Broadcasting Digital Migration state of readiness: Department of Communications, Sentech, SA Post Office; Universal Service and Access Agency of South Africa (USAASA)

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Communications and Digital Technologies

10 March 2015
Chairperson: Ms M Kubayi (ANC) and Ms J Moloi-Moropa (ANC)
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Meeting Summary

The Portfolio Committees on Communications and on Telecommunication and Postal Services were jointly briefed by the Department of Communications, Sentech, USAASA and the South African Postal Service on their preparedness to rollout Broadcasting Digital Migration. After concerns were raised about the absence of the Communications Minister, Members queried the three-time missed deadline for implementation. Policy was due to be gazetted in the following week and rollout was scheduled for June. The ability to manufacture and set the standards for the Set Top Boxes in time for the deadline was questioned. Members asked repeatedly about protection from piracy and the Department’s stance on control system software, conditional access and encryption. Members also voiced concern about funding for the Department and its entities.   

Meeting report

Members voiced annoyance that the Minister had not made herself available to the Committee.

Ms M Kubayi (ANC) explained that the Minister had notified Parliament as to her having a previous commitment and she had also asked for a postponement so she could appear before the Members. Ms Kubayi had recommended that the briefing go ahead regardless.
 
Department of Communications on Broadcasting Digital Migration (BDM) state of readiness
Acting Director-General Donald Liphoko said the policy underpinning the Department’s BDM project was expected to be gazetted the following week.
 

Deputy Deputy-General: Policy, Mr Norman Munzhelele, made the presentation and outlined the key role-players and what their involvement in the project was. These were:
1)    Sentech, which would manage the network;
2)    Independent Communications Authority of South Africa (ICASA), the regulatory body;
3)    South African Bureau of Standards, responsible for developing the standards around which BDM would function;
4)    USAASA would manage the funds;
5)    South African Post Office (SAPO) would handle the distribution of the Set Top Boxes (STB); and
6)    eTV, the SABC and MNet were the broadcast partners.
 

Mr Munzhelele said, together with Sentech, the SABC would be responsible to ensure that as government they had the necessary resources.
 

The milestones achieved to date were also highlighted but Mr Munzhelele acknowledged that the deadline to switch over to digital had passed three times. In hindsight, the Minister had indicated it was important that a stricter deadline needed to have been set.
 

Mr Munzhelele focused on the Department’s responsibility which was to protect STBs for free-to-air broadcasting. With the purposes of implementing Digital Terrestrial Television (DTT) it had been agreed that:
1)    STBs were a transitional tool to enable migration from analogue to digital; and
2)    The control system did not mean a conditional access system nor did it mean an encryption of signal too control access to content by viewers. Control systems referred to a security feature to encourage the local electronic manufacturing sector.
 

Mr Munzhelele said the Department’s responsibility was to protect the box, after that its responsibility ended.
 
Sentech presentation
Chief Operating Officer, Mr Kganki Matabane, said as at 4 March 2015 the company had completed the rollout of digital infrastructure at 177 of the 178 of the analogue sites, providing 84.01% population coverage and 57.82% geographical coverage. Sentech was on target to complete the DTT network rollout to 178 sites by the end of March 2015. This would result in population coverage of 84.23% and a geographical coverage of 57.99%. Thereafter the company would focus on further optimisation of and stabilisation of commercial readiness. In addition, the company would align its current Analogue Switch Off (ASO) technical plans with the overall national ASO plans. Finally the company would continue with the rollout of the four greenfield digital sites.
 

He said fruitful discussions with broadcasters had been conducted and a tariff had been agreed on. The tariff model was based on consideration of a number of factors including:
1)    The acceptance of the discretion that broadcasters retain on the elements of the Sentech network choose to use;
2)    The assets and operating costs were shared; and
3)    On costs that varied depending on multiplexor allocations and coverage areas.
 

Sentech had also been asked by the Department of Telecommunications and Postal Services to assist with the setup of a contact centre to assist South Africans to navigate the new digital environment. The funding for the centre had not yet been confirmed and therefore Sentech had not commenced with the build.
The company had secured some funding for dual illumination during the financial year 2015/16 but not thereafter. The concern was whether there would be continued funding support for dual illumination funding going forward. Should this not be the case then Sentech would need to fund it out of its own cash reserves since some of the costs were non-discretionary. This would disable the company from pursuing some its current obligations.
 

