Business Maverick, South Africa

Op-Ed: Government needs private sector to refresh SA Connect

By Marian Shinn 8 February 2016

The ANC government’s fixation with its developmental state as the apex service delivery vehicle is proving to be the major impediment to the delivery of South Africa Connect, an ambitious and inclusive broadband policy to connect 100% of the population to high-speed communications infrastructure by 2030. By MARIAN SHINN.

Among SA Connect’s key promises is the delivery of broadband access to 90% of the population at a cost of 2,5% or less of their basic monthly income by 2020; and that more than 2,000 government institutions and 1,572 schools would be connected by 2017/18. A universal average download speed of 100Mbps to 100% of the population by 2030 is another target.

The severely under-resourced Department of Telecommunications and Postal Services (DTPS) is trying to do it all.

Little is publicly known about SA Connect’s progress, scope and funding. Only the Department and the entities reporting to it are involved.

All except JSE-listed Telkom, which government regards as a state-owned company.

There is none of the sector-wide inclusion that SA Connect stated was critical if the funding and delivery challenges were to be met. Neither government nor the private sector can tackle this project alone: collaboration is critical.

The National Broadband Advisory Council (NBAC), appointed to advise on the rollout of the policy has collapsed through ministerial neglect; it is uncertain whether the implementation plan developed by DTPS has been submitted to National Treasury to release the first tranche of funding; whether a transparent and legally sound process will be held to appoint the ‘lead agency’; or whether government has conducted a credible nationwide survey into the future-proof suitability of all the communications networks already installed around South Africa.

There has also been no known attempt by the DTPS to engage the Information and Communications Technology (ICT) sector to discuss working together to create a national broadband network, its likely cost and funding mechanisms.

What vague information has come to the fore in the past year is that government seems to think it can roll out this network by deploying the expertise and capacity of state-owned entities such as Broadband Infraco, State Information Technology Agency (SITA), Sentech, SA Post Office and the Universal Service Access Agency of South Africa (USAASA), together with JSE-listed Telkom.

Adopted by Cabinet in November 2013, SA Connect has barely got off the ground, further delaying the opportunities for all who live and work in South Africa to be included in the interconnected world of e-Government service delivery and innovative growth and work opportunities that the internet economy offers.

Born out of an extensive, inclusive research effort that distilled the views of civil society, government, the ICT sector, researchers, lawyers and customers, SA Connect seems to have become the banner under which any government ICT project gathers.

The private sector, with its expertise, dynamism, willingness to participate in getting more customers connected and productive, as well as billions of rand to invest in infrastructure to redress the infrastructure imbalances of the past, has been shut out of the project.

Except for Telkom.

President Jacob Zuma controversially announced in his 2015 State of the Nation Address (SONA) that the government had decided to designate Telkom “as the lead agency to assist with broadband rollout”.

He announced that connecting the eight district municipalities that are piloting the National Health Insurance scheme would be the first phase of the broadband rollout.

President Zuma will have to give an update on this programme at the State of the Nation Address (SONA) 2016 on Thursday this week.

Getting credible information on the progress of SA Connect from the Minister of Telecommunications and Postal Services, Dr Siyabonga Cwele, his deputy, Professor Hlengiwe Mkhize, or their department, has proved difficult during the past year.

The no-show, at Minister Cwele’s instruction, of his officials and the entities reporting to the DTPS, at last week’s parliamentary portfolio committee hearing into SA Connect’s progress, is a clear indication that this programme has gone nowhere slowly.

The information that can be gleaned from the ministers’ speeches and press releases, as well as replies to parliamentary questions I have asked, is both vague and contradictory.

Comprehensive research into the status of South Africa’s communications network infrastructure and SAConnect’s activities, conducted by ICT researchers BMI-TechKnowledge, released last December found that progress “has almost entirely been limited to various uncoordinated initiatives by provinces and metros”.

My view is that these initiatives are the various government departments’ and entities’ ICT plans, irrespective of SA Connect, and are funded out of their own budgets.

I base this on the response from Minister Cwele when I questioned him on two tenders in the National Assembly last year. Valued at R23,7 million, they were to extend broadband infrastructure in two of the municipalities named in SONA 2015. He knew nothing about them.

