Broadcasting Digital Migration state of readiness: Minister of Communications, Sentech, USAASA & SA Post Office

Meeting report

Open remarks by the Minister of Communications
Ms Faith Muthambi, Minister of Communications, welcomed everyone and indicated that this whole project of Broadcasting Digital Migration (BDM) is a shared project and the Department of Communications (DoC) is leading in this project with three other entities including Sentech, Universal Service Access Agency of South Africa (USAASA) and the South African Post Office (SAPO). The Project Management Office (PMO) has embarked on the assessment of the technical elements of the project and implementation. The purpose of assessment was to ensure that there was proper planning and sequencing of services to be in line with the programme implementation ecosystem that has been developed. The purpose of the assessment was also to identify and unlock potential risks issues in the process of the programme and the implementation in order to provide appropriate recommendations on the actual implementation timelines for deliverables and milestones to declare the digital migration dual illumination performance period.

The Minister highlighted that the one of the critical aspects of the project was the bilateral agreements with the neighbouring countries to ensure that there is harmonisation. The Department together with the Digital Migration Project Management Technical Team embarked on a campaign in May and June 2015 to undertake a series of bilateral engagements with neighbouring counties including Botswana, Mozambique, Swaziland and Lesotho. During this visit, joint statements and Memoranda of Understanding (MOUs) were signed with neighbouring countries and there were agreements on matters like the establishment of a joint task team to facilitate the engagements between the countries. There was also an emphasis on the importance of collaboration and co-ordination of the regulators in addressing matters of mutual interests on cross-border interference of terrestrial services.

During these visits, the Department also shared plans on the roadmap to the release and use of digital dividend for other services and shared technical implementation best practices which are inclusive of Set Top Boxes (STBs) sourcing and distribution. The engagements went further to discuss the matter of content development and information dissemination to facilitate social cohesion and integration. The ministers in all these countries ensured that the task team will be in action and results-orientated by producing a quarterly report on the expedition of the agreed roadmap and made commitments to monitor progress so as to ensure successful BDM of the respective countries. Timelines were agreed upon with SADC countries on the rollout and the release of digital dividends and the PMO was still busy with engagements with all the key role-players on the outstanding deliverables in light of the timelines of neighbouring countries. There was a concerted effort to work towards the announcement of the dual illumination performance period.

The Minister assured the Committee that the Department was on track to have the BDM programme implementation realised in South Africa and the PMO was working tirelessly with all key role players in order to ensure a successful implementation. The focus of the Department was to have affordable STBs so that all South Africans could be able to have access to multiple channels. She urged Members to support the programme in order to realise the broadband services that the country has been waiting for.

Briefing by the Department of Communications
Mr Solly Mokoetle, Programme Head: Digital Terrestrial Television (DTT), said the Presidential Proclamation of 2 December 2014 gave powers to the Minister of Communications for the implementation of the DTT programme. The DTT Project was formally handed over to the DoC on 31 January 2015.The Broadcasting Digital Migration programme is therefore a flagship of the DoC. In March 2015, Cabinet approved the final amendments to the BDM policy, which unlocked the project to enable implementation. Cabinet further approved that government provide free STBs to five million poor TV-owning households. This shift is a reflection of government’s commitment to ensure that digital migration happens within the shortest time possible.

The country did not meet the 17 June 2015 ASO as set by the International Telecommunications Union (ITU) but a lot of work has gone into the process leading to the imminent ASO. Notwithstanding this, the Ministry concluded and signed bilateral engagements with neighbouring countries (Botswana, Namibia, Mozambique, Lesotho and Swaziland) in order to minimise cross border radio frequency spectrum interference. The Ministry is ready to consult with Cabinet on the digital signal switch-on date. The DTT PMO was re-established in October 2014 and technical teams were established and operationalised: Implementation Planning; Public Awareness Forum; and Spectrum Harmonisation and Coordination [Regulator (ICASA), Signal Distributor (SENTECH), National Public Broadcaster (SABC) and DoC].

