Digital Terrestrial Television State of Readiness: briefing by Department of Communications, ICASA, SABC and e.tv

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Communications and Digital Technologies

27 November 2012
Chairperson: Mr S Kholwane (ANC)
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Meeting Summary

The Department of Communications (DoC) briefed the Committee on the Digital Terrestrial Television (DTT) State of Readiness in the country. The briefing spoke to the DTT project map, the DoC’s activities in terms of DTT, key milestones reached, the DTT allocation for the subsidisation of Set Top Boxes (STBs), the consumer support and awareness campaign, installer training, the roles various entities were playing in terms of the DTT rollout. The Committee was informed that due to lack of funding, and because of the e.tv’s court case against the Minister, the DTT project would be delayed even more.

Before the briefing commenced, Members expressed disappointment that the Director-General of the DoC, Ms Rosey Seseke, was absent from the meeting, especially since the subject matter was so important. It was agreed that Ms Sekese would be contacted and a request was made that she should make her way to the meeting. The Committee was concerned that the current DoC delegation would not be able to attend to all of the Members’ questions.

After the briefing, Members expressed concern that the presentation did not give them any specifics about the rollout plan for STBs until 2015 and that the rollout target for 2015 would not be met. The picture that the Committee got from the presentation was not clear and they were not sure that any progress had been made since September 2011. At this stage, the Committee hoped to have a much clearer idea of what was happening, with specific target dates and practical feedback on which dates were not met and what the implications were.

The Committee was worried that the Universal Service and Access Agency of South Africa (USAASA) would not fulfil the role they were given in the DTT rollout process, given the entity’s lack of capabilities and capacity. Members appreciated that the awareness campaign had been launched, but wondered if it would reach the end-users because it was clear that no one knew about DTT yet. They wondered why the DoC had made use of radio and television to tell communities about DTT. The Committee noted that the 2006treaty regarding DTT through the International Telecommunications Union (ITU) gave allowance to a number of countries on the African continent for an extension to 2020. They asked why South Africa was excluded from this allowance and if the DoC was considering asking the ITU for an extension.

Members also wanted to know whether DoC was making progress regarding the court case e.tv had against the Minister, what would happen to people if they did not purchase an STB, if the cost of R432 million for the 450 000 STBs included the cost of aerials as well as installation, how the DoC calculated the amount of jobs to be created through the DTT process, and how call centres would accommodate the deaf.

At the end of the morning session, the Committee noted that there were some questions that the DoC delegation could not answer without the DG. They noted that the DG did not make it to the meeting in time and asked that the proper project plan should be presented at another meeting with the DoC the next day. The Committee had informed the Minister of the DG’s absence during the meeting, and they would take the matter forward. Members warned that what happened at the meeting today was unacceptable and that it would not be tolerated in the future, as it showed a lack of respect for Parliament.

The briefing by the Independent Communications Authority of South Africa included an overview of the process followed to issue draft regulations for Digital Terrestrial Television. Five rounds of public consultations were concluded in September 2012. The final regulations would be issued in December 2012. The delay in issuing the regulations was caused by delays in finalising the DTT policy and standards.

South Africa currently had 15 licensed television services, including four free-to-air channels and five community channels. There were not enough channels available for further community and commercial television broadcasters. The objective of broadcasting digital migration would allow additional spectrum and television channels to become available. South Africa was a signatory to the Geneva 2006 Agreement, which required countries in region 1 of the International Telecommunications Union to migrate to digital television broadcasting by 2015.

Technical standards for the set-top boxes required to convert digital television signals to analogue signals that could be received by older television sets had been finalised. Multiplex 1 catered for public and community television services. Multiplex 2 catered for commercial free-to-air and subscription services. The proposal for Multiplex 3 would cater for new entrants to the broadcasting sector but had not yet been approved by the ICASA Council. A Joint Spectrum Advisory Group and a Digital Television Content Advisory Group had been established.

Members asked for an explanation of the multiplex concept; when dual illumination would commence; what the plans were to grant licenses to community television broadcasters; the legal lacuna that allowed community broadcasters to extend broadcasts beyond community boundaries by utilizing satellite broadcasting platforms; the technical capability of set-top boxes and if any legal challenges were anticipated.

Midi-TV (e.tv) was a commercial free-to-air television services company that played an active role in the development of DTT. e.tv planned to launch additional digital channels. The briefing identified the internal and external processes that needed to be completed before digital broadcasts commenced. e.tv was concerned that new entrants in the television sector would threaten its financial viability. The company had also taken legal action over the policy decision to transfer control over set-top boxes away from the free-to-air operators.

Members asked questions about the readiness of e.tv to launch by the June 2013 target date; whether the dispute concerning the control of the set-top boxes could be settled out of Court and the services available to the deaf community.

The South African Broadcasting Corporation presented an overview of the approach followed by the public broadcaster, a channel report and a summary of the objectives, key drivers, key issues and achievements. The major challenge was a lack of funding, which meant that plans to launch additional channels had to be shelved. The SABC estimated that its DTT programme would cost R6.8 billion. The National Treasury had not approved requests for additional funds to launch new channels and do complete the developments necessary for DTT. The SABC was exploring alternative sources of funding but would not be ready to meet the launch target date of June 2013. The public broadcaster planned to make use of its extensive archived stock of programmes.

Members asked questions about alternative funding plans; whether the SABC had sufficient technical skills capacity; the utilisation of external service providers; the continued financial viability of the SABC and the need for the Corporation to meet its mandate.

Meeting report

Opening Statement
The Chairperson stated that he hoped the presentations would shed light on the Digital Terrestrial Television (DTT) situation in the country. Members wanted to know where the DTT process was going and what still needed to be done. The Committee wanted to make sure that all people had access to broadcasting. Members were also very interested in how relevant entities were going to approach DTT in order to bridge the digital divide. They were mindful that there was a court case between the e.tv and Department of Communications (DoC). He assured the stakeholders that Members would not encroach on any matters that were sub judice; they did not want to undermine the judicial process. He hoped matters would be resolved quickly so that the DTT project would not be delayed.

The Chairperson noted apologies from the Minister, the Deputy Minister, and Ms Rosey Seseke, the Director-General of the DoC who had to attend to work commitments.

Ms R Morutoa (ANC) asked where the Minister, Deputy Minister and DG were.

Ms R Lesoma (ANC) stated that Ms Seseke, as the leader of the DoC had to be at the meeting. She had an issue with the DG’s absence because the Committee was discussing a very important matter.

Mr G Schneemann (ANC) suggested that Ms Seseke be contacted and asked to come down to the meeting, unless there was a serious reason that she could not be there.

The Chairperson replied that the Minister and Deputy Minister could not attend the meeting because they were involved in Cabinet meetings. As for Ms Seseke, at first she stated that she would be attending the meeting; however, she then sent a letter saying that she could not attend. He agreed that Ms Seseke should be contacted and asked to attend the meeting so she could honour what was going to be discussed.

Mr A Steyn (DA) agreed with Mr Schneemann’s suggestion. The DTT state of readiness was quite an important discussion and unless Ms Seseke had anything better to do, she should make the time to attend the meeting.

The Chairperson asked DoC officials to contact the DG and ask her to come to the meeting.

The Chairperson noted that the presentation that the DoC was going to make was slightly different from the one Members had received. It seemed that a few slides had been added to the original presentation.

Ms Lesoma noted that this was not fair, as Members had already read through the presentation and now there was new information for them to look at. This was not the first time that it happened to the Committee.

Mr Themba Phiri, Deputy Director-General: ICT Policy Development in the DoC, apologised for the additional information. He stated that three slides had been added to the presentation.

The Chairperson stated that new copies of the updated document would be printed for Members so that they did not get confused during the presentation.

Ms W Newhoudt-Druchen (ANC) asked that the DoC email the Committee the updated version as well.

