SA Connect: Department progress report, with Deputy Minister

Meeting report

Briefing

Mr Robert Nkuna, Director General, Department of Telecommunications and Postal Services (DTPS), gave a progress report on the implementation of the strategic pillars of the SA Connect programme. He said that SA Connect had changed how it viewed Broadband. Previously it had been all about infrastructure, but now it was following the worldwide trend to look at it from the point of view of what impact broadband had and what SA’s needs were. The policy set out the targets and objectives and these were based on four pillars; Digital Readiness, Digital Future, Digital Development, and Digital Opportunity. A key objective of SA Connect is that broadband must reach a critical mass of South Africans.

He then spoke to the institutional framework. Issues which arose from engagements with Provincial Broadband Steering Committees were:

• the quality and bandwidth of connectivity provided to schools
• that repairs took too long and the services did not adhere to the SA Connect Policy
• the sustainability of the connectivity
• theft and vandalism
• some facilities did not have power
• the location of some facilities had to be corrected.

On the Digital Readiness pillar, he said policy issues had been addressed and the ICT policy White Paper was gazetted in October 2016 containing policies that were key to the implementation of SA Connect: Spectrum, Rapid Deployment, Wholesale Open Access Network policies and Digital Development Fund

Draft legislation has been developed. Internal consultations were being held, to be followed by public consultations.

He said agreement was reached with industry on the way forward to implement spectrum And Wholesale Open Access Network (WOAN) policies. WOAN was needed, to provide access for new players in the industry. 

There may be no urgency to return the current high demand spectrum from licensees until the end of current licence period to ensure investment certainty. The licensees had committed to buy at least 30% of the capacity of WOAN to ensure its viability. The Minister committed to conduct an urgent high-level study to determine spectrum capacity required by WOAN. Any remaining spectrum would be licenced to operators with rural coverage obligations. In such cases the licensees further committed to buy at least 50% of WOAN capacity. The Minister approved the National Radio Frequency Plan 2017 which would be gazetted by ICASA to facilitate the release of additional spectrum for Broadband and other radio-communication services.

On the Digital Development pillar, he said implementation would be achieved through a two-phased approach. Phase 1 covered 6135 facilities in eight district municipalities and 2700 government facilities would be connected by March 2018.

In 2016 the Department planned to start the implementation in eight pilot districts after following the open tender process by State Information Technology Agency (SITA). There was no successful bidder, resulting in the tender being cancelled. Since then the Department decided to use State Owned Entities SITA, BBI and SENTECH. The Minister formally mandated SITA and BBI to work with the Department to finalise the detailed implementation plan and service level agreements and the Department was engaging with the Chief State Law advisor on the legal framework envisaged between the Department and the SOCs as well as with National Treasury on financial considerations. The DG and the CEOs of the SOCs would finalise the Service Level Agreement.  SOCs had commenced planning and the process to identify the facilities to be connected as per the roll-out schedule was underway. The SOCs were identifying SMMEs and ISPs to ensure local empowerment and training of small entities would be done. The Department, in collaboration with SOCs, had engaged the following DFIs for SA Connect funding: Development Bank of South Africa (DBSA); Industrial Development Corporation (IDC); Small Enterprise Fund Agency (SEFA); National Empowerment Fund (NEF); French Development Agency (FDA); and the Public Investment Corporation (PIC).

The Phase 2 business case, to connect 35211 facilities in 44 district municipalities was developed and submitted to Treasury for funding. There was no funding allocation for Phase 2 and the Department was working with Treasury to unblock the funding issue.

He then spoke to provincial initiatives. Gauteng had connected 1000 of the 3000 targeted sites. The Western Cape had connected more than 1900 sites. Limpopo had issued a tender on 11 April 2017 which was closing on 9 June 2017. North West province had published a tender for broadband implementation which was subsequently cancelled. The Province had appointed a service provider for the provision of WIFI connectivity in four villages in the Ngaka Modiri District Municipality.