Set Top Box and viewer migration would rollout in June 2015.
 
South African Post Office (SAPO) presentation   
SAPO Specialist Manager, Special Projects and Strategic Planning, Mr Anton van Vuuren, noted recent milestones achieved in readiness for digital migration:
1)    Finalisation of the draft layout of DTT application and installation voucher forms on September 2014;
2)    Finalisatio and submission of SAPO updated pricing structure for three year period 2015/16 - 2017/18 to the Department of Telecommunication and Postal Services on 4 November 2014;
3)    Finalisation of its risk management register framework for the DTT project on 7 November 2014;
4)    Finalisation of the distribution plan on 18 November 2014;
5)    SAPO’s packaging, ordering and delivery requirements for the STB equipment had been presented to potential bidders on 2 December 2014;
6)    SAPO presented to the Ministers of Communications and Telecommunication and Postal Services during a handover session of the DTT project on 30 January 2015; and
7)    Presentation on its state of readiness to Parliament on 11 February 2015.
Mr Van Vuuren said SAPO would achieve 100% system and operational readiness within four months from the date of sign-off of its distribution plan.
 
Universal Service and Access Agency of South Africa (USAASA) presentation
Chief Executive Officer, Mr Zami Nkosi, said tenders had closed on 21 January 2015 and evaluations were underway. An external auditor, Rain Chartered Accountants, had also been appointed.

Open tenders would be closed on 20 March for the borderline and Square Kilometre Array areas. Requests for proposals from installers would be completed by the end of March. This was phase one. Phase two involved the implementation in high density and high volumes areas such as metropoles and townships.
In summation, Mr Nkosi said the total numbers per the General Household Survey 2013 was 6 211 852. USAASA was:
1)    Finalising its phase two implementation plan and funding thereof; final reconciliation of households at time of implementation and cost implications;
2)    Recalculating the project cost against the approved 100% funding of equipment; and
3)    Finalising an alternative distribution model considering SAPO challenges.

While five million households would be subsidised, over 6.2-million households qualified as poor. More funding would be needed to subsidise the rest of the poor households.
 
Discussion
Ms M Shinn (DA) asked for clarity on what was meant by “control system”. The Minister had made a statement previously that there was no capability to make encryption possible however the delegation from the Department had said it would the prerogative of the broadcaster. Was new software going to be developed or a new technical change? How long would that take?
 
Ms Shinn asked why the subsidy had been dropped. There was not enough, it would cost government R2 billion to acquire five million subsidized Set Top Boxes. Where is the money going to come from? What was the breakdown of the costs not yet budgeted for like the call centre which looked like it was only going to be live after the first STB was installed. What were the costs of the public awareness campaign, the distribution of the STBs from SAPO and maintenance thereof? What was the exact figure for STBs that would be handed out?

She also asked if the Sentech funding challenge could be elaborated on considering its mandate. It seemed the switch off was only going to be in three years time, did it mean that the spectrum would not be available before then or in tranches or in years to come.
 
Ms V van Dyk (DA) also asked for more detail on encryption and the control system. Without encryption, how did government plan to protect the local market against cheap STB imports?
 
Ms M Mafolo (ANC) asked about the five million poor households that would acquire free set-top boxes. How was the Department going to balance who could afford them and who could not? In terms of job creation, would youth and people in the provinces be trained or would the Department be migrating staff from various provinces. How long would it take until analogue switch-off? The awareness campaign was also late. When would that happen?
 
Mr Tseli (ANC) wanted clarity on illumination funding. If it was not addressed, it would impact on other projects? He asked how the people who required subsidies were identified. What did the process say to the people who did not have TV licences? He asked to what extent the unions were involved.
 
Mr G Davis (DA) commented that the Department had not done enough to meet the deadlines. What was the biggest singular reason for this? What would happen on 17 June when the International Telecommunication Union's deadline came? How would the quality of the signal be affected?