Department Briefing on the DTT State of Readiness
Mr Themba Phiri, Deputy Director-General: ICT Policy Development in the DoC, gave the Committee a brief overview of the DTT project map and DTT activities from the Departent’s side. He stated that the Broadband Digital Migration (BDM) policy had been amended and finalised, Set Top Box (STB) standards had been finalised and the Scheme of Ownership Support and STB Manufacturing Strategy was finalised and approved by Cabinet in March 2012. The SABC, e.tv and Sentech finalised the STB Control Operational Parameters and a DTT project Management Office (PMO) was established.

The BDM policy was amended and gazetted on 17 February 2012 and the Digital Video Broadcasting – Terrestrial 2 (DVB-T2) standard was adopted for South Africa and the Southern African Development Community (SADC). The STB Request for Proposal (RFP) was issued in July 2012 and adequate responses were received from local manufacturers. Contract awards were underway until e.tv’s court challenge against the Minister. The Department of Trade and Industry (DTI) has designated the STBs of up to 30% local content manufacturing requirement.

There was a plan to procure a seed order of 450 000 STBs in the current financial year to March 2013. National Treasury released a dedicated procurement practice note for STB manufacturing. A total cost of R432 million was estimated for the 450 000 STBs, including installation - at the approved 70% subsidy for the STBs and 100% full subsidy for installations. An allocation of R230 million was available for this financial year, with rollovers of R220 million and R180 million from financial years 2011 and 2010 respectively, pending Treasury approval. The DoC had plans to roll out 1.5 million STBs per year for the next three years. The Department noted that there was enough industry capacity to produce 5 million STBs within two years, subject to vendor appointments and funds being available. The goal was to finalise the STB rollout within the next two financial years. The total DTT allocation for the subsidisation of STBs was R1.36 billion until 2015/16.

The DoC initiated a Consumer Support and Awareness Campaign. An external service provider was appointed to rollout the campaign. The establishment of a permanent call centre was delayed by the e.tv court case. The DoC was exploring other alternatives and had approached SITA as a possible interim path. SITA would be contributing call centre facilities for an initial 6 month period, as an interim, contingency measure. The facility will be shared between DoC, Sentech, the SABC and Free to Air (FTA) broadcasters. The aim was to create 4500 jobs at the call centre in the long term.

In terms of installer training, the first phase would include up-skilling existing installers with DTT installations, while phase 2 included creating community support representatives who would be the backbone of DTT migration. It was noted that communities preferred having a local community person assist them when they have problems with installation. Phase 3 would include having newly trained DTT installers with both satellite and DTT technical installation capabilities.

The DoC held regular stakeholder and industry consultations for the DTT project. An industry body called the “Rules of Operation Committee” had been working with the DoC on detailed technical matters related to DTT transmission. The Independent Communications Authority of South Africa (ICASA) published a revised set of draft DTT regulations and held public consultations. The final regulations had been taken for legal vetting before being published. DTT signal distribution tariffs had yet to be approved. Sentech was in charge of rolling out the DTT transmitter network, signal aggregation and multiplexing facilities. Sentech was working with the DoC and the South African Post Office (SAPO) on the provincial STB rollout programme. The STB control issue was being contested by e.tv in the South Gauteng High Court. The South African Bureau of Standards (SABS) partnered with an established UK based company to develop test suites, to advise on project execution strategy, hardware and equipment, and to support integration, acceptance and testing of the DTT project. The Rules of Operations Committee was established by SABC, Sentech and other broadcasters to ensure technical interoperability between all stakeholders and a seamless user experience.

A Memorandum of Understanding (MoU) between the SABC and e.tv was finalised to achieve the DTT launch and e.tv is ready to launch on the DTT platform, awaiting approval of ICASA regulations and tariff structures. Draft regulations have made provision for community TV broadcasters and other new broadcasters to be included in the DTT network.

The Universal Service and Access Agency of South Africa (USAASA) defined the STB subsidy qualifying criteria. USAASA would place STB orders with manufacturers on behalf of DoC and pay the manufacturers after STBs had been delivered at SAPO warehouses. STB distribution logistics were to be handled by USAASA and SAPO. SAPO had signed a MoU with DoC, USAASA and the SABC for the distribution logistics. They designed software processes to carry out agreed-upon business rules for the distribution of STBs to qualifying subsidy recipients.

DTT Launch Calendar
Phase 1: October 2012
Proof of concept launch took place. Minister successfully launched and demonstrated the workings of Digital TV technologies in the Northern Cape. Satellite technology was demonstrated in the towns of Williston and Carnovon while terrestrial was demonstrated in Motswedimosa near Kimberley.

Phase 2: Early-Mid 2013
This signals the start of the commercial launch with the availability of STBs for both subsidised and retail markets.

Phase 3: Beyond June 2015
The analogue switch off would take place.

Challenges
The Current legal case by e.tv threatened to delay the project even further, thus extending the dual illumination period with the associated running costs. While there were still funding issues, there had been some improvements and the DoC would continue to work with entities and National Treasury to ensure that this project was fully funded, and that the funding and project delivery schedules were aligned.
 
Discussion
Ms Lesoma stated that before she proceeded to ask her questions, she needed guidance from the Chairperson. The DoC was the Committee’s department, and the “administrative principal” who was supposed to be at the meeting to answer Members’ questions, was not there. What guarantee did the Committee have that its questions would be answered and taken to the head of the organisation? Was this just a PR exercise or was the Committee going to have a separate session with the DG? She had a serious problem with the head of the organisation not being at the meeting.

The Chairperson said that if Members felt that questions should be delayed until the DG arrived at the meeting, then they would do that.

Ms M Shinn (DA) stated that she shared Ms Lesoma’s concerns but thought that the Committee should go ahead with the questions. She was sure that Mr Phiri had a mandate to answer on behalf of the DoC. He should be aware that what was said in the meeting was binding. If there were any outstanding issues, they could be addressed by the DG when she arrived.

Mr Schneemann agreed that the Committee should proceed with the discussion session. If the Committee needed more clarity on matters pertaining to the presentation, they could always address them again as the Committee was scheduled to meet with the DoC again the next day.

Ms Lesoma stated that in the future, if there were graphs in the presentation, the presenter should go through them slowly so that Members could understand those better. After listening to the presentation, it was noted that the 2015 rollout target might not be met. She asked what might lead to the delay. The DoC said that it was having discussions with the e.tv, but it did not say whether it was going to make a break through. She asked if the DoC was confident that USAASA would fulfil the role it was supposed to be doing. She was worried in terms of USAASA’s capacity and capabilities. She noted that the DoC did not give the Committee any specifics about the rollout plan for STBs until 2015. She appreciated that the awareness campaign was launched, but wondered if it was aggressive enough to reach the end-users. The DoC was working on the assumption that everyone read newspapers and had TVs.

Mr Phiri addressed concerns regarding the roll out of DTT. He stated that the stakeholders met during the course of last year and put together a plan that guided all stakeholders about the roll out of DTT. The plan needed regular amendments because there were certain issues that had to be addressed.

Mr Wonder Dlangamandla, Chief Director: Technology and Infrastructure, DTT at the DoC, added that the plan was to work with Sentech and other stakeholders on the provincial rollout of the project. SAPO would come in, in lieu of the fact that it had a presence in all the provinces. USAASA would also be brought in.

