Paper developed

Review of provincial policies, activities

Stakeholder database Stakeholder

Consultation Steercom TOR

Detailed business cases of prioritised interventions

Stakeholder buy-in

Key

act

ions

O

utpu

ts

Approved cabinet submission

Planning for implementation phase

Consolidated Strategy &

Implementation Plan

Consolidation of all findings and recommendations of business cases

Key recommendations unpacked

Stakeholder buy-in and support from industry, municipalities and provincial steering committee

Consolidated telecoms infrastructure strategy and

Immediate projects identified for implementation

Strategic Framework

30 year strategic outlook and projection

Vision-statement for the western cape province

Identification of short, medium and long term interventions

Prioritisation methodology

Project definition reports for top 6 - 8 interventions

Engagements with municipalities

Stakeholder consultation (ongoing)

Strategic framework and prioritised projects

Cabinet approval of final position paper and strategic framework

High-level analysis of interventions

Note: Workstreams will overlap

Presenter

Presentation Notes

The PGWC's initial response and first project action was to develop a policy position paper as a consultative document setting out a proposed policy position about what the PGWC could do to spread telecommunications infrastructure and affordable access to communications for business and society and to make sure that this contributes to the Province’s social and economic development goals. The position paper was then used as a basis for consultation with a cross section of internal and external stakeholders to obtain input, consensus and gauge support for a telecommunications and broadband strategy within the Province. Unanimous support was received for the prioritisation of the development of a well-functioning, robust, affordable and accessible telecommunications infrastructure for the Province of the Western Cape. There was a strong view that “less talk and more action” was needed, and DEDAT moved into the development of the strategic framework and the implementation plan. The identified steps are shown in Figure 3: PGWC Broadband Projects Process map below.

An idea of the Gap Indicators: South Africa & Africa

Strategic Framework

READINESS (SKILLS, APPLICATIONS, ETC) USAGE

The vision is that of a Western Cape where every citizen in every town and

village has access to affordable high speed broadband

infrastructure and services, has the necessary skills to be able to effectively utilise

this infrastructure and is actively utilising this

in their day to day lives.

Co-ordinated and Integrated

Action (Catalytic Telecoms

Environment)

Connected Government

Connected Economy

Connected Citizens

INFRASTRUCTURE

Presenter

Presentation Notes

DEDAT then proceeded to construct a strategic framework centred on co-ordinated and integrated action across government, citizens and the economy focussing on enabling infrastructure, environment readiness and driving usage of ICTs within the Western Cape.

High level Western Cape broadband infrastructure milestones Infrastructure development is a key catalyst and that Government’s role has to be to facilitate and drive the development of telecommunications infrastructure in the province.

• 70% government buildings & 100% of public schools connected. • All communities have access to public ICT facilities (in every ward) • Large government buildings and specific targeted industries in the

metropolitan area are connected via “fibre to the premises”. • Pilot wireless mesh network deployed in Khayelitsha, Mitchell’s Plain

and Greater Saldanha Bay as alternate last mile access infrastructure.

2014

• Every citizen in every town and village has access to affordable broadband infrastructure.

• Citizens in the metropolitan area have access to affordable broadband infrastructure at network speeds in excess of 100Mbps.

2020

• Every citizen in every town and village has access to affordable broadband infrastructure in accordance with internationally accepted speeds and standards. 2030

National Targets • Universal broadband access by 2020

• Public ICT Access within a 2 km radius of anyone by 2019

Presenter

Presentation Notes

This initiative is a long term programme with multiple dependencies and timelines. The key philosophy underlying the entire programme is that infrastructure development is a key catalyst and that Government’s role has to be to facilitate and drive the development of telecommunications infrastructure in the province. When the strategic framework was developed, certain targets were proposed for 2014, 2020 and 2030. Based on the business case development, these targets (mainly the 2014 targets) have had to be slightly revised based on what is realistically possible. The current targets are still very aggressive but are achievable. The following are high level short, medium and long term milestones for the Western Cape broadband programme from an infrastructure perspective: Short term (by 2014): 70% government buildings & 100% of public schools connected. All communities have access to public ICT facilities (in every ward) Large government buildings and specific targeted industries in the metropolitan area are connected via “fibre to the premises”. Medium term (by 2020): Every citizen in every town and village has access to affordable broadband infrastructure. Citizens in the metropolitan area have access to affordable broadband infrastructure at network speeds in excess of 100Mbps. Long term (by 2030): Every citizen in every town and village has access to affordable broadband infrastructure at a minimum network speed of 1000Mbps. Short term (by 2014): 70% government buildings & 100% of public schools connected. All communities have access to public ICT facilities (in every ward) Large government buildings and specific targeted industries in the metropolitan area are connected via “fibre to the premises”. Pilot wireless mesh network deployed in Khayelitsha, Mitchell’s Plain and Greater Saldanha Bay as alternate last mile access infrastructure. Medium term (by 2020): Every citizen in every town and village has access to affordable broadband infrastructure. Citizens in the metropolitan area have access to affordable broadband infrastructure at network speeds in excess of 100Mbps. Long term (by 2030): Every citizen in every town and village has access to affordable broadband infrastructure in accordance with internationally accepted speeds and standards. It is also important to note that the national government targets are: Universal broadband access by 2020 Public ICT Access within a 2 km radius of anyone by 2019