Mr Mokoetle noted the BDM policy in the country was developed and approved in 2008. The BDM policy underwent two amendments in 2012 and 2015 and final policy amendments approved on 4 March 2015 and gazetted on 18 March 2015. The government is to provide free STBs to five million poor television-owning households. The Minister of Communications is to announce the Performance Period after consultation with Cabinet.

The DTT regulations were completed and published; and a regulation for Digital Channel Licensing was to be finalised. The DTT Standards shows that the DTT SANS 862 (DVB-T2) have been completed and published and the DTH SANS 1719 have been completed and published. The Department was still on track for completion in October 2015 for IDTV SANS 10352. The STBs Control System Specifications were finalised by broadcasters and handed over to USAA and the STBs Conformance Testing established and conformance regime ready.The terrestrial and satellite network have been completed and covers 84% and 16% of the population respectively and all 178 analogue transmitters configured with the DTT network. The optimisation and testing of network – the Sentech system was ready for testing STBs. The performance period (dual illumination) was to be completed in the next 18 to 24 months and the Minister will announce the performance period while the ASO roadmap was ready.

Mr Mokoetle said that South Africa was to adopt a phased approach for the ASO to achieve the following primary objectives:
- Protection of services from cross border interference;
- Compliance with SKA Act requirements;
- Align to best practice and minimise services disruptions;
- Optimal allocation of resources (dedication);
- Viewer management risk adverse approach.
- The phased approach has been adopted in other countries and it has minimal impact on viewers.

The Department has ratified bilateral engagements with neighbouring countries and technical team established consisting of Independent Communications Authority of South Africa (ICASA), SENTECH, SABC and DoC. The borderline spectrum analysis was conducted for all neighbouring countries and the interference scenarios were considered in the analysis without limit on distance between sites in either country. Five of the six countries were visited (Botswana, Lesotho, Swaziland, Mozambique and Namibia) and the cooperation agreements signed between Ministers; MOUs in the development process (to be finalised before the World Radio Conference (WRC 15); and the Department was to finalise bilateral agreements with Zimbabwe. The Department has engaged in Public Education and Awareness (PEA) and the PEA strategy was completed and approved for implementation and implementation commenced. The three key major launches for the PEA strategy included the education launch; STB launch (dual illumination / performance period and the ASO. The Communication Plan has already been completed and key messaging developed and the pamphlets and leaflets were developed in eleven official languages.

Mr Mokoetle concluded that in the acquisition of DTT Devices (STB and Antennas), the panel of manufacturers (26) was established to supply DTT and DTH STBs; and three companies to supply antennae. The control/security system specifications was completed and handed over by broadcasters to USAASA as required by policy and standard. The government was to place STB orders in August 2015 and the logistics and distribution framework to be finalised and ready.

Briefing by Sentech
Mr Kganki Matabane, Chief Operating Officer (COO), Sentech, indicated that by the end of June 2015, Sentech had completed the rollout of digital infrastructure. The remainder of the coverage will be serviced by the Direct-to-Home Satellite (DTH-S). The national project currently runs ASO in simulcast (dual illumination) with the ASO starting after a national network rollout (ITU Guideline Model) and Sentech proposes adoption of a phased approach. In the phased approach the ASO takes place in a given province or region at a time before moving onto the next province. These are some of benefits and advantages of a phased approach:

South Africa will apply the lessons learned from one province to the other to improve processes and approaches for the next province. In a case of something going wrong, the impact will be limited to one province. This approach apportions scope and allows focus of human and financial resources per province and will eventually enable a smooth and manageable ASO.

Based on the scope related to STB rollout and viewer migration, June 2015 ITU guideline and the Astronomy Geographic (AGA) Act of 2007, Sentech developed a logical regional ASO plan to ensure compliance with the AGA Act and protect services from the likely cross-border interference considering the time required to migrate viewers.

Mr Matabane indicated that the main drivers of the model Sentech has worked on are on the distribution and logistics programmes from SAPO and USAASA. Their estimates of the ASO period have been benchmarked against countries that have already completed their migrations in Region 1. In general, the ASO periods are affected by a number of issues, including the role of the public broadcaster and how the migration program is funded and the existence of government or industry bodies to drive the different aspects of the migration project. In alignment with best practices for managing ASO, Sentech welcomes the government-driven ASO coordination committee called the DTT PMO Office under the Ministry of Communications. The PMO Office has been tasked with the co-ordination of all key stakeholders in the BDM Project ecosystem and Sentech is represented and continues to contribute in this regard. The company has worked on several technical details of the phased ASO.