Mr Roy Kruger, Technical Adviser to the Ministry of Communications, stated that this was not a rocket science project. It was a project where if you had the money, you bought the equipment. In Sentech’s case, it took the equipment and switched it on. 61% of the population would be able to buy an STB now, switch it on and it would work. The project was up and running. The intricacies were the areas that the DoC still had to convince the House were under control. The Committee expressed concern that the DoC did not know what it was doing; however, he assured Members that it did. The Minister, in conjunction with the DG and Mr Phiri, appointed engineers, himself and Mr Dlangamandla, to the PMO. Project managers from Sentech were also being used. From a technical point of view, the DTT project was up and running in approximately 70% of the country now. All the equipment had also been delivered, so by March 2013, 80% of the country should be covered. By the end of next year, the DoC hoped to have 88% of the country covered with DTT, while the other 12% would be covered with satellite. In theory, there should be 100% coverage by the end of 2013. The country should be ready for DTT. Then there was the issue of STB manufacturers. He noted that there were delays. The DoC submitted a Request for Proposal (RFP) to find out if there was capacity and where they would get the STBs from. When they did this, the DoC find out that half the manufacturers wanted to sue them. The DoC, after receiving submissions from the RFPs, realised that there were plenty of people who could manufacture the STBs. The boxes had been manufactured for the last 20 years, but South Africa decided it wanted its own set of standards. If the STBs were imported then no jobs would be created. Ideally, a South African standard was needed, as the Chinese did not make STBs for 11 African languages. This meant that STBs would be manufactured locally. The DoC managed to get the STB standards ratified and launched in May/June 2012. From a technical point of view, the project was up and running, DTT was being rolled out and targets would be met.

Mr Schneemann said that someone in his constituency had asked him to ask the DoC what would happen to people if they chose not to purchase a STB. Would they still be able to watch SABC? And if they could not watch SABC, would they still be required to pay their licences? He noted that the 70% subsidy for STBs and asked how people would be expected to pay the 30%. How would the subsidy work and who would benefit from it? He wondered where the awareness programme had been implemented as he had not heard anything about it. He posted a question on his Facebook account asking people if they knew what DTT was and what it entailed. He awaited the response, but wondered where the awareness programme had been started. It was noted that people were waiting for ICASA to finalise guidelines regarding DTT. There were earlier timeframes that were set. Why was ICASA only finalising this now? In terms of USAASA being responsible for certain roles – he had doubts about USAASA’s abilities. Drawing from the oversight visits conducted by the Committee to USAASA offices, Members were not very excited about the work they were doing. They could not even run telecentres effectively. He wanted to know how they would manage to be involved in DTT. The 2006 treaty regarding DTT through the International Telecommunications Union (ITU) gave allowance to a number of countries on the African continent for an extension to 2020. Why was South Africa excluded from this allowance? Were they considering asking the ITU for an extension?

Mr Phiri replied that the reality was that there were people who would not buy the STB. In countries where they had implemented the DTT rollout, programmes were set up to target people who did not feel the need to change to digital and get STBs. The campaign helped those people to see the necessity for STBs. When the time came for analogue to be switched off, those people would be affected. The DoC wanted to ensure that by the time it came to switching from analogue to digital, people would have adopted DTT. He agreed that measures had to be put in place to address this matter.

Mr Phiri stated that ICASA was only finalising guidelines because the SADC market had experienced competition around Digital Video Broadcasting (DVBT) standards used in Europe and Japanese standards. This issue was so controversial that it had to be attended to procedurally. SADC had to undertake a study to find the best standard, which caused a significant delay. The implementation of the DVBT standard was out of the fact that Region 1, to which Africa belonged, had adopted a recommendation of the ITU because the DVBT standard was possible to implement in this region. Many of the STBs used by DSTV and STBs were already DVBT based. This caused a big delay in ICASA finalising the guidelines for DTT. Moving into a new standard meant that the costs were not the same. Policies regarding DTT and timelines also had to be reviewed. The delay was regrettable, and the costs were not the same. Sentech’s costs also had to increase. This related to STBs – the adoption of new technology meant that each STB would cost approximately R700. However, from 2008 to now, following global demand, it meant that the cost of STBs would be lower. This meant that the costs of aerials could now be included in the R700 basic cost. Now, the installation, the aerial and the STB could be included in the R700 cost. He stated that the exact pricing might not be available today but he was confident that the aerial, STB and installation could all fall into the same price bracket as before.

Mr Phiri addressed the matter of the extension until 2020. He stated that the ITU classified countries into regions, which adopted agreements according to an ITU system. So, the agreement by Region 1 was that the deadline would be 15 June 2015. South Africa was bound by the agreement of the ITU, of which it was a member. But, it was very clear that African countries were struggling to meet this deadline.

The Chairperson noted that 30 of the 52 nations in Africa were on a 2020 deadline. So, why was South Africa pressured with a deadline of 2015? It was a foregone conclusion that African countries would not reach the 2015 deadline.

Mr Phiri replied that the ITU system allowed countries to make “footnotes” on the agreement. This option was open to South Africa. This would amount to reviewing the agreement. It was good practice for a country to work towards an international treaty.

Ms Shinn observed that a lot of the programmes that were essential for the awareness, acceptance, installation and use of STB’s were still in the planning stage. The plan was to have the first set of STBs out in mid 2013. People still had to be trained to install and educate communities about STBs. She compared the old presentation with the updated one received in the meeting, noting that the new presentation stated that adequate responses to the RFP were received, while the old document stated that 37 tender responses were received. She asked why the DoC was now hiding the number. She had a list of 36 companies that had responded by 14 September (11 am). Was there a late entry that had been allowed? She asked if the plan to procure a seed order of 450 000 STBs included an order for 100 000 satellite STBs. She noted that the presentation showed a total cost of R432 million for the 450 000 STBs. A presentation made by USAASA in April this year showed that the amount of money made available for the boxes did not include the aerials. USAASA’s presentation showed that the total cost with the aerials meant that half the number of STBs would be available. She wondered if the Committee was misinformed in April or if the cost of R432 million included the installation a well as the aerials. The presentation stated that 1.5 million STBs would be set up per year over the next three years. This amounted to 4.5 million, not 5 million which the Minister was still talking about. The presentation first stated that the STBs would be rolled out within the next three financial years, and then later said they would be rolled out over the next two-financial years. The Committee needed more consistency with this matter. The presentation also showed that the DTT allocation for subsidisation of STBs amounted to R1.36 billion. The Committee needed to know where exactly those funds were coming from and who was going to be responsible for managing it. The old presentation stated that SITA, who would provide call centre facilities for six months, would charge DoC R357 000 per month. She asked if this had been budgeted for. She also wanted the Department to elaborate on the 4 500 jobs to be created from the call centres in the long term as well as the 20 000 new jobs for installers. She hoped these figures were not “thumbsucked”. She noted that the Minister was collaborating and consulting with the provinces and wanted clarity on with whom she was negotiating. One thing that was missing from the presentation was that it did not give Members a clear sense of a timeline for DTT. Was there a timeline with absolute deliverables? This caused her a lot of concern.

Mr Phiri replied that the DoC was not hiding the number of responses it had received during the tender process. The DoC sent out a Request for Information (RFI) as well as a Request for Proposals (RFP). These were two processes. There were 37 respondents. 36 respondents were for RFIs. There was no way in which there were exceptions on late tenders received. The DoC’s system did not allow for this.

Ms Shinn noted that the tender process closed on 14 September 2012, and from this list, she had 36 names and not 37.

Mr Phiri replied that he did not have the list of names with him, but the count that he had was 37 names. He would have to go back and check on this. Supply chain management was the responsibility of another DDG.

The Chairperson noted that the DoC was going to be with the Committee the next day and it could address the matter then. This was why the Committee wanted the DG to be present.

Mr Phiri commented on the query regarding the 1.5 million STBs to be set up each year for the next three years. The rollout plan made it possible to set up another 500 000 STBs during those years. The DoC was looking at the capability of the manufacturing capacity that was available. The DoC was trying to demonstrate that it was possible to set up these STBs and that expectations of the manufacturing requirement would be met.

The Chairperson noted that the question was whether the DoC could afford to buy the material or not. The reality was that the DoC had R1.3 billion available to set up all the STBs. The budget did not talk to the reality that the STBs would be set up by 2015.

Mr Steyn added that the presentation which the Committee had been given appeared to be “massaged”. It did not tell the Committee what the capacity was per annum. He did not want answers that were slightly massaged. There was a clear difference between capacity and what the DoC was planning to roll out.

Mr Phiri explained that it was the plan to roll out 1.5 million STBs per year. However, there was a financial shortfall on the budget for STBs, which affected the 5 million target for STBs. This was being discussed with the National Treasury. The MTEF would address this issue as well.