Six core projects

Co-ordinated and Integrated

Action (Catalytic Telecoms

Environment)

Connected Government

Connected Economy

Connected Citizens

Connecting Leadership

Connecting Government

Connecting to the World

Connecting Communities

Connecting Households

Connecting Business

Presenter

Presentation Notes

DEDAT then proceeded to construct a strategic framework centred on co-ordinated and integrated action across government, citizens and the economy focussing on enabling infrastructure, environment readiness and driving usage of ICTs within the Western Cape.

Connecting Leadership

The objectives of the project are to have integrated and complementary initiatives between government and the private sector, harnessing limited investment for maximum impact. Key deliverables include: • Set up and manage a Broadband Advisory Council/ Leadership forum which will drive the

strategic direction and on-going investment in the broadband environment in the Western Cape. • Setup and operationalise the Broadband Programme Office to manage and direct the entire

programme ensuring integration and synergy between projects. This includes responsibility for advocacy and lobbying, securing and managing of funding, commissioning activities needed by the various projects, monitoring & evaluation, etc.

• Evaluate and setup of an appropriate institutional model for the long term success of the Western Cape Broadband Programme (SPV/ PP discussed later).

• Setup and manage a Way-leave Co-ordination Office to standardise and fast track way leave applications, co-ordinate infrastructure development projects and encourage the sharing of passive infrastructure like ducts, trenches, towers, etc.

Presenter

Presentation Notes

This is a co-ordination, integration and leadership project that will drive the creation of a catalytic broadband communications environment in the Western Cape. This project aims to: Harness leadership and vision across all sectors of society Create enabling policy and regulatory environment Drive coordinated and integrated action - integrate and direct various initiatives to ensure that core/ strategic infrastructure and services are built Develop funding models and secure funding- government programmes, grants, private sector investment etc. The objectives of the project are to have integrated and complementary initiatives between government and the private sector, harnessing limited investment for maximum impact. Key deliverables of this project include: Set up and manage a Broadband Advisory Council/ Leadership forum which will drive the strategic direction and on-going investment in the broadband environment in the Western Cape. Setup and operationalise the Broadband Programme Office to manage and direct the entire programme ensuring integration and synergy between projects. This includes responsibility for advocacy and lobbying, securing and managing of funding, commissioning activities needed by the various projects, monitoring & evaluation, etc. Evaluate and setup of an appropriate institutional model for the long term success of the Western Cape Broadband Programme (SPV/ PP discussed later). Setup and manage a Way-leave Co-ordination Office to standardise and fast track way leave applications, co-ordinate infrastructure development projects and encourage the sharing of passive infrastructure like ducts, trenches, towers, etc.

Connecting Government

2 Core programmes • Part 1: Building a Provincial backbone (Mainly fibre) • Part 2: Connect government facilities (via building municipal infrastructure - mainly wireless, tactical

quick wins) Part 1: Build Provincial backbone • Phase 0 (Planning & initial setup) • Phase 1 (District Municipalities – 132 km & 5 POPs) – start in Year 2. 7 months. • Phase 2 (862 km & 26 POPs – fibre backbone to all LGs) . - Start in Year 2, complete in year 3 (approx.

13 months). • Phase 3 (1553 km) - Extend communications to other communities and build redundancy. Requires

private sector buy-in and funding contributions Part 2: Connect Government facilities • Key Provincial Government buildings to be connected to City

fibre (already underway). • Connect all schools • Extend school network footprint to connect all government

building in the vicinity, with the objective of creating a single government network – reducing cost and facilitating integration of services to citizens.

