Court rules against Eastern Cape in battle to use Liquid Telecom over Telkom

The High Court in Bhisho has ruled in favour of SITA in a dispute with the Eastern Cape government over the rollout of broadband.

Using its existing Master Service Agreement with Telkom, SITA suggested that the Eastern Cape upgrade 160 provincial government sites that were already connected.

The head of the Eastern Cape’s provincial broadband unit, Dayalan Padayachy, said that an analysis of the quoted price shows the average monthly costs per site are:

  • R26,000 to SITA as a port charge.
  • R7,000 to Telkom for line rental.

Provincial director general Marion Mbina-Mthembu said that the fees were for contended 10Mbps lines from Telkom.

In total, the price would have been R885 million for 400 sites over a five-year contract.

The Eastern Cape rejected the proposal, and wanted to “piggy-back” on an existing tender awarded by the Western Cape government.

Piggy-backing

Liquid Telecom, which provides broadband to the Western Cape, was able to offer much better pricing.

Mbina-Mthembu explained that Liquid Telecom was willing to offer the same pricing it offered the Western Cape, which comes to between R8,000 and R10,000 per month for each site – 71% cheaper than SITA’s proposal.

It also offered offers uncontended 10Mbps connections.

The Eastern Cape elected to make use of Liquid Telecom’s services, and Mbina-Mthembu presented evidence that the Eastern Cape obtained permission from the Western Cape government and Liquid telecom to piggy-back on the deal.

Mbina-Mthembu also contended that SITA said they could piggy-back on the Western Cape tender – but SITA disagreed.

The resulted in a legal battle.

Court fight

Judge John Smith has now stated that the Eastern Cape government did need approval from SITA to participate in the existing contract with Liquid Telecom.

Smith also disagreed with the Eastern Cape’s assertion that SITA had given its approval.

However, Smith said that the parties need to come up with a “just and equitable remedy”.

He noted that there has not been any suggestion of corruption in the allocation of the contract, and added that it appears the services rendered by Liquid Telecom may be reasonable and cost effective.

Setting aside the contract would also probably results in a waste of public funds, Smith said.

Smith postponed making an order relating to the costs of the case, and asked SITA and the Eastern Cape to come back with arguments for a way to resolve the situation fairly.

SITA is due to file its argument by 2 November, while the Eastern Cape and Liquid Telecom will have until 16 November.

Liquid Telecom told MyBroadband that it will work with SITA and the Eastern Cape to determine a solution that satisfies all parties and stakeholders.

Now read: War over R3-billion broadband contract – Report

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Court rules against Eastern Cape in battle to use Liquid Telecom over Telkom