The City of Johannesburg (COJ) has taken over control of the R3.4 billion Johannesburg Broadband Network (JBN), after the council recently approved the creation of a municipal-owned entity (MOE) to run it.
This follows the cancellation of a contract with Ericsson SA, which won the deal to build and operate the network in 2010, and later ceded it to CitiConnect Communications. The COJ will pay R1.2 billion to buy back the network assets, after the council's ANC majority pushed through the proposal at the end of last month.
The original contract came into dispute after CitiConnect Communications was found to have created intermediary companies to sell spare capacity on the COJ's network, as well as that it laid fibre for a second network in the city's trenches.
CitiConnect manages an entity called BWired, which was established by the city in partnership with Ericsson SA when the broadband project was initiated. Ericsson won the tender to run the project for a period of 15 years. After this time, the project would have been taken over by the city.
Initiated in 2006, the project was designed to integrate the city's telecommunications platforms, lower operational costs, increase access, lower costs of communications for residents, and allow access to areas that were previously not connected, because they had no fibre network, says the COJ.
Zolani Matebese, the city's head of broadband, notes that after the conclusion of the termination and transition arrangements, the city will obtain full control of BWired, the operating entity created to implement the project. According to the prescripts of the Municipal Finance Management Act, BWired now becomes an MOE.
He says once all the outstanding issues surrounding the cancellation of the contract had been resolved, the JBN would become "an absolute game-changer" for both the city and its residents.
"This exciting development accelerates the city's ability to fast-track its smart city programmes. The 900km of fibre-optic cables that have been rolled out provide us with backhaul infrastructure capacity to Internet service providers and mobile operators, removing the entry barrier for smaller providers and capital expenditure for larger ones.
"We've hit the ground running and are already making headway in rolling out several smart city initiatives."
Matebese says after the termination, the city was released from the obligation to pay R279 million a year over 12 years, allowing it to realise a 20% annual saving. "This projected 20% annual saving will go back into the fiscus and allow us to apply more smart city initiatives."
The COJ says small businesses will also benefit, as in the past, small businesses were not able to use cloud technology due to a lack of bandwidth.
"We can deliver so much more now that we have the broadband platform. Small businesses and all other users will now have access to a wide range of applications and services that were not previously available. Poor and undeveloped areas have also benefited," says Matebese.
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