The model also allows for compliance in the SKA area in the Northern Cape and the protection of services along the border areas. Further consideration has been made on the need to start with smaller and less complex provinces, to draw lessons learned and reduce general impact per ASO activity. Overall, based on the above, the estimate is that ASO will take about three years to be completed and the period could be compressed if timelines for STB distribution and related logistics are shortened and this applied to both retail and subsidised STBs. The ASO plan is being socialised with industry stakeholders for further optimisation and to ensure industry alignment.

The dual illumination activities are in respect of incremental cuts arising from running both analogue and digital networks simultaneously - this will continue until ASO. The estimated incremental cost for dual illumination for the financial year 2016 is R131 million, and the funds allocated amount to R99 million, thus leaving a funding deficit of R32 million. A request has been submitted to National Treasury for the shortfall and requirements for the 2017 financial year (R140 million) and FY2018 (R149m) through the Medium Term Expenditure Framework (MTEF) process.

Mr Matabane stated that the tariff model of DTT is based on consideration of a number of factors, including but not limited to, the acceptance of the discretion that broadcasters retain the elements of the Sentech network that they may choose to use and share assets and operating costs. The model is based on re-evaluation of assets and consideration of operating costs specific to DTT and Service Level Agreement (SLA) commitments and the tariff model has been shared with broadcasters and the regulator. The tariffs of the Cape TV, Soweto TV and Tshwane TV have increased significantly and this is in alignment with the increases in the number of transmitters and the increased geographic coverage, both of which are determined by the national frequency plan.

In conclusion, in order to ensure that there is a speedy and resolute DTT-to-DTT migration process, the following issues must first be addressed and dealt with as the DTT-DTT migration process will require that 93% of the current DTT network be reconfigured for a successful second migration process. Sentech estimates that this process will take between 12 and 18 months to complete. Consequently, it is imperative that the impact of restacking and detailed planning principles are discussed and agreed upon with stakeholders. The discussion on the planning principle in line with the ICASA frequency assignment plan is critical in ensuring that there is alignment on the requirements for ASO and digital dividend release. This should be done in line with the impacted stakeholders together prior to the DTT-to-DTT migration process and this will assist in minimising implementation risks and ensure that the digital dividend is made as quickly as possible. Sentech believes that DTT-to-DTT migration will require complex orchestration of network reconfiguration, and it will be important that there is alignment between the ICASA published frequency plan and the ASO plan.

Briefing by South African Post Office (SAPO)
Mr Anton van Vuuren, SAPO COO, said that SAPO`s R917 million pricing structure was included in the DTT Project presented to the DoC`s PMO on 3 July 2015. The DoC had already confirmed SAPO`s role as distribution partner for the DTT Project. SAPO was requested by the DoC PMO on 9 July 2015 to align its logistic and distribution plan to prioritise the distribution process for the SKA and borderline areas for completion by 31 December 2015 and 30 June 2016, respectively. The role of SAPO as logistics and distribution partner for the DTT Project was confirmed at the DoC`s DTT awareness campaign launch on 13 July 2015. SAPO was requested by the National DTT Technical Forum held on 16 July 2015 to align its DTT distribution plan to commence with the phased-in registration phase in the SKA Area on 1 September 2015. SAPO`s aligned draft DTT distribution plan was submitted to the DoC PMO on 24 July 2015.

SAPO`s DTT point-of-sale (POS) and backend software is scheduled for delivery on 4 August 2015 and full system testing will commence on 5 August 2015 for completion by 31 Aug 2015. SAPO`s official appointment as logistic and distribution partner on USAASA`s system is scheduled to be approved by USAASA`s board on 12 August 2015. Thereafter, SAPO`s invoicing process to USAASA will be activated. SAPO was currently focused on the finalisation of additional information required by DTPS on SAPO`s R917 million pricing model. It was currently awaiting DTPS availability to complete preparation exercise for planned discussion with National Treasury on the funding of SAPO`s current shortfall amount of R771 million. The role of SAPO for DTT migration was for it to act distribution partner mainly ensuring the display and distribution of STB marketing at SAPO with a focus on online outlets and process applications for the subsidised STBs during the phased-in pre-registration phase. SAPO will also be responsible for the ordering, warehousing and distribution of the STB equipment to SAPO outlets, issue of an installation voucher to qualifying applicants and notification to assigned installers for installation.