He then moved on to national initiatives complementing SA Connect. The Universal Service Obligation (USO) rollout formed part of the license obligations for MTN, Vodacom, Neotel & Cell C. The target was 5250 schools in 5 years. To date 3641 schools were connected and education content was placed in local servers.

USAASA used the Universal Service Access Fund (USAF) to expand their program of connecting underserved areas in the OR Tambo District Municipality. 210 of the planned 609 sites have been connected.

He then spoke to the Digital Future pillar. He said the purpose of SOC rationalisation was; to consolidate/align DTPS ICT SOCs; to avoid duplication and wastage of scarce financial resources; and to assist with SA Connect aspirations of delivering broadband access to all citizens.

The SOC rationalisation project would create two entities; the State Infrastructure Company and the National Broadband Network Company (NBN Co). The NBN Co would focus on the consolidation of DTPS ICT infrastructure SOCs, with the main aim of avoiding duplication and wastage. The State Information Technology Company (IT Co), would focus on:

• Research and development
• Innovation
• Localisation (Local procurement and open source)
• Cybersecurity
• Procurement of IT Products and Services
• E-Government implementation
• IT Service management

Speaking to the Digital Opportunity pillar, he said the e-Strategy and the e-Government Framework were gazetted on 7 April 2017 for public consultations and comments. Provincial consultations were currently underway. This initiative was essentially on how government communicated with its citizens.

He also spoke to e-education on effective integration of ICT’s into teaching and learning activities that promoted deep learning experiences for learners. The progress as at May 2017 was:

• Wi-Fi at schools – 2x Access points per school, 7282 APs’ provided;
• Devices (for leaners & teachers) – 24 tablets & 3 laptops per school, 98307devices delivered;
• Local Server at school for offline solution – 1 local server per school, 3641 servers delivered;
• Broadband Connectivity to sync to DBE Cloud at Datacentre – 3641 schools connected;

He then touched on USO obligations for connected health facilities. In January 2017 ICASA published a notice to amend Telkom’s Universal Service Obligation to include connectivity to public health institutions.

The obligation requires Telkom to provide connectivity to 3631 public health institutions within five years from commencement.  This will support some of the e-Health initiatives of National Department of Health.

Deputy Minister Stella Ndabeni-Abrahams congratulated the Western Cape and requested the cooperation of the members in promoting the uptake of broadband in their constituencies. She said that although SA Connect had experienced challenges the Department would ensure the roll out program through government entities. She added that while there might be a roll out of broadband, if people were not ready to use broadband to change their lives for the better, the objective of the program would not have been achieved. There was a need to empower SMMEs and have them participate on ecommerce platforms. She said the Department was working on rationalising the Department’s SOCs.

Discussion

Ms J Kilian (ANC) said that given what members had seen on an oversight visit, the Committee was not convinced of the project because it was clear that there were no set standard. Was there a national speed standard that needed to be achieved? Was there any role for the SA Bureau of Standards (SABS) in the setting of the standards? Did the SOCs have the capacity to do this and was it achievable? Were the first-year targets achievable given financial constraints? What went wrong with the Limpopo tender? What was the role of the private sector in the roll out? Was there any coordination between the Department and the CSIR on the high-level study undertaken on the best way to utilise the available spectrum? She wanted the list of 3641 schools so that site visits could be done.

Mr K Siwela (ANC) asked if SOEs would issue tenders as they took over certain functions after the rationalisation. When would the SOC rationalisation be finalised? Who would carry the cost if the cancellation of the North-West province tenders and why was it cancelled? Why was the budget increasing when there were fewer sites being connected in the later years? USAASA was only achieving 30% of its planned sites, what was the project timeline and was the utility still on track to complete the rest of the sites? He wanted an update on the connectivity at the Mpumalanga site that the committee had been to as part of its oversight visit.

Ms N Ndongeni (ANC) asked how the strategy finalisations had been negotiated for the e-government strategy. Was there any engagement with the Department of Education on the alignment of the e-Cloud with Operation Phakisa?

