Municipal Broadband Investment in South Africa

There’s an interesting AFP article on the city of Johannesburg’s 1 billion Rand (~105 million USD) contract with Ericsson to deliver municipal broadband infrastructure.  In it they quote an anonymous “telecoms expert” who says:

…that municipalities were already stretched to provide basic utility services, and that the provisioning of telecoms services would simply put additional strain on already ineffective organisations.

He further argued that government’s involvement in telecoms in the past, typically through Telkom and Sentech, had hurt the industry and kept South Africa back, and that there was no reason to believe that things would be different this time.  He suggested infrastructure investment incentives such as tax breaks to operators rather than direct government involvement in such networks.”

Given that the city of Johannesburg is giving a billion Rand to Ericsson, I don’t think the straining already ineffective organisations argument is really what’s at issue.  I suspect straining already over-stretched municipal budgets is probably more to the point.  However, even that is secondary to the two most important weaknesses in Johannesburg’s approach:

1) Johannesburg now has its hand in the cash register

By betting all or nothing on Ericsson, the city has aligned its broadband fate with Ericsson.  The city obviously wants to see Ericsson succeed, which is all well and good. However, the dark and ugly flip side of this is that the city will not want competition in the municipal broadband market to flourish as it might hamper the success of their investment with Ericsson.  Sound familiar?  ::cough::  Telkom, 1990s, hello?

2) Monolithic tenders are often ridiculously inefficient

Around the world we have seen the failure of municipal wireless networks in the last few years.  The nature of these failures is a matter of wide speculation but I would argue that a major cause is large cities betting their budgets on a single provider that promises the world.  Earthlink’s failure in the United States is a prime example of this.  One cannot help but wonder how much of that 1 billion Rand is going to be eaten up by endless consultant fees, meetings, overheads, etc.  How much will actually go to deploying infrastructure?  If Ericsson is going to deliver affordable cost-effective broadband for the city of Johannesburg, they are going to need to be as lean as the leanest Seacom-connected ISP start-up.  This strikes me as unlikely.  Equally, broadband is a very fast moving technological field. What happens when all of Ericsson’s equipment is outmoded by leaner, smaller competitors?  Will they come back to the city with their corporate hands outstretched for another billion Rand to upgrade?

Hearts in the Right Place

Having said that the hearts of municipal officials are clearly in the right place.  Johannesburg councillor Parks Tau says, “We regard access to broadband as a key driver of economic growth and wealth generation.”  Jacquie Subban, head of strategy for the eThekwini Municipality, argues the importance of broadband access in terms of economic growth and social development and says that broadband infrastructure should be made available cheaply.  They are SO right.  Well and affordably connected cities can be significant drivers of social and economic growth.   The key issue is where does this correct and well-intentioned thinking ultimately lead municipal governments.  Failing to learn the lessons on offer from the likes of Sentech, Telkom, Infraco, is frankly hard to excuse.

So what should municipalities do?

  • Focus On Enabling Infrastructure. The OSI model is a great guide for municipalities.  Anything above Layer 1 should be questioned.  Municipalities should make a point of investing in the most basic infrastructure possible that lowers barriers to entry for industry and enables competition as opposed to competing with industry. Cities are in a unique position to assist in the deployment of fibre infrastructure.  They already dig up the streets on a regular basis. No road should be re-surfaced, no sewer pipe replaced, no traffic light installed without consider options for the deployment of at least conduit and possibly fibre.  When a city deploys fibre, outside of servicing their own needs, they should let others light their own fibre.  Access to dark fibre should be non-discriminatory.  The City of Stockholm is a great example of how a city can partner with the private sector to deliver pervasive affordable broadband.  The City of Cape Town appears to get this.
  • Create Incentives for Sharing. Where possible either create incentives or mandate the sharing of ducts, in-house wiring, etc.  Encourage cost-sharing for new infrastructure deployment.  Promote transparency by making all existing and planned deployments a matter of public knowledge.
  • Be Proactive. One obvious idea that comes to mind would be for a city to carry out its own spectrum audit.  Find out what spectrum is in use and lobby for local access to unused spectrum. A recent survey of spectrum use in Dublin, Ireland revealed that average use across the primary spectrum bands was less than 14%.
  • Be Creative. Street lights, tall buildings, existing urban features are all possibilites for deploying infrastructure.  The way that the city of Paris used the extensive sewer system to deploy fibre is a brilliant example of broadband innovation.

I believe that the successful model for pervasive, low-cost municipal broadband involves a mix of large infrastructure providers and entrepreneurial smaller ones to keep them on their toes.  The above list is just a start.

  • Julio

    Dear Sir:
    I fully agree with your points!
    Monopoly is a hurdle for broadband CPE vendors.
    We are try to join this project but still find the door.
    Could you give me any suggestions?

    Thank you!!