cities

Smart city strategies
Smart city strategies include investing in ICT infrastructure and attracting technology businesses (e.g.
establishing technology or innovation, or business process outsourcing hubs). Since 2013, all of the
major cities have taken steps to commission and install broadband infrastructure, including providing
free Wi-Fi in strategic areas or in public places (e.g. parks and railway or bus stations). The cost-benefit
analysis for free Wi-Fi demonstrates a clear net gain to the city, as the economic activity that is
stimulated by having access to the internet far outweighs the relatively low cost of installing and
managing the service.
A market-led development is the introduction of digital neighbourhood solutions for well-organised,
wealthy residential areas in the bigger cities. Craighall Park in Johannesburg was the first residents’
association to announce such a solution, with the signing of a contract with Fibrehoods, a joint venture
between Waterfall Investment Company and CSS Tactical, a security company, to invest in data and
security infrastructure in the neighbourhood. This provides high-speed data through an aerial fibre
network and 134 security cameras to support community security initiatives. Members of the
residents’ association pay for the infrastructure over a period of 10 years, and members can also
become subscribers for the fibre to the home data services. The initiative has already resulted in
increased property values in Craighall Park, and it will be interesting to see if all residents switch from
Telkom fixed-line telecom services to the fibre services. Another initiative, Vumatel, provides free 1GB
fibre connections to any school it passes, as it lays down fibre internet connections in selected suburbs
in and around Johannesburg. A number of other neighbourhoods in Gauteng and the Western Cape
are in discussions with service providers, while similar market-led neighbourhood services are being
developed for energy supply, taking homes off the grid. 18
If wealthy neighbourhoods choose to opt out of being connected to public networks, such as fixed
telephone lines and electricity, the risk is that these public networks will not be financially sustainable.
Therefore, municipalities should consider introducing special charges for those firms or
neighbourhoods that do choose to go off-grid, in order to retain the revenue required to maintain
and manage network infrastructure.
The use of municipal assets to increase revenues
National Treasury has gone on record to say that municipalities should be more entrepreneurial and
innovative in the use of their assets, such as by leveraging more resources from the private sector and
households (National Treasury, 2011: 91–103).
7
18 Fripp C. ‘Inside Parkhurst’s off-grid power plan – pricing and details revealed’, 1 June 2015. http://www.htxt.co.za/2015/06/01/insideparkhursts-off-grid-power-plan-pricing-and-details-revealed/
Finance and Innovation 267