Investigation into R1.3bn broadband buyout takes political turn

Investigation Into R1.3bn Broadband Buyout Takes Political Turn

The DA-led COJ is investigating the R1.3 billion price tag attached to the buyout of the city’s broadband network.

City of Joburg (COJ) mayor Herman Mashaba believes the motion of no confidence against him and the speaker of council is motivated by the decision to institute an investigation into the previous administration’s decision to take control of the Johannesburg BroadbandNetwork (JBN) project.

In March1, Mashaba confirmed a thorough investigation will take place as a result of the “astronomical costs” incurred by the city after taking over the project. In 2015, under ANC leadership, the COJ agreed to pay R1.3 billion to buy itself out of the JBN project deal. After establishing the investigation, the COJ confirmed that a senior official from the Department of Economic Development had been suspended pending a disciplinary hearing into allegations of misconduct relating to contracts and payments linked to the broadband network project. Although a complete report of the investigation is yet to be released, Mashaba says: “Preliminary findings of the report indicate that a number of high-profile individuals associated with the ANC have been linked to the city’s decision to purchase the fibre network.”

The executive mayor is of the view that the preliminary findings have influenced the interest of the ANC’s Umkhonto We Sizwe Military Veterans Association (MKMVA) in the tabled motion of no confidence against him.

See alsoIn a statement, Mashaba says: “I have been advised that the city will soon receive a full report based on an independent forensic investigation into the previous administration’s decision to purchase a 900km fibre broadband network at a cost of R1.3 billion.

“Specifically, it would appear that two senior members of the MKMVA held an interest in the companies benefiting from the purchase of the broadband network, benefiting almost R200 million. Why was this permitted?

“The preliminary findings also strongly indicate the same senior members of the MKMVA were, from the outset, deeply involved in manipulating the city’s tender process with respect to the deal.”

Investigation Into R1.3bn Broadband Buyout Takes Political Turn

Joburg mayor Herman Mashaba. (Photograph by the COJ)

Initiated in 2006, the JBN project aims to provide access to broadband services to improve the city’s delivery services, realise ICT-related savings, and provide communities and businesses with more affordable Internet.

The contract to build and operate the 900km broadband network was initially awarded to Ericsson SA, which won it in 2010, but later ceded it to CitiConnect Communications. In 2015, the city decided to acquire the fibre network and establish a municipal-owned entity, the Metropolitan Trade Company, to take over the running of its R1.3 billion broadband network. Under the initial agreement, the city would have paid an annual fee for the building and operation of the network.

After 15 years, it would have taken over ownership of the network. According to Mashaba, the aim of the JBN project was to provide access to broadband services which would improve the city’s service delivery, realise ICT cost-related savings for the city, and give communities and businesses across Johannesburg more affordable Internet access. Despite the astronomical costs, few of these benefits have been realised, necessitating a thorough investigation of the decision, he concludes.

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Investigation Into R1.3bn Broadband Buyout Takes Political Turn


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New pricing model: NBN says RSPs could save up to 70 per cent on business connections

NBN has revealed a revamp of its pricing model for business broadband services, replacing the NBN Business Ethernet (nBE) product that it had expected to launch later this year. Beginning next month, NBN said it would introduce a spend cap for Traffic Class 2 business-grade broadband connections, which can be delivered over fibre to the node, fibre to the basement and fibre to the premises. TC-2 services offer a committed information rate (CIR) with defined latency, jitter and loss characteristics and are intended for medium-sized businesses and enterprises. RSPs will save up to 70 per cent on monthly wholesale fees, depending on factors such as speed tier, contention ratios and extra service level agreements. “The pricing will vary based on the amount of bandwidth purchased by retail service providers each month, with NBN’s higher speed tiers expected to deliver the greatest reduction in overall costs,” the company said in a statement. NBN declined to reveal details of its wholesale rates for business services. NBN earlier this year revealed that as part of a restructure1 it had created a new Business Sales and Marketing department. “Near one billion dollars of future annual revenue will potentially come from the business segment and this requires a fundamentally different Go-To-Market strategy to that which NBN has applied for the residential segment,” NBN CEO Bill Morrow said in a memo announcing the restructure.
“NBN is well positioned to deliver business-grade services at competitive market prices to unlock further choice and competition for Australian business,” said NBN’s executive general manager, product, sales and marketing for business, Ben Salmon

New Pricing Model: NBN Says RSPs Could Save Up To 70 Per Cent On Business Connections Read more NBN looks beyond the National Broadband Network rollout2

“Today’s announcement demonstrates our ongoing commitment to adapt and optimise our products and pricing in order to keep up with market trends,” Salmon said in a statement released today.