Mr Phiri addressed the question of whether job creation figures had been “thumbsucked”. The jobs were modelled on specific terms and the number of employees related to budget availability. The teams worked on these numbers specifically for this project and the spreadsheet that the DoC worked on confirmed these numbers. 

Ms L van der Merwe (IFP) shared the same sentiments as Ms Shinn. As someone who was new to the Committee, she was none the wiser about where the country was in terms of DTT. What was missing from the presentation was the timeframes. Right now, the picture was very “fuzzy” and she was not sure that any progress had been made since September 2011. She noted that although there was an awareness programme in place, the normal person on the street did not know what DTT was. She noted that the switchover to digital was largely hinged on the consumer messaging strategy. The DoC spoke of an external service provider being appointed to do this, but she wanted to know what the strategy entailed. Was the DoC targeting social media? How were they approaching rural communities? Who was appointed to run the consumer messaging service and at what cost? What strategy was in place to ensure that people would be able to pay the 30% for the STBs that were not subsidised? Would people be able to afford this 30%? She believed the subsidy qualification criteria have already been set out. When will they be defined and when would be people be able to comment on them?

Mr Phiri replied that it was fact that the qualifying criteria for STB subsidies was created by USAASA, which they submitted to the Minister. The document would be made public after the Minister published it for public comment. It was in fact good work that was done by USAASA. Input from several stakeholder meetings were taken into consideration when putting this document together.

Ms J Killian (COPE) expressed a deep concern and disappointment with what the Committee was presented with. At this stage, the Committee hoped to have a much clearer idea of what was happening, with specific target dates and practical feedback on which dates were not met and what the implications were. Part of the delay was that the Committee was not sure about the standards of the STBs, but it was the DoC that was responsible for this issue. To say that this delayed the process was unacceptable. What were the implications if there were legal challenges? The DoC could not have a situation where this was blamed for a failed rollout and where the cut-off deadline would not be reached by 2015. The fact that the Committee was presented with two or three versions of the presentation made today was a clear indication that there was no concrete plan in place. Currently, she was not convinced that the DoC was in control of the process. The idea that certain tender processes were followed and so many tenders achieved the deadline – the Committee was aware of the history of botched tender processes in the country. Was the Committee going to face, once again, with questions about whether deadlines for tender processes had been extended? In terms of the STB manufacturing strategy, the DoC said that approximately 5 million people would have to be supported and that the rollout programme would run over five years. There were ample experiences of countries where the rollout of DTT was successful. She felt that the DoC’s strategy was not based on successful examples from other countries. It seemed that the DoC was trying to convince the Committee that it was focused on job creation and using preferred service providers; however, the bigger project was at risk. If the DoC did not know about the problems some entities involved in the DTT rollout were having, such as USAASA, then how could the Committee trust that the DoC had a proper plan in place? Why was it that radio and television were not running programmes to make people aware of the DTT rollout? Why was this not included in the presentation? The DoC could not abdicate its responsibility to entities like South African Local Government Association (SALGA) to communicate to people about the DTT process. For the process to be successful it needed a pilot at the top driving the process. She did not see this happening with the DoC and she was not convinced as a concerned South African.

Ms Newhoudt-Druchen stated that if she worked out the cost of an STB, it amounted to approximately R960. Although 70% of this amount was going to be subsidised, the rest of the people who lived on grants still did have money to pay for this. She asked what would happen if they could not afford this. For those that did not qualify for the subsidies, would they have to pay the full cost, or would it be less? The Committee needed full details about the consumer awareness programme so they could share the information with their constituencies. She asked what processes the call centres would put in place to accommodate the deaf. She wanted to know if DTT would make television programmes accessible for people that were deaf-blind, people that were deaf, and people that were blind. The DoC had to give this directive to ICASA. There had to be certainty that the deaf and blind people would have access to TV programmes.

Mr Kruger answered that without access to the internet at call centres, meeting the requirement for those with disabilities was quite difficult. But, hopefully over the next few years, the call centres would have the ability to do live chats where by text messaging, consumers could tell call centre agencies what problems they were having. The DoC had also catered for email and SMS capabilities.

Mr Steyn said that one of the slides that were changed were on the financials. If slides had to be changed so late, it told him that someone did not know what was going on. He thought that things were going to start coming together once the DoC had its Project Management Office (PMO) in place. He expected the PMO to take the lead with this presentation. If anything, he was more confused about the status of DTT after the presentation. There were absolutely no targets and timeframes in the presentations. The other concern that he had was that there were so many consultative forums, yet e.tv chose to take the legal route with e.tv. Did this mean that consultative forums actually did not work? The DoC’s struggles with DTT seemed akin to “a fish out of water, gasping for air”. He calculated that the DoC was going to need R1.4 billion a year to roll out 1.5 million STBs a year. If the DoC could not figure this out, then the entire operation was going to come crashing down. How was the DoC going to roll out R1.5 million STBs a year if their entire budget was R1.36 billion until 2016? He wondered what the DoC was doing, as they did not seem to be managing this project. The DoC had to try to stick to the deadline, instead of looking for the extension.

Mr Phiri noted that there were some concerns regarding the DoC’s capacity in terms of DTT. This had to do with the unfortunate disbandment of the Digital Dzonga. It was true that when the Dzonga was established, the government looked at the UK and Australian model at the time. The models showed that some technical capacity had to exist, which also had to coordinate with the DTT project. He submitted that a coordinating body was necessary for this to work. It was his experience that most of the expertise needed for this project already resided within the industry. With a project like this which was multi-faceted, it was important to share skills and knowledge. Digital Dzonga was just one of these platforms.

The Chairperson asked Mr Phiri to elaborate on what he just said. He asked what the DoC was going to do about the Digital Dzonga, especially since it was so important.

Mr Phiri replied that the DoC had advised the Minister that it was important to continue with the Digital Dzonga model.

Ms Shinn clarified that the DoC had advised the Minister that the Digital Dzonga model should be reintroduced and that the DoC’s project office was insufficient to get the project moving.

Mr Phiri explained that he was very involved with the Digital Dzonga project when it first started. He asked the Committee to recall that the industry had worked for two years to give the DoC advice. He noted that industry players worked well together and shared resources – some resources which the DoC did not have. This model, like in the UK, had experts that came from outside government. The DoC had a coordination role that also required full time officials. It was his view that the Digital Dzonga was necessary, as it gave a context to people’s participation and the roles they played.

Ms Lesoma wanted a yes or no answer as to whether he advised the Minister that the Digital Dzonga should be introduced. It was the first time she heard that the Minister did not listen to the DoC. This was why the DG had to be at the meeting.

The Chairperson informed the Members that they needed to proceed with the discussion. He said that what Mr Phiri was trying to say was that there was a need for a structure such as the Digital Dzonga. The Committee wanted to advise the Minister in this regard; it was not as if the Minister had rejected the idea already.

Mr Phiri confirmed the Chairperson’s understanding of the matter. He responded to Ms Shinn’s question of clarity, saying that there was a plan to fill the vacancies in the Digital Migration offices because the current capacity was not enough for the DoC to execute the project as expected.

Ms Morutoa understood that Mr Phiri was quite capable of answering the Committee’s questions; however, there were some issues that the DG had to attend to. She supported Ms Newhoudt-Druchen when it came to the call centres. The call centres were not doing anything to help the people and asked if they were compliant with labour laws. She lived in Soweto and noted that most people did not know what STBs were and what they were supposed to do. This was very disappointing, as the Committee had high expectations. The Committee definitely had to deal with USAASA’s failures.

Mr Phiri addressed concerns about the call centres. He stated that the Batho Pele principles were very important. He noted that it was true that call centres did not always do much for consumers sometimes. The DoC would take this on board and try to include it in the curriculum. He wanted call centre workers to respect the people they were speaking to.