Mr Davis asked if control system was not encryption, then that meant content producers would not be protected from piracy so it would be difficult to get premium content on the STB. What assurance could be given against piracy?

Mr Davis asked how SAPO would be able to deliver STBs if it was unable to deliver post. What plans were in place in the event of strikes?
 
Ms D Tsotetsi (ANC) referred to slide 15 and asked what label would indicate the STB was made in South Africa. In slide 17 were the qualifications of the incumbents verified?
 
Sentech was asked what lessons could be learnt from one province to another. Were there any unintended consequences that could affect timelines?
 
Mr M Ndlozi (EFF) said there needed to be much more strictness in meeting targets. What was the date of publication of DTT regulations by ICASA?
 
Mr Ndlozi asked what the determinants were for the Department to decide who was worthy of the rollout of free STBs or not. Was it based only on their salary slips? Much more needed to be included, when applying for financial aid.
 
He asked SAPO how many installers it had. On what basis would installers be employed?
 
Mr Ndlozi (EFF) asked for clarity on how STBs would be protected from outside imports.
 
He said the shortfall subsidy to the poor for STBs could be revived by the absent Minister’s salary package. Could the Minister of Telecommunication and Postal Services not take the helm?
 
Mr M Kekana (ANC) asked how long the period of rollout to the poor was. How long was the STB going to last, what would happen when the box expired?
 
Ms M Ndongeni (ANC) asked what the plan for entire project was. Would the deadline be met? Could more clarity on training be given?
 
Ms L Maseko (ANC) said she did not think the switch off from analogue should be rushed until the switch on to digital matters had been resolved. She said there needed to be a process to ensure that those who received the subsidy were actually indigent so as not to create dependency.
 
She queried if there was going to be a transfer of skills to the local manufacturing industry related to the STBs. A 30% estimate seemed too little.
 
Ms Kubayi referred Members back to previous presentations by the Department on subsidies for more information.
 
Mr Liphoko replied that the rollout for the communications campaign was in partnership, in part, with Sentech. Other departments were involved and broadcasters had agreed that they would use their platforms to publicise the rollout and create awareness.
 
Mr Munzhelele said the first radical change in the broadcasting system since the advent of colour TV was digital migration. National Treasury was willing to assist the Department, Sentech and the SABC to take the project forward but this had not yet transpired. Sentech had spent R1.7 billion on infrastructure and an amount of R2.7 billion had been allocated for next MTEF process. As a department it had to be innovative to ensure that there was money to do public awareness. An amount in excess of R90 million had been put aside for public awareness.  Treasury had also expressed a willingness to help with distribution. The Department noted the question on installers.
 
Ms Kubayi asked, based on the Appropriations Bill, if any shortfalls were estimated.
 
Mr Liphoko replied that this was R2.7 billion. National Treasury had agreed it would revisit funding based on performance and milestones passed. The bulk of work was centred on how to unlock the digital dividend while it had commercial value.
 
Head of the Digital Migration Project within the Department, Solly Mokwetle, said there were a number of controls within a STB. There would be a control system to protect the box. Conditional access was within the realm of broadcasters to allow access to content. There is free-to-air and then there is conditional. If one had to operate a conditional access system, they would need to put in a device for those conditions.
 
Chief Operating Officer of the SABC, Hlaudi Motsoeneng, said conditional access could not be supported considering the poorest of the poor. The SABC needed to be everywhere. No one could use any broadcasters’ content.
 
ICASA Councillor, Mr Rubben Mohlaloga, said the existing regulatory framework would remain post the gazetting of the Department’s policy.
 
Sentech Chief Financial Officer, Rudzani Rasikhinya, said allocation for funding had only been received for the 2015/16 financial year. In terms of how the company planned to do the rollout, it had been aligned to SAPO distribution. For 2016/17 and 2017/18 no funds had been allocated. R120 million had been allocated for illumination.
 
Mr Matabane of Sentech said the company had to consider the Satellite Kilometre Array no-go radio zone first. They would then move to cross border sites, in order to protect the country from interference coming from bordering countries. The focus thereafter would be on low population and less complicated provinces.
 