Mr van Vuuren added that the SKA Area live pilot site for the registration and distribution phase was first priority. The rest of the Northern Cape province, which will include the applicable borderline areas in the province was second priority and the remaining borderline areas was third priority. The inland areas of the provinces like Limpopo, Mpumalanga, North West, and Free State were to be considered as fourth priority. SAPO was planning for the delivery of the DTT system solution by 4 August 2015, the DTT system solution testing by 31 August 2015 and the distribution and delivery of marketing material to SKA areas, followed by the training of retail SKA branch staff.

Critical dependencies were identified as:
- The finalisation and sign-off of SAPO`s DTT Distribution Plan (business rules document included) and it was awaiting final approved phased-in Registration and Distribution Rollout Plan from DoC.
- The timeous availability of the following DTT Marketing material at branch level: STB application and installation voucher forms; STB Customer Information brochure (brochure to also highlight SAPO`s distribution process functionalities); and STB display poster.
- The timeous launch of pre- and mobilisation awareness campaigns and the DoC`s planned activation date was still to be confirmed.
- The timeous activation of the DTT Call Centre. Due to distribution of subsidised STBs to all qualifying households in the SKA area, the DTT Call Centre will not be a critical dependency for the SKA area registration. Timeous set-up and activation of the DTT Call Centre was critical when it commences with the STB distribution phase in the SKA area and the registration phase for the next area.
- Finalisation of STB Qualification Criteria (Valid TV-licence requirement).
- Finalisation of SLA (SAPO DTT Pricing Structure included). This matter has escalated to DoC and USAASA on 24 July 2015 and it was awaiting the DoC`s response on the way forward.
- Although funds approved by Treasury for the distribution function was only R146 million, SAPO will commence with the DTT rollout until funds have been depleted or the balance of R771 million has been secured.

Briefing by the Universal Service Access Agency of South Africa (USAASA)
Mr Zami Nkosi, USAASA CEO, indicated that the qualifying criteria have been adopted by Cabinet and it approved 100% subsidy for poor households. The manufacturing tender was evaluated, adjudicated and approved in 31 March 2015 and the STB manufacturers panel has been established in 08 April 2015. The tender has been published for installation services and the 158 companies’ bid submissions have been evaluated for Board consideration. USAASA was proud that the price negotiations with manufacturers and bid evaluation for installation services were concluded. SAPO system demonstration to USAASA and back‐end fully meets requirements. The point of sale development was finalised 31 July and the bid adjudication for installation services tender has been concluded. USAASA has appointed 16 manufacturers for the STBs and the cumulative monthly production for this was 1 404 000 units and the two manufacturers were busy with DTH satellite dishes and related accessories and the cumulative monthly production was 65 000 units. There are seven manufacturers that are focused on DTT antennas and related accessories with a cumulative monthly production of 490 000 units and 21 manufacturers that are responsible for DTT STBs with a cumulative monthly production of 1 492 000 units.

The decision has already been taken that manufacturers should have 30% local content and then 70% for the actual price. All bidders that had undergone testing of STBs, only two had passed to date. All bidders had submitted the Standard Bidding Document (SBD) 6.2 Declaration Certificate on Local Production & Content to the Department of Trade and Industry (dti) as per instruction note. The local content certification per the instruction note was pending.

The challenges identified by USAASA were:
- SABS tests for big and small manufacturers resulted in delays in processes and it was unable to test DTH.
- Local content certification.