Mr N Koornhof (ANC) said that it was sad that the budget was a constraint but SA Connect had to be pushed. Why was there no successful bidder for the first phase of SA Connect? Was the Department on track? Why were there open spaces on the country map on slide 19? Were all provinces using different models to implement connections? He said the roll out had to have urgency and energy.

Mr C Mackenzie (DA) asked who did the monitoring and site evaluations. How many Thusong Service Centres were operational? Who was the service provider for Ngaka Modiri? He said that SA occupied 76th spot on the e-government table worldwide.

Ms M Shinn (DA) said that government had asked to be connected seven years ago yet they were still not connected and the new legislation would take years to implement. The SA Connect tender had failed. Had there been any attempt to contact the tenders? The SA Connect plan would fail. There was a need to engage with the private sector because it was an immense project and the funding was not there. The capital expenditure for 48 000 government sites would cost R33b creating a need for innovative structuring and financing. The funding for the project lay with the provinces and the metros not national government. What was the Department doing to get them to achieve the targets? She said she had no idea what was happening to spectrum or to wireless.

Regarding quality assurance and whether the Department had the capacity to do the SA Connect project, Mr Nkuna said that the Department was currently being reorganised. There would be Departmental officials working on SA Connect project only.

The Department would enhance its engagement with ICASA to ensure that the equipment used was approved. The project management office would attend to installation requirements.

Regarding SOC’s capacity to drive the project, he said he saw the SOC’s working in conjunction with the private sector and not on their own.

He noted the comments on BBI and would be paying specific attention to this to ensure that it was capacitated because BBI was central to the coordination of the infrastructure roll out. Excess capacity of SOCs such as PRASA, Eskom and Transnet would be crowded in.

Regarding the North-West tender, the Department was not part of tendering which was done by the provinces. 

Regarding the private sector and the resolution of the spectrum issue, he said that the Department had had discussions with stakeholders and had come to an agreement on the way forward.

The ‘internet for all’ had been launched to involve the private sector. SOCs could invoke SCM policies to get the private sector involved.

He said the CSIR was assisting in modelling the capacity of WOAN.

SOCs rationalised was a priority and it was apparent that the Department would be better off with a harmonised configuration amongst key SOCs. There was still no name for the company that emerge from the rationalisation.

He said seven bills would be sent to the Committee

Regarding the implications for growth, he said SA Connect was one of the stimuli to assist in growth of the economy and to restructure the economy for the demands of the fourth industrial revolution.

On the implementation models, he said all the provinces were taking the same approach but had not all started at the same time. the Gauteng and Western Cape had started earlier. There was a need for caution where provinces did their own thing.

He said the issue of urgency, as well as agility, was taken seriously.

Regarding government going digital, he said that government had to be a role model user if it wanted the rest of society to do it. There was a need to improve the coordination of e-government. He said there was a need to improve on the 76th place ranking it had achieved.

With regard to the role of SMMEs, he said the Department would start with the services part of the value chain. 96 ISPs were owned by youth. The Department was talking to Intelsat to assist with rural area access. He said the Department did not yet have a strategy on how to use this opportunity to stimulate manufacturing.

Regarding the financing of broadband, he said that the money the Department had was to buy services. The Department had started to engage with Treasury on the supply side servicing by SOCs. He said the Department could not conclude contracts with SOCs because the SOCs had not had an agreement with the Department. This agreement would be signed in the course of the week and sacs could now approach DFIs for finance.

Regarding spectrum, he said licences were not valid for infinity, it had a lifespan, and the Department was speaking about the alignment of the spectrum licenses with other licenses. There was no intention to ask companies to return their spectrum. No intention to do anything untoward to this sector.

On the issue of national standard for the speed to be achieved on the networks, Mr Tinyiko Ngobese, DDG, said SA Connect set out the speeds that had to be achieved, 10Mb/s in 2016 and later moving up to 100Mbp/s and further to 1Gb/s.  Some prior connectivity was not aligned to these speeds.