• Build links to backbone

Synthesis: Conceptual design part #1 – Backbone component

Presenter

Presentation Notes

This figure shows a conceptual view of the hybrid solution using assets & services from Broadband Infraco where possible, augmented with fibre on the FibreCo / Cobuild routes which PGWC constructed fibre and microwave spurs.

Synthesis: Conceptual design part #2 – Municipal component

LM’s fibre optic and/or microwave

backbone

Connectivity to provincial network

Local Municipality HQ

Other LM buildings in same town

Schools, hospitals etc. in same town

Other towns in LM

Other towns in LM

Presenter

Presentation Notes

The second main component of the proposed strategy for Connecting Government is the Municipal component. The concept centres on equipping the Municipalities (Local & District) to provide local access services to Government facilities. This is essentially equipping them to progress what has been started in most Municipalities, and to bring them up to a higher level of sophistication. As seen earlier, the WC Municipalities have already connecting their facilities with fibre and wireless system, and that the level of penetration varies. Moreover, the research has highlighted technical and delivery difficulties that need addressing. The figure shows the example of a Local Municipality using its own infrastructure to provide connectivity to other LM buildings in the same town, plus serve other public facilities (non-Municipal assets) such as schools, clinics and hospitals. Other towns would be similarly equipped and, over time, they would be connected to a municipal backbone. For communications between Municipalities and other government departments, connectivity would be facilitate to the provincial network.

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Synthesis: Conceptual design part #1 & part #2

Presenter

Presentation Notes

This diagram illustrates the relationship between the LM & DM networks and the backbone including connections to neighbouring provinces and the rest of the world through the international connections.

Phase 1, 2 and 3 overlaid over PGWC sites

• Medium term (3 – 10 year) Provincial Fibre Backbone • Phase 1 (District Municipalities – 132 km & 5 POPs) –

start in Year 2. 7 months. • Phase 2 (862 km & 26 POPs – fibre backbone to all

LGs) • Phase 3 (1553 km) - Extend communications to other

communities and build redundancy.


This is a project to integrate and expand shared public access to ICT facilities to all communities in the Western Cape. Public ICT access facilities (e.g. telecentres, Smart Cape, Cape Access, etc.) are a very important tool to provide poor people with access to technology. It is being used extensively in both developing countries and developed countries. A phased approach will be adopted • Phase 1 will ensure that there are public ICT facilities in every ward by 2014. There are 388

wards in the Western Cape, 233 (60%) of which do not currently have public ICT facilities. • Phase 2 will extend the public access footprint to every voting district by 2018. There are

currently 1576 voting districts in the Western Cape. • Phase 3 will evaluate the situation post-Phase 2, determine the gap with the national targets at that stage and put in place a strategy to close the gap.

Across all three phases, sustainability models for the public access facilities (including entrepreneur driven models) will be explored.

Connecting Households

• Create a wireless mesh networks as a “last mile” open access network connecting all households in an urban area (Khayelitsha & Mitchells Plein) & a non-urban area (Greater Saldana)

• Utilise network for government-related initiatives e.g. connecting offices, schools, CCTV cameras, Public Warning Systems, smart meters, etc. and delivering government services (e-Government, e-Education, e-Health, etc.)

• Partner with private sector to make access to broadband services more affordable to recipient communities – must also consider readiness (eg. skills)

• Explore partnerships with the private sector to extend and/ or maintain this network while ensuring “open access”.

• Deploy over a two year period (services live by Q1 2014

• Seeding the environment with low cost computing

devices • 10 000 refurbished computers per annum • Pilot 10 000 other low cost computing devices (targeting

schools) • E-Waste Centre (in support of the environment)

Medium term goal (by 2020) is that every citizen in every town and village has access to affordable broadband infrastructure. It is anticipated that wireless and wireless mesh systems will have a key role meeting these objectives.

Connecting Business

This is a pilot project to develop a model fibre to the premises (fttp) infrastructure in the City of Cape Town. Key players in this model will be the City of Cape Town, Western Cape Government, a broadband operating company (a SPV/PPP between government and the private sector) and private sector telecommunications service providers. • Pilot 1: Fringe Precinct • Pilot 2: Oude Molen (vicinity of planned Cape Health Technologies Park) • Pilot 3: Khayelitsha business nodes linked to the VPUU programme • Supporting identified priority sectors

Connecting to the World (International connectivity)

• Reduce international bandwidth costs to the Western Cape by using government as a demand aggregator and an anchor client to obtain dedicated international capacity

• Project viable only taking into account Western Cape Government’s needs and will result in significantly reducing the cost of international bandwidth.