The tenders were awarded by USAASA, a DTPS entity charged with extending communication infrastructure to under-serviced areas.

When I asked a parliamentary question on what exactly the DTPS’ R739 million budget for SA Connect over the Medium Term Economic Framework (MTEF) was to be spent on, Minister Cwele’s contemptuous answer on August 7 was: “The monies will be used to provide broadband connectivity services to the targeted government sites in the Phase 1 districts.” Clearly not, if USAASA is already using its own funds to provide the connectivity.

The designation of JSE-listed Telkom to lead SA Connect has been controversial and is legally dubious in terms of government department procurement processes that need to be transparent and competitive.

It seems government’s decision is based on two things:

  • The view that Telkom is a state-owned company and can be assigned tasks according to ministerial whim, and;
  • That because Telkom has the most extensive communications network in South Africa, a relatively low-cost national broadband network can be fast-tracked. BMI-TechKnowledge estimates that Telkom has 30,000 km of national long-distance fiber, but that an additional 60,000 km is needed if the 39,000 government facilities are to eventually be connected under the SA Connect banner.

In a conversation with Minister Cwele after his department’s strategic plan presentation mid-2015 he told me that the conversation with Telkom was to give it the bulk of the work in exchange for an agreed low cost to help kick-start its wholesale division.

In December 2015 Deputy Minister Mkhize told a Telecommunication and Media Forum gathering that Telkom is offering government a special average rate of 47% discount on wholesale prices, compared to similar solutions being offered to its wholesale customer base. Whether this would be vaguely affordable and profitable in the post-#NeneGate climate is anyone’s guess.

Deputy Minister Mkhize said Telkom’s offer “will also include a dedicated contact center to monitor and resolve service disruptions, and a cost-based wholesale price with a negotiated special rate for government that is below any market offer.”

How the deputy minister would know that this is “below any market offer” is anybody’s guess, seeing as the market has not been invited to respond to a request for information on the unspecified ‘lead agency’ role or been given an opportunity to tender.

She also contradicts information given by Minister Cwele to one of my parliamentary questions.

I asked him to explain the process of evaluating and appointing the ‘lead agency’. He replied on November 27, about 10 days before his deputy’s speech:

  • The ‘Lead Entity’ has not been appointed yet. The department is following due process (unspecified) to facilitate the roll-out of broadband for Phase 1; and Phase 2 is still at a planning stage considering that the funding has not been determined,
  • The scope of work (to be done by the lead agency) will be finalised after due process for the appointment of the service provider has been finalised, and
  • The announcement of the service provider will only be done once the department has finalised the process and the subsequent conclusion of the necessary agreements.

I hear that while Telkom is keen to get the business from DTPS it is equally anxious that a legally unchallengeable process of its ‘appointment’ is followed and that the deal makes business sense.

SA Connect is far too ambitious a project to be managed by a department that is moribund because of its understaffed executive leadership – only one permanent deputy director general instead of six, an acting Director General, a mainly disengaged minister whom the Auditor General has chastised for lack of leadership, and a missed target score in 2014/15 of 21 out of 29.

No-one knows what SA Connect will cost, because the project has not been scoped and no-one outside the government’s entities and Telkom has been known to be included in the discussions. So there is no concept of who from the ICT private sector – and any foreign investors – could also bring expertise and solutions to the project, at what cost and in which timeframe.

There is no known discussion between government and the major ICT sector players on funding models and what investments they can bring to the pot.

The SA Connect policy stressed that government and the private sector must work together to make this massive, critical infrastructure project happen – and fast – if South Africa and all its people are to have the opportunity to be included in the rapidly evolving global knowledge-based society.

When I challenged President Zuma during his November 17 parliamentary question time on the ‘designation’ of Telkom as lead agency and asked why the private sector was being shut out of SA Connect, he replied that no-one was being shut out.

Let’s see whether his SONA next week (February 11) lives up to that promise. DM

Shinn is Shadow Minister of Telecommunications and Postal Services

Photo: Radiant Johannesburg by Pascal Parent via Flickr.



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