In terms of standards for equipment, he said there had been no standard until the Universal Service Obligations that were published by ICASA for equipment. Operation Phakisa\s standards were quite high so the Department was focusing on the USO standards.

On the cancelled North-West tender, he said the Department had engaged with the province where they said they had engaged with the service provider which they felt had some shortcomings which had to be addressed first, therefore the re-issuing of the tender.

On the issue of the budget increasing whilst the number of sites decreased, he said the strategy was to connect sites that were closest to infrastructure first. As one moved away from infrastructure, the cost increased. The budget was there to pay for services. In addition, therefore they payment for services were cumulative as more sites were adde3d in the following years.

Regarding engagement with the Department of education, he said the Department had [participated in the development of Operation Phakisa and the development of the e-learning system. And started working closely with the Department of Health on the National Health Insurance.

Regarding open spaces on the map, he said these spaces represented the eight districts where connections had already been made in phase one.

Regarding monitoring, he said the Department had a small team visiting the sites and identifying challenges.

The Thusong Centres were part of the plan because they were crucial in the provision of e-government services.

On the issue provinces and metros having the funds and not the national Department, he said the Department was working with Treasury on institutional mechanisms which have not been finalised yet, to ensure that funding for phase two was used for its intended purpose.

He said the Department would provide the list of 3000 schools that had been requested, to the committee

Mr Mohapi said the capacity needed to be augmented. He said the target of 2700 sites was do-able but not easy.

He said the required network speed was 10Mb/s. he said the green and blue clouds on slide 16/17 were SITA’s while the grey cloud were NGN networks which SITA asserts on networks.

Regarding access, he said 5000 Departments were connected via various parties. There was a suggestion that the current arrangement with BBI be extended. He said the operating model there was similar to the current one being used.

He said the timeline was based on IGFR and engagements with suppliers and normal tender processes were being followed. The timelines were very tight.

Regarding e-strategies, he said SITA was expected to drive e-learning applications in schools.

He said the SA Connect tender was specifically for access networks, not for end to end networks. The tender was cancelled because none of the bidders met mandatory requirements.

Regarding the concern whether SOCs had the capacity to do the work, Mr Gift Zowa, CTO: BBI, confirmed that they could do the work and meet the requirements. It had already rolled out 1 000km and 41 POPs and they were running at high values than was asked for. BBI had even done projects for the four major mobile network operators in the country. BBI’s capacity lay not only within itself but also in the rest of the SOEs and BBI was leveraging this. In total BBI had run 14000 km of cable.

On the SA Connect project, he said high level designs had been done to verify that facilities were there. He said SOCs would be used but would also use SMMES and black economic empowerment companies in implementation. These companies had gone on to get bigger work contracts with Vodacom and other companies, so the Department was taking training and developing these black empowerment companies.

He agreed the timelines were very tight, but BBI would leverage on existing infrastructure. The Department had done work via the CSIR in previous years and the results of that study would be used to allow BBI to run fast and not start from scratch.

Regarding Ms Kilian’s question, Mr Lumko Mtimde, CEO, USAASA, said the challenge of connecting was that it was not only connecting to USAASA sites but also to USO connectivity.

Regarding Mpumalanga and Limpopo, he said independent technical people had been appointed, through SCM processes, to verify the information and to activate the connections.

Regarding the six municipalities not connected, he said a challenge was that end user demand was not stimulated so this needed to be stimulated so that the connections could have the impact that was intended.

USAASA would oversee the roll out from one centre and to what extent the two-year subsidy could be reviewed as it appeared that the subsidy was not sustainable enough as it did not stimulate the take up and ownership of the services.

The challenge of the limited budget was unfortunate.

Regarding OR Tambo municipality he said USAASA was more than ready in terms of broadband but not in terms of other targets. USAAASA was working with provinces and local municipalities and other partners.