Mr Phiri responded to all concerns regarding the awareness campaign. He explained that the DoC initiated a preliminary awareness campaign that ran through radio and television throughout the country on a small-scale because of certain limitations. The DoC had to get to a point where they had to ensure that all the aspects of DTT had progressed first. Towards the launch of DTT, the DoC also made sure that it was ready for the time that it could tell people that STBs were available. The DoC had to ensure that the service provider, Media Corner, which was responsible for the awareness campaign, had the right budget to continue with the campaign. The ramping up of the awareness campaign would include the introduction of radio and television, and outreach programmes would see face-to-face interaction with members of the community. Public areas such as train stations and bus ranks would also be targeted. However, he wanted the Committee to note that awareness of the DTT rollout was also the responsibility of all the broadcasters and relevant stakeholders. He agreed that the DoC had not done enough to raise awareness; however, there were plans in place to do more. He stated that budgeting around awareness had been a problem within the DoC, so from time to time they had to take money from the call centre to ensure that there was a budget for the awareness campaign. This was being discussed with National Treasury.

Mr Kruger responded to all questions and concerns regarding the call centres. He stated that call centres cost millions in operational expenditure. The DoC was looking at a way of constructing a call centre that would consist of three logical areas of functionality. The first one was that the DoC needed a call centre to answer questions from the public about administrative issues such as how much STBs cost and how they can access the subsidy. The second part was that a technical call centre facility was needed. The DoC identified Sentech as its technical partner for people who called in with technical issues. The third part was for the “Free to Air” broadcasters who would answer questions about content. The DoC looked at where this call centre would be located and focused on the MNET model. The DoC calculated that it would need to employ approximately 4500 people in its call centre. This might not even be enough. It meant that a massive building was needed. But, instead of doing this, the DoC decided that the call centres would be spread over a number of areas, including a number of rural areas. The figures were submitted; however, there was a financial constraint and the DoC had to look at setting up the call centre in a more efficient manner. One of the suggestions that came up was to use the 112 call centres. It was a call centre paid for by the government that already had the necessary technology. However, the project was delayed a because of litigation issues, but the DoC did not stop its planning. They decided to look at what else was available. They came across the SITA, which also had a massive call centre. A proposal was made so that the DoC could roll out a call centre with immediate effect. The amount of R375 000 to be paid to SITA was for them to set up the capacity and service level agreement to set up the call centre. SITA will run the interim call centre for six months while the DoC sorted out all the litigation issues. Once these issues were resolved, the DoC would set up a central call centre with a number of rural call centres. This will create jobs in rural areas. Sentech has also been involved in this project. Smaller, existing call centres have also asked the DoC if they could be involved. He believed that these call centres were a “breeding ground” for training people. 

Ms Schneemann asked if the DoC had looked at any examples of international call centres. He wondered if the call centre idea was realistic. How long would it last? Were these long term jobs? He understood the DoC’s plan to break up the call centres, but his experience was that there was usually one call centre in one location.

Mr Phiri explained that there were issues regarding the call centres that the DoC was exploring that had not been approved yet because they were yet to come up with a cost efficient model of doing it. There was a quest to create jobs. The call centres had to live up to this commitment. This depended on whether the DoC could get the money from National Treasury. It was the usual case that call centre agents generally could move from one sector to the other.

The Chairperson stated that for the past two years, the DoC had shown its inability to get the 112 call centre up and running. This was a problem. The Committee was concerned that the DoC had been unable to make a move on this. He wondered how things would be different this time around.
 
Mr Phiri answered that there was history to the 112 situation. He remembered that the DoC presented to the Committee in 2010 the reasons that led to the interruption of the 112 call centre. Currently, the 112 centres were funded through the PPP model. The terms of reference for the 112 centres were also specific. With the advancement of technology today, it was possible to meet the requirements of DTT. The 112 centres catered for a lot of people and the National Treasury had expenditure for the 112 call centre.

Ms Lesoma stated that the Committee was mindful that the country was still developing. The Committee was not being hard on the DoC, as they expected them to do well now that they had to correct technical resources. She wanted to know what the implications were for increasing the number of STB manufacturers. What was the guarantee that these manufacturers were going to manufacture all the parts in South Africa? She asked what guarantee the DoC could give the Committee that people were not going to unfairly abuse the subsidy system that was put in place for STBs.

Mr Phiri replied that the migration was a policy-led migration and it was expected of the DoC to provide decisive leadership, direction and coordination of this complex project. He was the first to admit that in many of the countries that implemented DTT before South Africa – it had proven to be a difficult, complicated project. Many African countries had difficulty in meeting the 2015 deadline. Under-developed countries faced major challenges, specifically with budgetary requirements. He maintained that although there was difficulty in implementing the project, there had been significant areas of improvement. Appropriate actions were taken to ensure that certain things happened and the DoC was learning a lot about the process. However, enabling legislation such as the Broadcasting Act and the Electronic Communications Act, had broadcasting digital migration policies, and in some instances there were gaps in the policies. A solution could be found with the e.tv case, but this depended on whether parties involved could negotiate in good faith.

Mr Phiri answered that USAASA’s capacity issue was quite a situation. The executives at USAASA were still on suspension but the board was trying to grasp what was happening. The board met regularly to attend to USAASA’s challenges. He informed the Committee that the responsibility regarding DTT that was given to USAASA was not of the DoC’s making as USAASA ran the Universal Service and Access Fund (USAF). The DoC has made sure that the two entities could share expertise so that USAASA could respond to the challenges that they faced. Processes to appoint a CEO for USAASA were on the way and he had first hand experience of many employees of USAASA that worked very hard to contribute to the rolling out of DTT.

The Chairperson stated that there a few issues that the Committee still needed clarity on. He had hoped that the DG would be at the meeting to answer them. There were a few answers that the Committee would have to request from the DoC. He still hoped that the DG would be able to answer questions when she arrived at the meeting. It was clear that the DoC was not going to present a project plan to Members, but it had given the Committee enough information for Members to understand where the DoC was in terms DTT. The last time the DoC presented on this matter it gave the Committee a chart to indicate what was going to happen and the timeframes in which the tasks would be completed. The Committee needed this information so it could properly oversee the work the DoC was doing. He wondered if the DoC had the budget for advertising and what the project management plan was for advertising. What form of advertising would the DoC be embarking on? He understood that Sentech still had to appear before the Committee, but Members were interested in knowing how the switch from analogue to digital was going to happen. Was it going to happen province by province, and which province were they going to start with? Clear timelines were needed for this as well so the Committee could know whether they were on track and if there were any challenges. The DoC was really lacking a clear project plan. In terms of finances, what was the reality regarding the money that the National Treasury had approved? Realistically, how many STBs would be set up and subsidised given the current budget? This had to be clear. The Committee noted that the DoC was engaging with National Treasury at the moment. He wondered what the DoC was going to do if they did not get the additional funding from the Treasury. The Committee could consider diverting funds from other projects to DTT.

The Chairperson stated that if the DG arrived, then the Committee would be working until midnight and a project plan would have to be presented the next day. The Committee would love to finish the meeting with a presentation on a clear project plan.

Ms Lesoma suggested that the DoC should present a project plan tomorrow. She wanted them to speak more clearly about the technical aspects of the DTT process.

Ms Morutoa was concerned that if the project plan was presented the next day, it would just be in response to the questions Members asked and not because it was a proper project plan based on reality. She asked if the project plan was going to be based on reality, or a project plan that stemmed from what the Committee wanted to hear.

The Chairperson stated that it was clear that the DoC had the contents of the project plan; it just was not presented. The Department could probably draw up a project plan, but if Members felt like this was impossible, then the Committee would move on to the other presentations.

Mr Phiri replied that the request was a tall order. The DoC could update the current project plan, which was what it wanted to do with the presentation. But there were milestones that it foresaw in the future. The DoC did not have some of the information here – such as issues around finances and supply chain management. He also informed the Committee that the DoC deliberately left a few details out of its presentation because it understood that some of the entities such as Sentech and the SABC would include the relevant information in their own presentations.

