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SA Connect is doomed to fail

Johannesburg, 23 Mar 2015
Government is not clear what Telkom's exact role will be in SA Connect, says deputy telecommunications and postal services minister Hlengiwe Mkhize.
Government is not clear what Telkom's exact role will be in SA Connect, says deputy telecommunications and postal services minister Hlengiwe Mkhize.

Government has finally confirmed Telkom is to be the lead agent in rolling out SA Connect - SA's ambition plan for ubiquitous connectivity by 2020 - but has provided no concrete implementation plans, leading analysts to say the project is doomed.

In February, president Jacob Zuma announced Telkom would be the lead agent in a project to provide broadband to eight municipalities in all of SA's provinces except Gauteng and the Western Cape. These provinces are already rolling out broadband.

Telecommunications and postal services deputy minister Hlengiwe Mkhize confirmed in an interview with ITWeb on Friday that the project announced by Zuma and SA Connect are one and the same.

However, Mkhize was unable to shed light on what Telkom's exact role will be, nor how other private and public entities would fit into the plan, the cost of the project, or how it would be funded.

Measure of control

Mkhize explained Telkom was chosen as the lead agency following a presidential review a few years ago that looked into integrating and consolidating state-owned entities. She says one of the outcomes was that it was important to make sure ICT agencies collaborate with each other in a co-ordinated and integrated approach to avoid duplication.

Telkom was selected for SA Connect because it is the "biggest player in terms of broadband" and successfully connected South Africans during the 2010 World Cup, says Mkhize. "It was also taken into account that the state is a shareholder in Telkom; as much as we are aware that it is also a listed company, the feeling was that we have influence in terms of the future. So the decision was really based on the work they have done and continue to do, and our influence over them."

The listed telco is 39% owned by the state, with another 11% indirectly held by the Public Investment Corporation. Both Telkom and government previously denied the state interferes in Telkom's running.

Expediency of the essence

Mkhize adds Telkom will be the lead company for SA Connect, but will have to partner with state-owned companies as well as the private sector.

It is clear Telkom cannot handle this magnitude of a project by itself, and will need to partner with other entities, says ICT commentator Adrian Schofield. However, he notes it does make sense to have a state-owned company in charge of procuring linkages.

Yet, Schofield questions why no tender was issued, noting this is the only way to ensure transparency and control costs. The lack of a tender process has previously been slammed because of the potential amounts involved, and Telkom's status as a listed company.

When asked why the tender process was not followed, Mkhize said: "The real question here is when are we going to start?" She noted SA Connect was approved by Cabinet in 2013, and infrastructure needs to be rolled out to most developed markets by 2016, with a 50% broadband penetration at 10Mbps.

"By 2020, 100% broadband penetration should be achieved at 100Mbps. By 2030, we will be evaluating all aspects of the policy, and focusing on up-skilling e-learning and the use of e-government." The department has promised to connect 580 clinics, 4 444 schools, 182 police stations and 572 other government offices to the Internet by June.

Schofield notes the implementation dates around the first phase are a "stretch of the imagination" because of the general lack of detail around how the project will be rolled out, by which entity, and how much it will cost. He notes this is sadly typical of how government approaches shortfalls in delivery: a grand plan and promises without enough detail.

Where's the money?

Only R1.1 billion was earmarked in this year's budget for SA Connect for the next three years. Mkhize could not provide an overall cost, saying there were currently only estimates. "That is why our strategy is to say, come April 2016, this is what are our priorities are, because if you hear numbers like R98 billion then you start saying in this country we are not going to have R98 billion."

When asked what the estimated cost was for 2016, Mkhize said: "We have to follow regular processes; if for instance we need to roll out broadband to OR Tambo or in the Eastern Cape, we will issue a tender. The question for us here, which we haven't really resolved, is what will Telkom's role be?"

Schofield notes the lack of clarity around where funding will come from is "an issue" as it is inevitable taxpayers will end up footing the bill. He notes government first needs to understand where the gaps in connectivity are, and how these should be filled, otherwise it is impossible to say how much this sort of project will cost.

Ovum analyst Richard Hurst says while government "at least" has some goals, the chances of the timeline being met are "very slim" because the plan on how to get there is "very thin" and lacks substance.

Hurst adds the chances are high that phase one will be pushed out and become phase two. "It seems like we are setting ourselves up for failure. It is a matter of sweeping the dust around the floor before we push it under the carpet."

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