On whether Sentech had the capacity to do the work, Mr Mallie Boo, CEO, Sentech, said that it was not going to be quick but they were using stop gap solutions. There would be areas where it would not be economically viable to roll out to certain areas and would be using satellite networks which were not the cheapest solutions and was only being used for the short arm. Other cheaper solutions were needed. Sentech provide wireless solutions. They were currently collaborating on the roll out and the private sector was used to assist in this. The collaboration was to benefit through the provision of fixed lines and to create efficiencies as much a possible and to do quick turnaround times.

Ms Kilian asked what the deadlines were to get the Department structure in place and from a public accountability perspective, when would the project team be established?

Mr Siwela asked why public-sector institutions were failing to get it right, when the private sector was using the same BBI services and it was working well.  The Department had talked of a detailed plan between SITA and BBI but there was no mention of Sentech.   

Regarding the issues around connecting the sites of the Departments of Educational and Health, Ms Shinn asked if SA Connect was only providing the connectivity and not the devices and content. what was the role of the National Broadband Advisory Council to play to get SA Connect off the ground? Regarding the BBI’s site visits, she said this had already been done by the CSIR and Telkom. Was BBI liaising with these two bodies? What was “internet for all” exactly?

Mr Mackenzie asked Mr Nkuna how many members of the Department were present on SA Connect and what was the date for the start of the program?

Deputy Minister Ndabeni-Abrahams said a project management office was being set up to deal exclusively with SA Connect and to have oversight over entitles on the rollout.

She said the private sector would be used where required. She said the figures mentioned were those connections that had been completed and the roll out was continuing. The failure in the roll out was because government Departments did not talk to each other.

Regarding when rationalisation would be completed, she said it while the rationalisation was being done, it had to be aligned with legislation and that had to happen by the third quarter and Treasury had to be engaged.

She said the Department was working with DFI’s and Treasury to source more funding.

SA Connect was about infrastructure not devices and therefore it was important to work with all stakeholders, Provinces had to budget for broadband as well as for example the Department of Health.

She invited the committee to the OR Tambo municipalities for the roll out of wife in Tsolo in the Eastern Cape.

Mr Nkuna said that the Department was entering into novel written agreements with its own entities to enhance accountability.

Regarding tendering he said the Department were giving entities responsibility to roll out and so the Department would not be tendering. The Department’s role would be one of monitoring the roll out.

Regarding the term “internet for all”, hew said that government had to take the lead and be an example. He said while SA Connect was being rolled out there were projects done by others such as in the area of skills development by Microsoft for example. “internet for all” is about everyone involved in this field should come together to know who was doing what so that linkages and areas of collaboration could be identified. Its Not something new.

On the rationalisation program, he said SITA was the state IT company and as there was a move to reorganise SITA to drive e-government.

The Department Will write to parliament on a proposed legislative program so that the committee would know what legislation would be coming.

On the exclusion of Sentech, Mr Ngobese said BBI’s plan will focus on the coordination of infrastructure and where BBI requires satellite services it would talk to Sentech.

On the role of the National Broadband Advisory Council in the SA Connect project, he said the Department was finalising the role that the council would play.

On the issue of the breakdown of the service amount, he said the Department did not have a breakdown, only the amount for the end to end service.

Regarding the increase in the budget compared to the number of sites being connected, he said R416m was allocated to connect 2700 sites in the first year. In the following year while connecting new sites the Department had to pay for services at the sites connected in the first year also and similarly for the third year. After that it was constant as all the sites would have been connected.

Mr Zowa said BBI was doing further verification of POPs and actual entities. The CSIR study was commissioned because the original study was high level study whereas BBI wanted a more detailed “door to door “study on feasibility looking at power supply, space, and overhead or underground cabling issues. BBI had to liaise with other entities in the area like SOCs regarding POPs

Mr Nkuna said regarding the roll out of spectrum, he said the CSIR played a big role in the modelling now engaging with the CSIR on high density for its optimum use to give industry spectrum but also to allow for WOAN. The 700-800MHz bandwidth was currently not available until digital terrestial migration was completed, but there was a small portion that was available.

The meeting was adjourned