The Social and Economic Impact of a Metropolitan Broadband Network for the City of Cape Town Nirvesh Sooful/  City of Cape...
Objectives of this presentation <ul><li>To share with you the draft results of an Economic Impact Analysis that the City o...
Developmental local government
Background <ul><li>The City is a large user of bandwidth, at very high cost </li></ul><ul><li>But current internal demand ...
Why telecoms infrastructure so important to us  <ul><li>We use a lot of it (for a lot of different things) </li></ul><ul><...
Project objectives <ul><li>Provide the City with enduring broadband infrastructure, so as to: </li></ul><ul><li>Bring down...
 
Strategy <ul><li>Build an extensive network of optic fibre  across Cape Town </li></ul><ul><li>Connect main municipal buil...
Strategy <ul><li>The City is not looking to become a Telecommunications Operator and compete with the likes of Telkom and ...
Organisational arrangements <ul><li>Responsibility lies with IS&T (CIO Office) </li></ul><ul><li>City is the “owner” of al...
Benefits <ul><li>The City of Cape Town </li></ul><ul><ul><li>Reduction in existing costs for 30-40% </li></ul></ul><ul><ul...
City is looking at broader benefits <ul><li>Digital communications are the basis of the modern knowledge economy </li></ul...
Economic Impact Assessment <ul><li>Independently conducted by same Consultants who did EIA for CTICC, World Cup </li></ul>...
Economic Impact Assessment <ul><li>Part 1: international literature review. Purpose is two fold.  </li></ul><ul><ul><li>Fi...
International  <ul><li>There is a substantial body of literature that demonstrates the economic benefits of constructing a...
Local: Macroeconomic Analysis <ul><li>While there are a number of different types of macroeconomic effects, the two most i...
Macroeconomic analysis <ul><li>The total contribution to GDP is expected to amount to R225m in 2007/08, R483m in 2008/09 a...
Additional points <ul><li>Capital formation [value of plant to support output] of R90billion. </li></ul><ul><li>Cumulative...
Conclusion <ul><li>The City is embarking upon this broadband initiative as it needs it for its own operations. </li></ul><...
Thank You Questions/ Discussion Contacts: [email_address] Copies of this and other related presentations, as well as furth...
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Digital Cities Conference 2007 - The Social and Economic Impact of a Metropolitan Broadband Network for the City of Cape Town

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The 3rd Annual BMI-T Digital Cities Forum is a two day event held on the 4th and 5th of October 2007 .

The City of Cape Town is in the process of installing its own broadband telecommunications network. It is envisaged that not only will this network result in considerable cost savings for the City itself, but also has the potential to bring about significant social and economic benefits to the city at large. The objective of this presentation is to identify, explore and, where possible, quantify the potential economic and social benefits that would be generated as a result of the proposed broadband network.

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  • Digital Cities Conference 2007 - The Social and Economic Impact of a Metropolitan Broadband Network for the City of Cape Town

