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.
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.
Connecting Communities
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
Connecting Communities
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
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.
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
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.