Liquid Telecom announced that it has concluded an agreement with the State Information Technology Agency (SITA) to deliver broadband services for the Eastern Cape Provincial Government.
This follows a protracted battle between the government of the Eastern Cape and SITA, which culminated in the High Court ruling in favour of SITA.
Effectively, the Eastern Cape government had “piggy-backed” on an existing tender awarded to Liquid Telecom (then Neotel) by the provincial government of the Western Cape without getting the necessary approvals from SITA.
While there is nothing wrong with piggy-backing on legal tenders, government departments must get permission from all the necessary stakeholders before doing so.
Judge John Smith said that there had not been any suggestion of corruption in the allocation of the contract. He also said that it appears that the services rendered by Liquid Telecom may be reasonably cost-effective.
To avoid wasting public funds, Smith did not set aside the Eastern Cape’s contract with Liquid Telecom, but ordered all parties to come to a “just and equitable remedy”.
The High Court ruled on the matter in November last year. At the beginning of March this year, SITA and the Eastern Cape Provincial Government reached a settlement in the Bhisho High Court.
According to the ruling, any additional work related to broadband services for the Eastern Cape government would be provided by SITA through an open tender process.
If either SITA or the Eastern Cape government breached the agreement and failed to fix their transgression within seven days, the other party will be entitled to approach the court for an order.
The signing of a deal between Liquid Telecom and SITA brings an end to the battle, and restarts the programme to roll out broadband services to the Eastern Cape.
Fight over price, delays
Prior to the High Court case, the Eastern Cape government told MyBroadband that it had chosen to piggy-back because of severe delays and uncompetitive pricing from SITA.
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.
Liquid Telecom’s price was 71% cheaper than SITA’s proposal, for a higher quality service. SITA had quoted for contended 10Mbps Telkom lines, while Liquid’s proposal was for uncontended lines.
As a result, the Eastern Cape rejected SITA’s proposal, and elected to “piggy-back” on the Western Cape’s existing tender with Liquid Telecom.
Mbina-Mthembu argued that she had obtained the necessary permissions from all the stakeholders involved — the Western Cape, Liquid Telecom, and even SITA.
However, SITA disputed the claim that it had given its blessing for the project and took the matter to court, where the judge ruled in its favour.
Eastern Cape broadband project
Now that the matter is resolved and SITA has partnered with Liquid Telecom on the project, the broadband roll-out in the province can continue.
“Having the opportunity to start connecting the least-connected province in South Africa is an honour for us,” said Reshaad Sha, the CEO of Liquid Telecom South Africa.
Sha said that their high-speed network services will be a key enabler in the delivery of government services through the facilities connected as part of the project.
“The partnership between SITA, Liquid Telecom and the Eastern Cape Provincial Government also aims to demonstrate that it is possible to deploy pervasive high-speed broadband in a rural province so as to ensure that the objectives of SA Connect are met,” said Ntutule Tshenye, the acting CEO of SITA.
Liquid said that its partnership with SITA and the Eastern Cape Provincial Government will enable network expansion to take place that would not have been commercially feasible under normal circumstances.
The partnership with SITA and the Eastern Cape government will initially connect 2,700 government facilities with 100Mbps links. It will increase the connection speeds of these sites to 1Gbps over the contracted period.