    1. 1. The Social and Economic Impact of a Metropolitan Broadband Network for the City of Cape Town Nirvesh Sooful/ City of Cape Town
    2. 2. Objectives of this presentation <ul><li>To share with you the draft results of an Economic Impact Analysis that the City of Cape Town commissioned as part of its business case for its fibre network. </li></ul><ul><li>We believe that this is the first such report commissioned on the African continent. </li></ul><ul><li>This report is still in the draft stage and draws a direct link between the broadband investment and the growth of the economy of Cape Town (even though the most conservative case is used) </li></ul><ul><li>This is the first time that these findings are being made publically available. </li></ul><ul><li>The format of this presentation will be to first take you through some of Cape Town’s rationale and strategy for broadband, and then to explore the initial findings of the report. </li></ul>
    3. 3. Developmental local government
    4. 4. Background <ul><li>The City is a large user of bandwidth, at very high cost </li></ul><ul><li>But current internal demand is still not being met </li></ul><ul><li>And there is huge future demand that the City cannot afford </li></ul><ul><li>Solution: build optic fibre infrastructure capable of supporting ‘broadband’ communications throughout the City </li></ul>
    5. 5. Why telecoms infrastructure so important to us <ul><li>We use a lot of it (for a lot of different things) </li></ul><ul><ul><li>Internal Operations </li></ul></ul><ul><ul><ul><li>Cash Offices, email, depots, stores, SAP, HR, Intranet, etc. </li></ul></ul></ul><ul><ul><li>Security- CCTV </li></ul></ul><ul><ul><li>Citywide telephony system </li></ul></ul><ul><ul><li>City Call Centres </li></ul></ul><ul><ul><li>Traffic lights </li></ul></ul><ul><ul><li>Emergency services (Tetra + applications) </li></ul></ul><ul><ul><li>Electronic Road signage </li></ul></ul><ul><ul><li>Telemetry system for electricity management and SCADA for water </li></ul></ul><ul><ul><li>Telecommunications in the context of social and economic development of City, e.g. Smart Cape Access Project </li></ul></ul><ul><li>It is expensive to buy as a service </li></ul>
    6. 6. Project objectives <ul><li>Provide the City with enduring broadband infrastructure, so as to: </li></ul><ul><li>Bring down own telecommunications costs (currently in excess of R100m pa), and </li></ul><ul><li>Provide the required communications infrastructure needed for the 2010 Soccer World Cup and beyond </li></ul><ul><li>Do this in a way that: </li></ul><ul><ul><li>Recovers costs (if possible) </li></ul></ul><ul><ul><li>Contributes towards the economic growth of Cape Town </li></ul></ul>
    7. 8. Strategy <ul><li>Build an extensive network of optic fibre across Cape Town </li></ul><ul><li>Connect main municipal buildings to this infrastructure to lower internal costs, including voice, data and ccTV costs </li></ul><ul><li>Provide optic fibre to transport, safety and security and other line departments for usage as part of the 2010 Soccer World Cup </li></ul><ul><li>Provide optic fibre to Water, Electricity and other line departments for ongoing management of their facilities </li></ul><ul><li>Connect Universities, Research Institutions, Iziko Museums, etc. </li></ul><ul><li>Resell the spare capacity to licensed operators in a way that lowers the cost of telecoms in Cape Town, encourages extended reach, promotes investment and facilitates development </li></ul><ul><li>N.B. Not providing telecommunications services in competition with private sector telecoms firms </li></ul>
    8. 9. Strategy <ul><li>The City is not looking to become a Telecommunications Operator and compete with the likes of Telkom and Neotel. </li></ul><ul><li>It will only resell spare capacity on its infrastructure </li></ul><ul><li>Customers will have to provide their own network equipment and management to be able to offer a Telco service </li></ul><ul><li>City will act as a neutral party and offer its infrastructure on an “Open Access” basis. </li></ul>
    9. 10. Organisational arrangements <ul><li>Responsibility lies with IS&T (CIO Office) </li></ul><ul><li>City is the “owner” of all infrastructure </li></ul><ul><li>City may tender out infrastructure management to neutral [non-telco] third party </li></ul><ul><li>City may at a later stage set up a Municipal entity to manage infrastructure </li></ul>
    10. 11. Benefits <ul><li>The City of Cape Town </li></ul><ul><ul><li>Reduction in existing costs for 30-40% </li></ul></ul><ul><ul><li>Better service levels </li></ul></ul><ul><ul><ul><li>more bandwidth which allows more advanced applications, more buildings connected </li></ul></ul></ul><ul><ul><li>More cctv cameras </li></ul></ul><ul><ul><li>Better traffic monitoring and management </li></ul></ul><ul><ul><li>New and different services eg More eGov, tele-working, etc. </li></ul></ul><ul><li>Cape Town </li></ul><ul><ul><li>Choice of telecoms service providers, lower costs, better service levels </li></ul></ul><ul><ul><li>Stimulation of the local economy </li></ul></ul>