The Chairperson stated that it would proceed with ICASA’s presentation. He warned that Mr Phiri was the commander of his team and he had to lead all the entities.

Mr Phiri stated that he was the commander of the policy branch within the DoC, which reported to the DG.

The Chairperson stated that the Committee would wait for the real commander to come.

Ms Lesoma stated that this was reason she asked if the Committee should wait for the DG to come to the meeting. Members were directing questions at the wrong person. She hoped the DG would be staying until Friday. It had to be put on record that the DG’s absence from the meeting was unacceptable.

The Chairperson added that the Minister had been told about the DG’s absence from the meeting. He stated that the Minister and the DG had spoken and the DG had been told to come to the meeting. He hoped the DG would arrive. When she did, the DoC had to inform her about the questions and issues that were raised so she could respond to them. The DG’s absence from the meeting was a very serious matter.

Ms Morutoa noted that whatever happened in the meeting would be recorded in Hansard. The DoC was called in to present in Parliament – they were supposed to inform the Committee about their DTT state of readiness. What happened today was unacceptable and would not be tolerated in the future. It felt as if the DoC was undermining Parliament. She hoped the Committee would be getting a reality of where the DoC was in terms of DTT at the end of the day.

The Chairperson hoped that the DG would arrive at the meeting, as the Committee had to report on today’s work to Parliament next year and recommendations had to be given. It would be nice if the Committee could make recommendations on an informed basis. Members have expressed their view on these issues and the fact that the DG was not here. The Committee would engage with the Minister on this matter as well.

Afternoon session

Independent Communications Authority of South Africa (ICASA) briefing
Dr Stephen Mncube, Chairperson of the ICASA Council introduced the delegates from ICASA and confirmed the Regulator’s commitment to digital migration.

Mr William Currie, Councilor, ICASA presented the briefing to the Committee (see attached document).

The introduction summarised the consultative and regulatory processes followed by ICASA since the publication of the ministerial policy in September 2008. Public hearings on the draft Digital Terrestrial Television (DTT) regulations were held in August and September 2012. There were currently fifteen licensed television services in South Africa. All public television services currently broadcast analogue signals. Commercial pay television services used digital satellite technologies. There were not enough terrestrial frequencies available to accommodate the introduction of new community, regional and free-to-air services. Broadcasting digital migration (BDM) would create additional opportunities for radio and television broadcasting and broadband services. South Africa’s approach to BDM was informed by the Geneva 06 Agreement (GE 06), entered into by all countries in region 1 of the International Telecommunications Union (ITU). The target date for the switch-off of analogue signals was June 2015.

The delay in finalising the policy had resulted in the delay in formulating the regulations. The commencement date and period of the dual illumination period (when both digital and analogue signals would be transmitted) had not been fixed. Technical standards for the Set-Top Boxes (STB’s) had been issued by the South African Bureau of Standards (SABS). The final Digital Migration Regulations would be published by the end of November 2012.

The regulations provided for Multiplex 1 (public and community television services) and Multiplex 2 (commercial free-to-air and subscription broadcasting services). Multiplex 3 would accommodate new entrants. ICASA was currently obtaining legal advice on the proposals for Multiplex 3 and hoped to publish the final proposals in December 2012.

A Joint Spectrum Advisory Group and a Digital Television Content Advisory Group had been established. The Content Advisory Group was engaged in considering regulations for local content.

The challenges included competitive issues resulting from the BDM policy, the absence of a specific date of commencement for digital broadcasts and the regional open window.

Discussion
Ms W Newhoudt-Druchen (ANC) asked for an explanation of Multiplex 1 and Multiplex 2.

Ms M Shinn (ANC) asked what the target date was for the commencement of the dual illumination period. She asked what the plans were to make more space available for community television services.

Ms R Lesoma (ANC) asked when the Multiplex 1 and 2 trials would be finalised. She noted that there were currently not enough frequencies available to accommodate new entrants. The commercial broadcasters had raised concerns over the negative impact of increased competition on their long-term financial sustainability. The same concern was not voiced by the public broadcaster, which received State funding.

Mr G Schneemann (ANC) asked what the reasons were for the delay in publishing the final regulations.

Mr B Steyn (DA) understood that most of the delay was caused by the debate on whether or not DVB-T2 was the most efficient option. He asked if there needed to be more public participation on the Multiplex 3 proposal. The briefing listed certain challenges but no indication was given of possible solutions and what the impact would be if the issues could not be resolved.

The Chairperson observed that the Content Advisory Group did not include the Department of Arts and Culture. The South African Broadcasting Corporation (SABC) and e.tv had raised concerns over new entrants. ICASA advocated that there needed to be a balanced approach to the issue of increased competition but did not explain what was meant. He felt that consumers should have a wider choice. There appeared to be a regulatory vacuum for community media services. The license requirements for a community television service (e.g. Soweto TV) limited broadcasts to the community but national coverage was obtained by broadcasting on DSTV. Although more than one operator would share a multiplex, the broadcasters did not have equal coverage obligations. He asked how ICASA would counter the tendency by operators to “cherry-pick” the best areas and ignore the poorer and more remote rural areas. Sentech had reduced tariffs to a certain extent but clearer guidelines or regulations were required from ICASA.

Dr Mncube undertook to provide written responses to Members’ questions if necessary. He agreed that the participation of the Department of Arts and Culture in the Content Advisory Group was important. ICASA had attempted to arrange a meeting with the Ministry to discuss the matter. ICASA had briefed all the Chapter 9 institutions on the implications of BDM and would be working in partnership with the institutions.

Mr Currie explained that South Africa was a signatory to the GE 06 agreement, which set the framework for BDM and imposed a deadline of 2015. GE 06 also catered for wireless broadband services. The regulations applicable to STB’s had been finalised. The earlier briefing by the Department of Communications (DOC) had outlined the delays that had been experienced. It was the prerogative of the Minister of Communications to announce the commencement date of the dual illumination period. The period could commence between September 2012 and March 2013.

Mr William Stucke, Councillor, ICASA provided a technical explanation of multiplexing. Analogue television broadcasting was inefficient and allowed for a limited number of channels. Channels had to be kept unused to prevent interference. Transmitter range was currently limited to a radius of 50 km. High power transmitters also interfered with broadcasting signals. Digital broadcasting technology allowed more than one simultaneous broadcast on a single channel. Trials were currently underway to test simultaneous television broadcasts and wireless broadband services on the same channel. Although the debate over which technology should be used had caused a delay, the country had benefited from the newer DBV-T2 becoming available in the meantime.

Mr Currie advised that the multiplexing trails would end mid-2013. The space used for trail purposes would then become available to operators. ICASA did not interfere in agreements between community television services and DSTV. It was a policy decision whether or not to allow a community television service to broadcast beyond the geographic borders of the community. DSTV customers had access to the broadcasts but were not necessarily members of the community. The license application for Mzanzi TV was turned down for technical reasons. The broader issue required further debate.

Ms Lesoma said that the policy governing community media required review. She asked if the community broadcasters were meeting the license conditions.

Dr Marcia Socikwa, ICASA Councilor advised that there was a loophole in the applicable legislation. ICASA had proposed changes to the ICASA Act to the DOC. The Act currently prevented the Regulator from interfering in agreements between operators. Another example was the broadcasting of Radio Pulpit signals beyond the borders of Pretoria.

Mr Currie explained that various changes in policy and in what technical standard would apply had resulted in the need for concomitant amendments to the regulations to be subjected to further public consultation processes. There was disagreement over the rights of the incumbent broadcasters and the rights of new entrants. The Multiplex 3 proposal would be submitted to the ICASA Council for approval in December 2012. He hoped that the proposal was a compromise that would be acceptable to both parties. The 2015 target date for BDM was a major turning point. Until that date, the incumbent operators had little competition. DTT would open up competition and encourage new entrants. He suggested that questions concerning tariffs were reserved until the briefing by Sentech on the following day. A review of the wholesale tariff structure was underway. It was likely that regulations would require a reduction in prices.