Salmon said that NBN had taken on feedback from RSPs and “developed a new pricing model to enable those offering high-speed broadband, voice services and after hours care on the NBN access network to market their products at a more cost effective price for their business customers.”

“These product offerings are particularly aimed at helping Australian medium and enterprise businesses to harness technologies such as cloud computing, multi-line voice, video conferencing and multimedia rich applications to increase their efficiencies and drive revenue growth,” Salmon said.

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Inflight broadband a $130bn market by 2035

September 27, 2017

Inflight broadband has the potential to create a $130 billion (EUR110.7bn) global market within the next 20 years, resulting in $30 billion of additional revenue for airlines by 2035. This is the conclusion the research study, Sky High Economics: Quantifying the commercial opportunities of passenger connectivity for the global airline industry, carried out by London School of Economics and Political Science (LSE) in association with Inmarsat, a global provider of global, mobile satellite communications.

Market potential

Based on current IATA data and industry sources, Sky High Economics has developed an independent forecasting model. It predicts broadband enabled ancillary revenues for airlines will come from four main revenue streams:

  • Broadband access charges – providing connectivity to passengers inflight
  • E-commerce and destination shopping – making purchases on-board aircraft with expanded product ranges and real-time offers
  • Advertising – pay-per-click, impressions, sponsorship deals with advertisers
  • Premium content – providing live content, on demand video and bundled W-IFEC access

At present, only some 53 out of an estimated 5,000 airlines worldwide offer inflight broadband connectivity. On the back of strong passenger demand, inflight internet will be ubiquitous on commercial aircraft by 2035. Currently, airlines receive an additional $17 per passenger from ‘traditional’ ancillary services such as duty free purchases and inflight retail, food and drink sales. Broadband enabled connected ancillary revenues will add an extra $4 by 2035.

Drivers for growth

Full service carriers look set to claim the lion’s share of airline revenues (63%), generating $19 billion by 2035. Capitalising on longer flight times, additional revenue will come from the ability to maximise e-commerce platforms and striking deals with content providers to offer premium packages. The Sky High Economics study predicts low cost carriers will generate $11 billion by 2035, the bulk of which will come from selling connectivity to passengers.

Regional differences

The research also identified that regionally, the greatest opportunity for broadband-enabled ancillary services is in Asia Pacific. Driven by passenger growth and availability of services, airlines in Asia Pacific will benefit from $10.3 billion of ancillary revenues by 2035, followed by Europe ($8.2 billion) and North America ($7.6 billion). Dr Alexander Grous (B. Ec, MBA, M.Com, MA, PhD.), Department of Media and Communications, LSE and author of Sky High Economics said: “The opportunity available to airlines is enormous.

The Sky High Economics study predicts the creation of a $130 billion market within the next two decades. Globally, if airlines can provide a reliable broadband connection, it will be the catalyst for rolling out more creative advertising, content and e-commerce packages. We will see innovative deals struck, partnerships formed and business models fundamentally changed for new players to lay claim to the $100 billion opportunity away from airlines.

Broadband-enabled ancillary revenue has the potential to shape a whole new market and it’s something airlines need to be planning for right now.”

Rupert Pearce, Chief Executive Officer, Inmarsat, said: “Inflight connectivity is no longer a luxury for passengers, it’s an expectation. The analysis from LSE shows there is huge scope for airlines to unlock entirely new revenue streams, while also helping to improve the passenger experience. What’s more, airlines will become the gatekeepers to a $130 billion market.

If they can install a high quality inflight broadband connection, we will see them open the doors to some of the world’s largest organisations.”