Mr Nkosi said people without a TV licence would not be excluded from the rollout.
 
SAPO officials said it would distribute the STBs but it was not involved in installation. In terms of strikes, mail was delivered in a different stream. The STBs would not be based on the same model.
 
Mr Mohlaloga said switch off should not be rushed but migration to digital should. Eighteen months should be sufficient.
 
Mr Ndlozi asked for clarity on the tender process and the terms and conditions.
 
Ms Shinn again asked for clarity on the control system. How, if the rollout was in June, would the STBs be manufactured by then if the standards had not yet been approved?
 
Ms Tsotetsi asked again for information on the qualifications of recipients because Government might be embarrassed at the end of the day.
 
Mr Tseli asked the same.
 
Mr Liphoko said there were criteria for people who applied. The Department was a small one but employee qualifications would be verified.
The STBs would be branded with the ‘Go Digital’ to identify them.
 
An USAASA official said the tender process was believed to be credible. Independent external evaluations would also be done.
 
Mr Mokwetle said conditional access made an STB permanent. The boxes should last dependent on the robustness of the manufacturing process based on the budget available. It was hoped to last for not less than five years.
 
Mr Liphoko said delays had been a result in part to legal challenges. Government was not a player in encryption but it was focused on providing a regulatory certainty for market players. A way had been possibly found to make it possible to protect franchises for free-to-air.
 
The meeting was adjourned.

Appendix
SAnews.gov.za - Communications Department welcomes digital migration policy approval

Communications dept welcomes digital migration policy approval
 08-3-2015

The Department of Communications has welcomed Cabinet’s decision regarding the approval of the Broadcasting Digital Migration Amendment Policy, with the inclusion of the control system in the set top box (STB).

With the international June deadline looming to migrate broadcasting services from analogue to digital, the department on Sunday said the inclusion of the control system in the STB will be clearly defined when the policy is published.

The International Telecommunications Union (ITU)-agreed deadline for the switch off of analogue television signals is 17 June 2015. However, South Africa will not meet this deadline.

The issue of whether to include the control system in the STBs has been a source disagreement amongst free-to-air broadcasters for some time now.

Minister Muthambi said this disagreement has “impacted negatively on the ability of the country to implement the broadcasting [of] digital television within the ITU agreed timelines”.

Broadcasting digital migration is the migration of broadcasting services from analogue broadcasting technology to digital technology.

The primary objective of digital migration is to clear the radio frequency spectrum currently occupied by broadcasters to enable the provision of wireless mobile broadband services and other innovative applications.

Government aims to provide free STBs to more than five million poor television household owners instead of a partial subsidy of 70% as previously approved in 2008.

The distribution of the STBs will prioritise those households in the border region areas of the country to avoid and minimise signal interference between those regions and neighbouring countries.

“STBs are to be used in the transition to enable free-to-air broadcasting services to migrate from analogue to digital television and will not be a permanent feature in the free-to-air broadcasting system in South Africa,” said Minister Muthambi.

She said the definition of the STB control system in the final policy will assist in clearing the confusion regarding the use of a control system in the STBs.

For the purposes of accelerating the migration of free-to-air broadcasting television from analogue to digital, the control system will have the following meaning:

  • control system does not mean a conditional access system nor does it mean an encryption of the signal to control access to content by viewers;
  • control system refers to a security feature to encourage the local electronic manufacturing sector;
  • the STB must have minimal switching (on/off) security features to protect the subsidized STBs from theft or leaving SA borders; and
  • it must have capabilities to enable the provision of government information and services.

However, the new policy position does not in any way prohibit any broadcaster who will want to include conditional access in the provision of broadcasting services to its customers.

“It is the firm view of the department that broadcasters who will want to do that should make their own investment in the acquisition of a conditional access system,” said the Minister.

In consultation with Cabinet, Minister Muthambi said the department will determine and announce the analogue signal switch on and switch off dates.

She called on all key role players in the broadcasting fraternity to put behind them all their differences and “work together to deliver digital television to the people, thus ensuring universal access to broadcasting services in line with the Constitution of the Republic”. 

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