Mr Nkosi mentioned that the SAPO transacting platform in testing was ready for the SKA application launch in September 2015 and standardised barcoding and packaging was already completed. The installer database file format was completed and the daily, weekly, monthly reporting formats have been agreed to.SAPO personnel training commenced in August and mobile satellite vans available as backup. The funding talks with UIF are already at final stages and up to 4 000 new installers will be sourced via Technical and Vocational Education and Training (TVET) colleges. The appointment of installers was to take place on 15 August 2015 and the recommendation will be made by USAASA Board at its next meeting. The SLA was to be signed with SABS on 30 August 2015 and this will focus on local content verification which is at an advanced stage. The finalisation of packaging, bar-coding, serialisation with SAPO and manufacturers has already been completed. The placement of orders was delayed pending the e-TV legal issue which stalled ordering. DTH order placement was ready but awaiting conditional access processing by the PMO and awaiting appointment of vendor for conformance testing for DTH.

Discussion
Ms M Shinn (DA) expressed a concern about the budget to complete the BDM and the possible shortfall that may be experienced. There are also conflicting figures that had been given by various entities. The policy says government would be giving away STBs to five million households and they are not subsidised and USAASA made a presentation on its quarterly report last week indicating that about 5.2 million households would be given the STBs through subsidisation. The presentation today mentioned about 6.1 million households would be given the STBs and it will be important to get the correct and precise figure of households to be given the STBs. She asked was there some agenda for giving these conflicting figures as the policy had clearly stipulated that five million households were to be given STBs for free. The problem of funding needed to be addressed as it was already said that at this stage about R2.72.5 billion was still needed to rollout the project and for the shortfall on dual illumination,

Ms Shinn said that it was critically important to know how much at this stage was not actually budgeted for so as to avoid a logistical nightmare in the near future. The presentation had failed to mention the cost of the community broadcaster subsidy and the UIF funding to train the installers. Sentech stated that there was a shortage of R32 million for dual illumination in 2015/16 and R140 million for the 2016/17 financial year and R149 for 2017/18 financial year. The total budget available from DoC for dual illumination is R129 million and Sentech’s figure was R131 million. DoC stated R137 million was for 2016/17 while Sentech’s figure was R140 million. These figures showed there was inconsistency on the actual cost of dual illumination.

Mr C Mackenzie (DA) stated that SAPO had always been well-prepared on software and project management and this had been confirmed by the presentation on state of readiness for BDM. However, the main concern seemed to be about SAPO’s finances. It is quite clear that SAPO needed to be up and running in order for this project to be operational. It was well-known that SAPO was losing about R100 million a month and there is a R1.2 billion guarantee from government. Where would the funding for SAPO come from to ensure that the project was operational? Was there any contingency plan in the event SAPO was unable, logistically, to meet its project obligations? He wanted to know if the marketing and communication strategy plan that was referred to as Digital Dzonga for digital migration was incorporated in the current marketing of the project to ensure value of the money was used for this project.

Ms D Tsotetsi (ANC) asked for the breakdown of the STB manufacturers in terms of race and requested that Black people should be inclusive of other racial groups like Coloureds and Indians. She requested the information for both big and small manufacturers for the purpose of checking compliance with the transformation agenda of government. How many bidders in total were involved in the testing of STBs? What was the cost of the inability to test the DTH-S? What was the time-frame for the appointment of component testing vendor for DTH-S?

Mr G Davis (DA) mentioned that about eight million people currently receive free TV by aerials and this means about three million people would need to buy the STB and the majority of these three million South Africans have a low household income. It is clear that the majority of South Africans could not afford to buy STBs that would cost about R600. The presentation did not mention how the five million beneficiaries of the free STBs will be identified. He asked USAASA to provide the list of all 26 companies that had been awarded the tender as well as the value of each contract. There are some valid concerns around the tendering process for the project especially on the issue of competitiveness and fairness in the manner in which the 26 companies were awarded the tender as this goes against the laws of competition.

Section 217 of the Constitution makes it very clear that “when an organ of state in the national or provincial or local sphere of government or any other institution identified contracts for goods and services, it must do so in accordance to a system that is fair, equitable, transparent and cost-effective”. This prescript was clearly violated in the awarding of the tender as this process was not competitive when every single bidder was awarded the tender. Section 38 of the Public Finance Management Act (PFMA) highlights that one of the responsibilities of the Accounting Officer is to ensure that “there is an appropriate procurement in the provisioning systems which is fair, transparent, competitive and cost-effective” and there is no clue that this prescript was followed in the awarding of the tender. It was also not clear whether the legal opinion was sought before the awarding of the tender to all the bidders.