• Adding CCT needs and the needs of the schools will only strengthen the business case. • Anticipated to be completed by mid-2013, as it is a key enabler for all of the other projects • Spare capacity available (if any), will be made available on a cost basis to the targeted

industry sectors/ areas – which should result in these sectors/ areas experiencing a reduction in the price of international connectivity.

Example : what Tenet achieved

Presenter

Presentation Notes

This is a project to reduce the cost of international connectivity for government and targeted industry sectors/ areas in the Western Cape. The project aims to: Use government as a demand aggregator and an anchor client to obtain dedicated international capacity, Utilize the spare capacity to reduce the cost of international connectivity to targeted industry sectors/ areas in the Western Cape, to assist in making these industry sectors/ areas more productive and competitive. Explore possible partnerships with the private sector around demand aggregation to get government and the private sector working together to reduce the cost of international connectivity to the Western Cape. This will be achieved by aggregating government demand (Western Cape Government, Municipalities, schools, etc.) and procuring bulk international internet capacity to meet this demand. This results in a long-term net cost saving to the Province, as well as the potential for additional economic benefits, notably to businesses in the Western Cape. The Province’s own departmental demand is projected to grow rapidly over the next decade, with corresponding growth in costs that would outstrip the expected price declines that can be expected in the market due to competitive forces alone. This will result in a significant project cost saving that can be achieved in an ‘Intervention’ case, vis-à-vis a ‘Do Nothing’ case. Spare capacity available (if any), will be made available on a cost basis to the targeted industry sectors/ areas – which should result in these sectors/ areas experiencing a reduction in the price of international connectivity. This project offers a very short return on investment and breakeven and is relatively easy to justify on the basis of cost savings. The project is anticipated to be completed by mid-2013, as it is a key enabler for all of the other projects.

Timeline with significant milestones PMO formally open on 2 July 2012

Connecting Schools starts by

mid 2012

Phase 1 complete March 2014

Phase 2 complete end 10/2014

Phase 3 complete end 2/2016

Phase 4 (municipalities) on-

going


completed by Jan 2014

Wireless Mesh Deployment starts in first quarter of 2013

Wireless Mesh network live by March

2014

Open Access ISP (lower cost

international connectivity by mid

2012

Schools connected by March 2014

Broadband Programme commences with key task of establishing PMO with capacity to drive programme (April 2012). Only interim capacity

at this stage.

Fibre backbone to K/ MP – run by City of Cape Town, commenced March 2012

Various activities needed before anything else can

happen, tenders, etc.

Institutional model

• A ringfenced special purpose vehicle (spv) will be needed for the implementation of this programme.

• This entity will primarily be responsible for utilising Government as a catalyst for the creation of affordable provincial wide broadband network infrastructure and services by

• Aggregating government infrastructure, complimenting it with private sector infrastructure, and extending where necessary

• Aggregating Government demand and providing services to Government on an integrated basis.

• Operates as an Open Access Network Service Provider by making the aggregated backbone and access infrastructure available to private sector on an open access basis. Will act as a wholesaler of: • Wholesaler of provincial backbone and access network infrastructure.

• Fibre to the premisis as proposed by the “Connecting Business” project.

• Wireless mesh networks proposed by “Connecting Household” and “Connecting Business:. SPV will play role of Exchange Management operator (ExMO) for the wireless mesh.

• Wholesaler of spare international capacity to targeted industry sector as envisaged in Connecting Business. Will operate as a wholesale open access ISP.

• This entity will not provide services to private businesses and end users. The entity is responsible to enable the private sector to provide these services.

Business Model

SPV Broadband

Western Cape

Licenced Telcoms Service

providers

Funders Commercial Banks

DBSA/IDC Others

Services (open access basis)

Debt service

Debt facility

Revenue “Royalties”

Operating agreement i.e. Aggregated demand, Off take

agreement & grants

Services Western Cape Municipalities

Wholesale Service providers – Government and Private Sector

Purchase/ rent existing Infrastructure & Services (where affordable)

Other Municipalities Etc.