Dr Mncube remarked that regulations needed to be amended whenever there were changes in the broadcasting landscape. ICASA played a role in settling disputes within the African Union (AU). There were several big players in the broadcasting sector. ICASA followed an inter-disciplinary approach and the various units worked closely together.

Ms Lesoma observed that it was essential that all the entities in the communication cluster worked together. The Minister could not announce the commencement of the dual illumination period before the STB’s were available.

Ms Shinn asked if an STB was limited to converting free-to-air broadcast signals.

Mr Steyn asked if there would be a further public consultation process once the ICASA Council had approved the Multiplex 3 proposal.

The Chairperson asked what the risk was of legal challenges to the Multiplex 3 proposal.

Dr Mncube said that ICASA attempted to level the playing field. The original players had made a lot of money but the Regulator wanted to see that previously disadvantaged entrants also benefited. The various units within ICASA worked closely together and the Council took decisions based on consensus.

Mr Currie explained that legal advice was being sought before the Multiplex 3 proposal was submitted to Council to avoid subsequent legal challenges.

Mr Stucke advised that STB’s would only be required until viewers had replaced their older television sets with a digital set.

Mr Roy Kruger, Technical Advisor, Ministry of Communications explained that STB’s could technically deal with both free-to-air analogue broadcasts and digital broadcasts by pay-television services. There was no legal prohibition against such dual capability.

The Chairperson said that it was necessary for ICASA to finalise the regulations. The Regulator should also consider the current loophole in the legislation that allowed a community broadcasting service from broadcasting nationally through the satellite broadcasting services. The Committee would consider inviting the relevant entities to submit briefings on the regulatory and legislative provisions and omissions that prevented them from carrying out their mandates. The rights of consumers had to be protected. He asked if ICASA anticipated any litigation.

Mr Currie was unable to discount any potential litigation but was optimistic that ICASA could deal with disputes in terms of the regulations.

Midi-TV (e.tv) briefing
Ms Lara Kantor, Group Executive: Regulatory Affairs and Mr Maxwell Nonge, Group Head: Technology and Platforms, e.tv presented the briefing to the Committee (see attached document).

The impact of BDM on free-to-air television services was highlighted. South African television audiences were drifting towards pay television platforms, which offered multiple channels and a wider viewing choice. Delays in implementing DTT had a negative impact on e.tv, which was unable to compete effectively by offering more channels.

e.tv had actively supported the DTT process since 2006. Before DTT could be launched, a number of internal (i.e. e.tv operations) and external processes had to be completed. e.tv was on track with the internal processes under its control. The external processes included Multiplex 2, free-to-air and other general issues as well as government-led processes. The target date of June 2013 was achievable, provided that the final regulations were issued and there was clarity on the issue of control over the STB’s before the end of 2012.

e.tv had instigated legal action over the control of STB’s. The court case had contributed to the delay in the implementation of BDM. The legal action was taken only after all other attempts to resolve the dispute had been exhausted. The Department of Communications had indicated its willingness to offer a solution to the dispute during the current briefings to the Committee.

Discussion
Ms Shinn noted that certain internal processes had not been completed. She asked if e.tv would have been ready for the launch if there had been no delays in the regulatory processes. She asked if e.tv had suffered any financial loss as a result of the delays. She asked if e.tv was actively commissioning local productions and what proportion of new content acquired was produced locally.

Mr Steyn asked if there was a possibility that the legal dispute concerning control over the STB’s could be resolved out of Court. It would appear that the dispute was not about tariffs, which should be acceptable to e.tv as the company had plans to offer pay-television services in future. He asked for clarity on the branding of the free-to-air platform, which had been classified as an external process that was not under the control of e.tv. He asked what the break-even point was for the organisation.

Ms Newhoudt-Druchen said that the DeafSA organisation had encouraged the deaf community to subscribe to pay television services such as Multichoice/DSTV because of the availability of subtitled programmes. DeafSA had also held discussions with TopTV. Requests for meetings with e.tv were however turned down.

Ms Lesoma observed that e.tv was confident that it would be able to meet the targeted launch date but was also reliant on other stakeholders to meet their obligations. She wondered why e.tv had effectively delayed the implementation of DTT by instigating legal action when the company was ostensibly so keen to have digital broadcasting in place. Government had agreed to restrict new entrants, thereby allowing the incumbent free-to-air operators to benefit from the anticipated digital bonanza.

The Chairperson asked if e.tv supported the Department’s idea of establishing a coordinating entity similar to the Digital Dzonga concept.

Ms Kantor advised that the target date of June 2013 excluded the possibility that the Court ruling would be appealed. The assumption was that both parties would accept the ruling or reach a settlement. The SABC and e.tv had understood that the free-to-air services would control the STB’s and were surprised when the arrangement was changed. e.tv felt strongly about the matter and had exhausted all alternatives before taking legal action.

Mr Nonge added attempts were made to settle the dispute out-of-Court. A meeting was arranged with the DOC, Mr Kruger and Sentech but no agreement was reached. e.tv was happy to attempt to resolve the matter amicably again.

Ms Kantor acknowledged that it was difficult to obtain Board approval for the additional expenditure involved in developing the business plan when the final regulations were not in place. The regulations issued in 2010 appeared to be final but the subsequent debate over standards had delayed the process. It would have been a waste of money if the regulations were pre-empted. The SABS standards for STB’s were outstanding as at the end of 2011.

Mr Nonge said that e.tv was aware that the DOC had issued a tender for the manufacture and supply of STB’s. Manufacturers had developed prototypes and were ready to start manufacturing the STB’s.

Ms Kantor advised that the free-to-air broadcasting services had lost market share to the pay television services. Multichoice/DSTV was currently the most popular platform with viewers. Unless the free-to-air operators were able to offer more channels, further loss of market share was inevitable. e.tv had seen the draft tariffs proposed by Sentech and was extremely concerned.

Mr Nonge added that a meeting with Sentech to discuss the proposed tariffs had been held but it was premature to comment on the issue as matters could change. The proposed tariffs were not sustainable.

Ms Kantor explained that e.sat held a license and was intended to be e.tv’s pay television offering. Multichoice/DSTV was a major player in the pay television services market and more thought was needed before attempting to enter the market. It was necessary to reach agreement with the SABC on how to brand and market the free-to-air platforms. Discussions were being held. The idea was to persuade consumers that the free-to-air services were worth paying for. Other successful migration programmes were also considered. She was not aware that requests from DeafSA to hold discussions had been declined by e.tv but felt that improved access for the deaf community should be considered.

Mr Nonge added that the multi-channel and digital environment made it easier to offer additional services for the deaf community.

Ms Kantor advised that the business plan developed by e.tv required 3 million STB’s to be installed. The concerns regarding new entrants centered on the fact that the new entrant would not be required to provide dual illumination services and it was not fair that the organisations that had invested significant resources into the BDM process would also have to face increased competition from new entrants. The issue of anti-competitive practices in the television market had to be addressed before additional entrants were allowed. The Digital Dzonga had served its purpose. Participation in the Dzonga was on a voluntary basis. The future advisory body needed to be staffed by full-time personnel.

The Chairperson noticed that a number of licensees were listed but were not operating. Licensing was one matter but the other issue was ensuring that the environment was conducive for new players to enter the market and to ensure healthy competition. He asked what measures were in place to ensure that license holders commenced operations and how long it took before a license holder started broadcasting.

Dr Socikwa advised that ICASA shared the concern over licensees that failed to commence operations. There was no legal requirement to force license holders from operating within a specified. The entire value chain needed to be taken into consideration when looking at the functioning of the broadcasting sector. ICASA had attempted to regulate local content and sports rights but more clarity on policy was required.

Ms R Morutoa (ANC) asked what action was being taken by ICASA and the DOC to address the shortcomings in the current legislation.

The Chairperson observed that the gaps in the legislation compromised the regulatory framework.

