Jo`burg to lease its telecoms assets

Johannesburg, 19 Oct 2006

The City of Johannesburg, which owns infrastructure to provide a telecoms platform, as well as a private telecoms network (PTN) licence, says the assets will be made available to a successful private sector bidder.

Spokesperson Virgil James says the assets, which include fibre, copper and wireless telecoms infrastructure, will be leased to the successful private sector bidder in return for rental income.

James adds that the tender has not yet been compiled, and the issue is still under consideration.

Legal implications

To ensure the proposed digital city project operates within the regulatory framework, senior council provided a legal opinion addressing any legal/regulatory risks potentially faced by the city, James says.

Mike Silber, a consultant with Michalson Attorneys, notes that while the Electronic Communications (EC) Act allows for municipalities to be licensed to provide communications services internally, the reselling of telecoms services to citizens by municipalities is a more contentious issue.

"Geographically-limited electronic communications networks operated by the private sector, where the municipality holds less than 25% shareholding, would qualify for a class licence from the Independent Communications Authority of SA (ICASA)," he says.

However, if the municipality`s shareholding exceeds 25%, the entity is more likely to qualify for an individual licence, which requires authorisation from the communications authority, he says.

James adds that while there appears to be nothing that could legally prohibit the city from contracting with a third-party to build and operate its PTN, the city is also electing to mitigate risk to include legal compliance as part of the pre-qualification tender process.

Parties are to indicate how they propose to build and operate the network and provide the services. A legal opinion will be obtained on any of the proposals if clarification is required in this regard, he says.

"It is unlikely that a complaint proceeding filed against the city (for providing telecoms services to citizens) would be successful, as long as it remains vigilant in complying with the regulations that are being developed on an ongoing basis by ICASA in terms of the EC Act," notes James.

Partnerships

In becoming a digital city, Johannesburg and other municipalities will face traditional Internet service provider (ISP) challenges, says Anthony Southgate, marketing executive at Internet Solutions.

Providing broadband services for end-users will require municipalities to provide more than raw bandwidth. They will need to have sufficient Internet access, the ability to manage the external networks, the billing engines to manage their clients, as well as services to ensure the end-user is receiving value from the services, he says.

Partnerships between ISPs and municipalities may prove invaluable, as municipalities would provide bandwidth to users, and this bandwidth would be fed back to an ISP, he says.

"The users would have the best of both worlds - a provider who has the infrastructure to get to their homes and offices, and a service provider who is able to deliver the traditional ISP services," he says.

BMI-TechKnowledge MD Denis Smit adds that underserviced area licensees (USALs) and digital cities have a lot to offer each other.

"Cities can provide capital, organisational muscle and anchor client revenue, while USALs have licences and possibly WiMax and other spectrum which would be powerful assets for the city," he says.

The final beneficiaries would be residents and businesses, who would be able to access telecoms services at lowered rates and become more competitive in the local and global environment, says MyADSL founder Rudolph Muller.