Mr M Kekana (ANC) appreciated all the presentations that had been made by the Department and various entities and added that the localisation of STBs was critically important as it meant that communities were able to benefit from this project. It is understandable that there was a policy of 30% local content for manufacturing of STBs but there should be 100% local content for the installers so that communities would be able to benefit. He suggested that the process for installers of STBs needed to be restarted so that local installers are able to be prioritised as beneficiaries in terms of employment.

Ms R van Schalkwyk (ANC) asked how the process of training installers in the TVET colleges and other education programmes could be monitored to ensure that there would be no delays in the implementation phase and in the identification of qualified installers. There are 11 million householders with TVs and there are very few South Africans that are currently subscribing to DSTV and this showed that there are more than five million people that are in need of STBs. How would DoC go about dealing with this issue? The awareness programmes needed have started already and this should involve public office bearers in order to reach out to the communities on a regular basis.

Ms J Kilian (ANC) asked if SAPO had any measures in place to prevent fraud in assigning the beneficiaries of STBs and to avoid the selling off of the free STBs. She asked USAASA if the cost of STBs would include the aerial installation as well. The DoC was silent on whether any formal agreement had been reached with the Department of Higher Education and Training (DHET) for the training of installers so that this could take place timeously. It is concerning that there are currently so many analogue TV sets in shops around the country and people may be saving to buy analogue TV only to find out that it will be useless without the STBs. She urged the Department to disseminate notices warning people to avoid buying the cheap TV sets that are currently flooding the market.

Mr R Tseli (ANC) appreciated the work that had already been done so far by the Department and the entities but expressed concern that the shortfall of R2 million by Sentech for dual illumination would only be addressed in 2017/18. What would be the impact of this R2 million shortfall on Sentech? What would happen to those that already had more than one TV set, regarding the STB? He asked the Department to share the communication strategy that would be used so that Members could also offer some assistance in their constituency work. There should be clarity on the actual number of households that will be given the STB. The latest figure was said to be eight million and not five million poor TV owning households.

Ms E Prins (ANC, Western Cape) asked if there would be someone responsible for answering enquiries and in cases where people want assistance when there is a fault with the STB and a signal problem. There should be a call-centre to assist poor people with these problems.

Ms M Kubayi (ANC) asked if SAPO and Sentech had made any submissions to Treasury about the shortfalls for the completion of the project so as to ensure adjustments now or in the next financial year. She asked the Department about the status of BDM in neighbouring countries so as to be prepared for possible spillages. The slow pace of the project was the main concern as the country did not meet the 17 June 2015 ASO date as set by the ITU. The implication for Sentech if progress continued to be slow, was the shortfall amount required by Sentech for dual illumination would continue to accumulate. Was the Department still held up by the court case lodged by e-TV? The slow pace for ASO was also impacting SAPO as the entity needed that money to be operational and stable and the sooner the Department starts the rollout of STBs, the sooner the income goes to SAPO as the money was currently sitting at USAASA.

Mr Nkosi responded that the Minister of Communications has been very clear on the beneficiaries of free STBs. The initial number of beneficiaries was five million and this was at the time that this initial policy was adopted. The approved number of five million was set in 2013 and this was based on the household survey that was done around 2008. However, with current unemployment, the number has grown to eight million and the figure that was budgeted for was the initial five million. This did not mean the latest additional three million will not be beneficiaries for this particular project. The UIF funding was aimed at assisting unemployed youth in order to be trained and encouraged to participate in this installer programme as this was seen as a potential to create job opportunities. USASSA was waiting for the evaluation that was still being done on the possibility of using UIF funding to assist young people to be trained as installers and therefore it was still unclear at the moment how much would be required for UIF funding. USAASA was targeting those TVET colleges that were in deep rural areas so as to ensure that the STBs are installed by people within those communities or municipalities.