    11. 12. City is looking at broader benefits <ul><li>Digital communications are the basis of the modern knowledge economy </li></ul><ul><li>Digital communications are integral to the delivery of services, trade and commerce, the creative industries and even social interaction </li></ul><ul><li>Convergence means that all types of traffic can be carried and exchanged across any digital network </li></ul><ul><li>At the core of these networks are optic fibre cables </li></ul><ul><li>The demand for the bandwidth provided by these cables is growing exponentially </li></ul>
    12. 13. Economic Impact Assessment <ul><li>Independently conducted by same Consultants who did EIA for CTICC, World Cup </li></ul><ul><li>The objective of this study was to identify, explore and, where possible, quantify the potential economic benefits that would be generated as a result of the proposed broadband network. </li></ul><ul><li>Report is currently in draft stage. </li></ul>This is the first such report/ assessment that we are aware of on the African continent
    13. 14. Economic Impact Assessment <ul><li>Part 1: international literature review. Purpose is two fold. </li></ul><ul><ul><li>First, is to determine the overall economic benefits that a city wide broadband network has had on other comparable cities. The intention was to identify potential benefits and extrapolate these benefits to the Cape Town economy at a generalised level. </li></ul></ul><ul><ul><li>Second, is to establish and replicate international best practice for the analytical part of the study. </li></ul></ul><ul><li>Part 2: Impact on Cape Town economy </li></ul><ul><ul><li>As part of ensuring that the benefits that are identified in the literature could be expected in the Cape Town context a limited number of firms were surveyed. </li></ul></ul><ul><ul><li>The intention of the survey was to ask factual questions about current communication costs and constraints and determine views on potential productivity gains from high speed broadband. </li></ul></ul>
    14. 15. International <ul><li>There is a substantial body of literature that demonstrates the economic benefits of constructing an optic fibre infrastructure and then deploying that network within a city or region. </li></ul><ul><ul><li>The impact of broadband on Lake County, Florida resulted in economic growth which was twice that of neighbouring counties. </li></ul></ul><ul><ul><li>In South Dundas in Ontario, Canada a significant finding was that 79.2% of companies had either more business or lower costs because of broadband. In particular $2.8 million in commercial / industrial expansion was experienced. </li></ul></ul><ul><ul><li>There was a CAD25.22 million increase in GDP for Dundas County; </li></ul></ul><ul><ul><li>The economic benefits of broadband for the state of Queensland, Australia include increases in regional output of AUD3.160 million; an average 1,586 jobs created; contribution to telecommunications productivity of AUD1.440 million; contribution to productivity in other industries of AUD3.470 million; and expected to increase aggregate consumption of AUD492 million by 2018/9. </li></ul></ul>
    15. 16. Local: Macroeconomic Analysis <ul><li>While there are a number of different types of macroeconomic effects, the two most important are contribution to gross domestic product (GDP) and creation of jobs. The importance of job creation is obvious. Increases in GDP are synonymous with increases in peoples’ economic standards of living. Increased GDP – i.e. increased production – is experienced in the form of more jobs, higher wages and reduced economic hardship. It is clearly an important measure. </li></ul>
    16. 17. Macroeconomic analysis <ul><li>The total contribution to GDP is expected to amount to R225m in 2007/08, R483m in 2008/09 and R736m in 2009/10. Based on these projections, the proposed broadband rollout would have made a cumulative contribution to GDP of R5.7 billion by 2011/12 when the majority of the infrastructure development will be complete. This cumulative total increases to over R211bn by 2026/27 (over the 20 year lifetime of fibre). </li></ul><ul><li>YES, you read right!!! - 211 BILLION RAND </li></ul><ul><li>From a jobs creation point of view, the report finds that &quot; total direct and indirect jobs are expected to amount to 2 412 in 2007/08 and 4 837 in 2008/09. It is expected that 14 828 direct and indirect jobs would be created in 2010 and nearly 252 000 by 2027&quot;. </li></ul>
    17. 18. Additional points <ul><li>Capital formation [value of plant to support output] of R90billion. </li></ul><ul><li>Cumulative tax contribution of R21.9billion. </li></ul><ul><li>Cumulative addition of R106billion to indirect household income. </li></ul>
    18. 19. Conclusion <ul><li>The City is embarking upon this broadband initiative as it needs it for its own operations. </li></ul><ul><li>On that basis alone, this project is viable (7 year payback) </li></ul><ul><li>However, if the spare capacity is made available on an open access model, a massive positive impact on the economy of Cape Town can be realised. </li></ul><ul><li>This links directly to our mandate of boasting our city’s competitiveness, reducing unemployment and lifting the majority of our citizens out of poverty. </li></ul>
    19. 20. Thank You Questions/ Discussion Contacts: [email_address] Copies of this and other related presentations, as well as further discussion can be found at www.knowledgecommune.com/blog

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