100% broadband by 2020: Treasury gets involved

South Africa’s National Treasury has decided to lead a market sounding on behalf of Government with a view to gaining an understanding of the approaches for achieving the targeted 100% broadband coverage by 2020, and the associated fiscal support that may be required to help with the roll-out.

The idea of affordable broadband for all citizens can be traced as far back as 2005 when the late communications minister Ivy Matsepe-Casaburri said that “affordable access to broadband is crucial for achieving socio-economic development goals”.

In 2010, former communications minister Siphiwe Nyanda promised broadband for everyone by 2019. When the late Roy Padayachie took over from Nyanda as communications minister, he committed to 100% broadband penetration in South Africa by 2020.

In her 2012 communications budget vote speech, current communications minister Dina Pule said that the DoC remains committed to delivering 100% broadband penetration by 2020.

However, it remains unclear as to how this will be achieved and where the money for this project will come from.

Pule explained that the DoC has not done their own studies to estimate the cost of a national broadband roll-out, but said that some industry players had investigated the matter and their findings show that the cost will be somewhere between R60 billion and R89 billion.

Pule more recently reaffirmed this figure, saying that it will cost “just under R90 billion” to roll out broadband infrastructure in the country over the next eight years.

Considering that Telkom, for example, has a market capitalization (the total value of the company’s shares) of under R10 billion, it puts the R90 billion figure in context.

Dina Pule
Dina Pule

Infrastructure projects

Government has said that infrastructure improvement is a key strategy for South Africa, and includes rail, road, water and energy projects.

The Presidential Infrastructure Coordinating Committee (PICC) was established to monitor the progress of projects, identifying problems and assist with overcoming any problems.

The PICC has identified 17 “Strategic Integrated Projects (SIP)”, of which expanding access to communication technologies is one. This includes achieving 100% broadband coverage for all households by 2020.

Through industry engagement the National Treasury will aim to answer various questions, including:

  1. How have other countries have been able to expand broadband coverage? What contributions have governments made towards the network roll-outs, and what mechanisms have been used to provide finance?
  2. What approaches would help to rapidly expand broadband coverage in South Africa?
  3. How much funding is needed from Government, and what mechanisms could be used to ensure that the funding is best targeted to achieve Government’s aims?
  4. What are the potential sources of financing that Government could use to fund its contribution towards broadband roll-out?
  5. What are the key challenges that may be faced in expanding broadband access? How might these be addressed?

The market sounding event lead by South Africa’s National Treasury will take place on 25, 26 and 27 July 2012.

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100% broadband by 2020: Treasury gets involved