Consumers and

Businesses

Revenue

Service

Revenue

Service

Green indicates money flow Grey indicates service flow

Other possible partners

Presenter

Presentation Notes

The essence of the Bwired business model is as follows: The City of Johannesburg pays R279m pa (off take) to Ericsson as OPEX for 15 years (R4.185bn) This is a minimum amount that CoJ can spend but not an upper amount. This fee is considerably less that the R382m pa that they currently spend on telecommunications services. (The figure of R382m pa is vastly inflated however on analysis) The City “Transitions R279m of “existing” services to the network. The fee to Ericsson is a minimum fee whether or not any services get transitioned. Ericsson cedes the agreement to the Bwired SPV The Bwired SPV sources commercial funding of R1bn with the R279m pa off take agreement as security. This is used to build the network Bwired provides the CoJ with specified minimum services. Bwired pays a “royalty” to the CoJ of income earned from external non-CoJ clients. Bwired firstly serves the CoJ and then offers services to the external market (but not on an OPEN ACCESS basis) BOT over 15 years with transfer of assets to the CoJ in year 15.

http://www.dfafrica.co.za/index.php

http://www.sita.co.za/home.htm

Stepped Approach (linked to Funding approach)

Step 1: Startup activities (Broadband Programme Office) Set up Broadband Programme Office to get the programme off the ground. Drive the creation of the Broadband Leadership Council, Start and co-ordinate initial programmes (Schools connectivity, wireless mesh, connecting PGWC building, connecting communities, etc.), advocacy , investigate & setup SPV. Funded by PGWC MTEF funding

Step 2: Migrate to SPV SPV based on cost replacement business case motivation. Also leverage EPWP and Municipal Contributions. Funded on the basis of long term contact from PGWC. Will drive the creation of Provincial Fibre backbone (Phase 1 & Phase 2)

Step 3: Leveraging Private Sector and social investment the basis of funding Incorporate SPV into either a Public Entity or PPP if required. A Transaction Advisor (TA) must be appointed with Treasury. Private sector commitment added to the funding mix – increased capital leverage for Phase 3.

“Direct “ Benefit Model<----Policy process maturation------->”Indirect “Benefit Model

---------------------------------------------------Time-------------------------------------------------------

Presenter

Presentation Notes

It is thus recommended that the project be broken into phases. Phase 1 SPV based on a cost replacement business case motivation which will get the project going whilst Phase 2 (which will commence almost concurrently) is to appoint a Transaction Advisor with Treasury and to determine the ultimate end point of the project which could be a PPP or a Public Entity (should the Phase 1 SPV no longer be considered as suitable). Phase 2 would require a more socio-economic justification motivation.

Conclusion

• Extensive research undertaken indicates programme is viable and cost effective.

• Leverages future expenses to build economic infrastructure that will take the province into the future.

• Position the province well for modernization, efficiency and effectiveness of government.

• However, the true value is in the economic development benefits and how it increases the competitiveness of the Western Cape, bringing us on par with our competitors in the developed world, the developing world and the rest of Africa.

• Big bold project, but one that is necessary at this stage. • Current approaches are not working. South Africa is rapidly sliding down the

international indices. More of the same is not going to work if South Africa is to turn the situation around.

• The Western Cape Broadband programme is a true legacy project that will position the Western Cape for the future, but also light the path ahead for the rest of South Africa.

Premier Zille - “game-changing infrastructure agenda”

Presenter

Presentation Notes

The extensive research that has been undertaken indicates that this programme is viable. It is cost effective as it leverages future expenses to build economic infrastructure that will take the province into the future. It will position the province well for modernization, efficiency and effectiveness of government, enabling the Western Cape Government to achieve its vision of being the “best run regional government in the world”. However, the true value of this programme is in the economic development benefits and how it increases the competitiveness of the Western Cape, bringing us on par with our competitors in the developed world, the developing world and the rest of Africa. It will secure the Western Cape’s relevance in a world economy that is being increasingly driven by global networks and broadband connections. It is a big bold project, but one that is necessary at this stage. The research clearly indicates that current approaches are not working and that South Africa is rapidly sliding down the international indices. More of the same is not going to work if South Africa is to turn the situation around. The Western Cape Broadband programme is a true legacy project that will position the Western Cape for the future, but also light the path ahead for the rest of South Africa.

Discussion Contact Details: Jo-Ann Johnston,

Chief Director: Strategic Initiatives,

[email protected]

Nirvesh Sooful,

Advisor/ Consultant, [email protected]

Presentation downloadable from http://www.slideshare.net/nsooful/

mailto:[email protected]