Mr Nkosi added that the PFMA regulations are indeed clear that the awarding of tenders should follow a credible process and this was exactly what was done by USAASA. The tender was gazetted, documented and published in all local and national newspapers and there were more than 58 respondents and the tendering process was still to be concluded. The installation of STBs is 100% local and 30% local content was only applicable to the manufacturing contents of the STBs. The Treasury instruction note tabulates the 30% of local content as comprising of PC boards, connectivity, the enclosures of the SBTs and the dti was required to certify that the components found in the box are 30% local. USAASA was avoiding a situation where the STBs will be imported from other countries without actually benefiting local people. He assured Members that the list of bidders would be made available and distributed to everyone. USAASA ensured that all the bidders were SABS certified. The focus at the moment was on the certification of DTT boxes and SABS was still experiencing difficulty in concluding the certification process. The Department had taken the lead in this regard in order to expedite the process.

USAASA has developed identification criteria for the five million beneficiaries and there was a public participation process about the qualifying criteria where the focus was on whether the public accepted the payment of 30% in order for government to subsidise it by 70%. However, the overwhelming majority of the public comments said people should be subsidised 100% and this was the response that the Minister took to Cabinet where it was agreed that people should be given 100% subsidy. It was indeed difficult to expect poor South Africans to spend 30% of their small income to pay for STBs and this 100% means those qualifying individuals will be provided with the STBs, antennas and installation for free. There was a legal opinion that was sought for the awarding of the tender to the bidders and this process was awarded a clean audit. The people that will be considered as qualifying for free STBs will be those with an income from R0 to R3200 and those people who already have DSTV and a form of income will not be considered. The STBs are meant for the poorest of the poor, mainly those who are unemployed and without any formal income. USAASA was engaging with the Department on the shortfall for the completion of the project and this would be addressed at length by the Department.

Mr Matabane responded that Sentech has already submitted its proposal to Treasury and the total budget that is available from the DoC for dual illumination was indeed R129 million and the amount that was offered in the presentation was based on the latest figures submitted to the Treasury. It is important to highlight that 85% of the DTT was allocated to SABC and then 15% was allocated to the TV community broadcasters and Sentech was planning to have at least three TV community broadcasters per province and a total of 27 throughout the country. The cost of the community broadcaster subsidy was unknown at the moment as ICASA still needed to license the additional broadcasters. The DoC has currently issued a Broadcasting Electronic Communications Act Community Broadcasting Support Scheme which is open for comments and Sentech was busy collating the comments. This is trying to deal with ways to subsidise the community broadcasters in order to be self-sustainable.

Mr Mlungisi Mathonsi, Acting CEO of SAPO, said that SAPO was aware of growing challenges in its operation but this did not mean that things were at a standstill and any entity that has gone through financial difficulty would require funding in order to be resuscitated. There has been great progress in the turnaround strategy that was implemented and this was putting SAPO in a more promising balance. The funding issues had been addressed and the entity was not expecting any difficulty going forward. SAPO has developed a separate accounting framework for the money that would be trickling in from the BDM project to account for any money generated from the project and this was discussed with USAASA. There are a lot of security measures that have been taken to prevent fraud and corruption in the distribution of the STBs and most of the details regarding this are already with USAASA and Sentech.

Mr van Vuuren explained that all the qualifying individuals will be issued with a unique referencing number during the registration process and this referencing number is synchronised with the serial number of the STB to prevent fraud and corruption. SAPO has also produced various reports and presented to USAASA foreign identify documents as well persons with different identity documents but the same address. There are also comprehensive security measures to be taken to prevent theft and loss of equipment.

Mr Mokoetle stated that Treasury had been very kind to the Department and was always willing to assist with any monies requested to either support Sentech, SABC or the STBs. The Department was in engagement with Treasury to address the shortfall in dual illumination and the Department needs to show the capacity to spend money that has been allocated since 2008 as this money has been rolled over for over 7 years. There had been an agreement that the Department should start spending the money before addressing the shortfall. The Department had sought every bit of information written about digital migration but there were processes that had been undertaken which led to investigations and Special Investigating Unit (SIU) enquiries and the marketing budget was one of those issues. Digital Dzonga was still under investigation by the SIU right now and the Department had looked at the plans that were written and done in the Digital Dzonga although much of the material was not used.