Mr Currie advised that license holders constantly requested ICASA to extend the launch dates specified in the license. ICASA was considering allowing the licenses to lapse if the licensee failed to commence operations within the specified period. ICASA was considering undertaking a review of the entire television broadcasting sector. The question was to what extent the State could intervene if a television broadcaster failed.

The Chairperson wondered to what extent ICASA understood the broadcasting sector. The Committee could address the weaknesses in the current legislation but amendments had to be proposed by ICASA and introduced by the DOC. It was unlikely that legislative amendments could be made before the DTT target date.

Mr Stuck explained that license applicants conducted their own market research and applied for a license because they were of the opinion that their operation would be commercially successful. The licensing process included a public participation phase. Only one of the five pay television applicants (i.e. TopTV) had commenced operations. In his opinion, ICASA had done as much as possible to ensure that license holders were capable of commencing operations.

The Chairperson remarked that the license should be revoked if the license holder did not meet the licensing requirements.

South African Broadcasting Corporation (SABC) briefing
Mr Lumko Mtimde, Member of the SABC Board and Ms Lulama Mokhobo, Chief Executive Officer, SABC Group introduced the delegation from the SABC. Mr Sipho Masinga, Acting Chief Technological Officer, SABC presented the briefing to the Committee (see attached document).

The briefing included a schematic illustration of the content, platform and transmission; policy and regulation; STB manufacturing, testing and distribution and marketing and consumer support functions. The activities the SABC was responsible for was highlighted. An overview was provided of the current involvement of the SABC in the DTT programme and the activities that had to be finalised before the target date.

The current challenges included the outstanding final DTT regulations; the funding shortfall to fully implement the SABC business plan and the availability and take-up of STB’s. The National Treasury had not approved requests from the SABC for additional funding, which restricted in the public broadcaster’s ability to launch the additional planned channels. The delay in issuing the final regulations could result in further delays in granting licenses for additional channels.

A summary of the objectives for the DTT project, the key drivers, key issues and achievements to date was provided. The project plan indicated a final target date for DTT of 30 June 2015. The target date for dual illumination switch-on was 30 November 2012.

Ms Mokhobo provided additional information on the cost of DTT to the SABC. The estimated total funding shortfall was R6.8 billion. Despite the importance of the role played by the public broadcaster, the National Treasury had not approved any additional funding for the SABC’s DTT programme. The SABC only had sufficient funding available to meet its mandatory licensing requirements. Consequently, the decision was made to put the planned additional channels on hold. Only the existing three television channels (SABC 1, 2 and 3) would be included in the DTT project. It was unlikely that the target date of June 2013 would be met.

Discussion
Mr Schneemann observed that there were clearly disadvantages to migrating to DTT. He asked if the SABC had identified alternative sources of funding. He asked if the lack of funding was the only reason why the SABC would not be able to meet the June 2013 deadline. The financial constraints meant that the SABC had to curtail expenditure but the licensing requirements had to be met.

Ms Lesoma asked if the projected DTT expenditure included escalation factors. She asked if it was possible for the SABC to achieve savings without compromising its mandate or the development of local content. She asked if archived material had remained relevant and suitable for re-broadcasting. She asked what action had been taken to develop skills capacity.

Ms Shinn asked if the SABC had the necessary technical capacity. The SABC had contracted with ATOS for four turnkey projects, only one of which was partially completed. She asked which studios had been converted to digital. She understood that the SABC had paid R200 million to Siemens for projects that were not used. She asked if proper project plans and project agreements with suppliers were in place. She wanted to know how the SABC would implement DTT if it did not have the necessary technical capacity on board. She asked if contingency plans had been developed and documented. She understood that the National Treasury had refused to grant additional funding for the launching of a 24-hour SABC news channel until the broadcaster was on a sound financial footing. She asked if the Treasury was equally unsympathetic with regard to DTT.

Ms Newhoudt-Druchen asked how viewers would be informed of DTT. She asked if the SABC relied entirely on the South African Post Office (SAPO) for messaging services. She asked what progress had been made with establishing a call centre to deal with STB enquiries and what access to enquiry services was available to the deaf community.

Mr Steyn observed that the high level project plan included in the briefing document still reflected a DTT switch-on target date of 30 November 2012. He wondered if the project plan was being kept up to date. The SABC did not appear to have an alternative plan to obtain funding if the National Treasury refused to grant additional funds for DTT. He asked when the SABC would be ready to launch. The SABC had more social obligations than e.tv but it would appear that e.tv was far more positive about DTT. He questioned the continued role of the SABC if the public broadcaster became financially unsustainable in future.

Ms Morutoa was disappointed by the lack of progress made by the SABC. She asked for more clarity on the plan to re-broadcast archived programmes. She was concerned over the response of the Treasury to requests for additional funding for DTT as it was clear that the DTT targets would not be met without adequate funding being available. She asked what action had been taken by the DOC to address the funding shortfall. DTT was a national priority and there should have been a funding strategy in place at the start. The DOC was the lead department but she was not reassured by the earlier briefing by the DOC. The Committee required detailed, complete and accurate reports on DTT. It was apparent that the Committee would need to spend more time on DTT.

The Chairperson was also interested to hear what the plan was to source alternative funding for the DTT projects. The Committee would be considering the 2013/14 budgets of the entities in the communications portfolio. The National Treasury wanted Government entities to make more efficient use of the limited funding that was available. It would be necessary to re-prioritise projects in the best interests of the country. He asked if the STB’s could convert signals from more than one broadcaster.

Mr Mtimde thanked the Committee for the support provided to the SABC. Policy, regulatory and funding certainty was required. He pointed out that the achievement of the 2015 DTT target date was not under the control of the SABC. The Corporation had made changes to its priorities since September 2012. The SABC was aware of the economic constraints and was currently engaged in re-aligning its programmes and projects. The licensing requirements represented the minimum terms and expectations and must be complied with. The SABC had planned to launch six new channels but the lack of funding meant that only the current three channels would be included in the DTT project. The project plan had not been amended because of the high level of uncertainty that persisted. DTT was new technology and the entire country lacked expertise. South Africa would have to develop sufficient technical capacity. It was critical that skills were transferred whenever external service providers were used.

Ms Mokhobo said that she wished to be honest with the Committee and admit that the SABC would not make the deadline. The SABC was ready to launch the existing three channels but the planned additional channels had been put on hold. DTT was excluded from the original request for the R1 billion loan guarantee that was made by the interim Board to the National Treasury. The SABC had to meet onerous guarantee requirements, continue normal operations as well as fund DTT developments. There was not sufficient funding available for the DTT project. The SABC was working on alternative funding plans but as yet had nothing concrete to report. At least 11 million households watched television in South Africa but fewer than 4 million households paid television license fees. An analysis of the database had revealed that the wealthier households that subscribed to pay television services refused to pay the SABC license fee. She conceded that the reputation of the SABC was not good. Media reporting of the SABC was often unfair and inaccurate but the Board was working with media organisations in an attempt to improve the image of the public broadcaster. The SABC was also engaged with the entity responsible for compiling viewer data to ensure that advertisers were provided with accurate and complete information.

Ms Mokhobo explained that the SABC had a substantial store of good quality programmes in its archive. Media reports on the amount spent on a soccer documentary had not been accurate but the SABC was confident that the documentary would be profitable. Austerity measures had been implemented to save costs. It was found that the initial estimate that the planned 24 hour news channel would cost R115 million per annum was not correct and that an incorrect model was used to calculate the cost. The revised amount was R20 million p.a. and the channel would also provide content for the news programmes on the other three channels. Archived children’s programmes remained suitable and relevant and could be repeated successfully.

Mr Magisa said that South Africa was attempting to change to a knowledge-based society and the SABC was one of the key drivers in the process. Government had developed major projects and plans for the migration to the digital environment. The SABC had experienced financial difficulties in 2006/07 and the Auditor-General had reported significant incidents of non-compliance and financial mismanagement. The SABC had taken corrective action to address all the findings. The SABC took the lead in dealings with external service providers.

The Chairperson advised that the proceedings would be resumed on the following day. T
he meeting was adjourned.

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