The Department was working on the target of eight million beneficiaries and the challenge with the policy was on funding the five million indigent households. There was awareness programmes done before on the DTT as already indicated but the problem with those previous awareness programmes is that they were not linked to what was happening on the ground. There had been a lot of promises and commitments in the media around this project but most of those promises did not materialise and it will be wise for the Department to be cautious of what is to be said until there is delivery on the ground. The specifications are supposed to deal with security measures especially in ensuring that the STBs are unable to be exported outside of the territory and frequency spectrum of South Africa. There are also features in the device that can be identified and reported when lost or stolen. The ability to prevent theft of devices was very difficult to achieve as it was even for vehicles. The security features are those of basic device security and not those that could provide an impossible kind of safety. The Department had had discussions with the Department of Labour (DoL) and agreed to support the training of installers and the Department was also having discussions with the dti and this was a matter that was being handled very carefully with USAASA. The Department will still need to approach DHET as suggested by Members in order to discuss the way forward on training the installers.

Mr Mokoetle responded that the Department needed to do a comprehensive public awareness campaign and inform the public that the country was now migrating from analogue to digital but it is still difficult to tell people not to buy analogue TV sets now when the integrated digital television (IDTV) sets are unavailable. The analogue TV will be able to work with the STBs and the Department will only encourage people to stop buying analogue TV sets when the IDTV sets are available. People who already had more than one TV set will mostly likely not qualify for a free STB and will be forced to purchase them in the market and if they qualify then the Department would be compelled to subsidise only one TV set. There would be a call-centre to deal with problems and faults with STBs and the signal. Main broadcasters like SABC and e-TV already have call-centres to deal with enquiries and the Department was looking to synchronise those call centres with the one that will deal with complaints and enquiries. There is a feeling from the broadcasters that Sentech can handle all the technical issues involved and the focus was on the synchronisation of the call-centres.

Mr Mokoetle added that only 48 countries out of the total of 91 countries that signed the agreement had managed to migrate from analogue to digital on the deadline of 17 June 2015. In the South African Development Community (SADC) region, only five countries managed to meet the deadline for ASO and the important thing that was done by those five countries was to ensure that there is no interference with the neighbouring countries. However, these five countries were still battling to completely switch off as there still was a need for STBs. SADC countries have extended the deadline for ASO from 17 June 2015 to December 2015 in acknowledgment that this process was complicated and complex to deliver the transition. It is important to take into consideration that 17 June 2015 was not a matter of switching off. Migrating completely to digital was a process. The Department had also visited countries like China and discovered that although the country had started the process of ASO in 2006, it was still struggling to completely move to digital.

The Minister indicated that digital migration was the flagship of the Department and there is awareness of the fact that the country was lagging behind in ASO and this one of the reasons the Department was putting in more resources to ensure that the project was operational. The e-TV court case was not keeping the Department from continuing with the project and therefore there was nothing at the moment that was preventing the Department from the rollout of the project. South Africa needed to have the standard on ID TV. The SABS would have finalised its standard by October 2015. The Department did not ignore what was developed and planned in the Digital Dzonga and was just building up on what was previously planned and conceptualised and the money that was spent to oversee the digital migration was not wasted. DoC was working together with the Department of Telecommunications and Postal Services (DTPS) to address the budget shortfall for dual illumination and the entities had already indicated that there had been discussions with Treasury on the matter.

Mr E Siwela (ANC) mentioned that based on the responses that had been provided, it was clear that the installers will be sourced from TVET colleges and to some extent using the DoL. However, it was unclear at the moment how USAASA would ensure that the identified installers were coming from the various required wards right from the initial stages of recruitment.

Ms Kilian commented that SABC had a very important role to play in making sure that people are able to move to BDM. The Department should be putting pressure on SABC to ensure that there is local content in local languages as it is understandable that there should be a multiplicity of programmes to accommodate various South Africans. Mauritius had already migrated to BDM but was still experiencing problems and it was essential not to undermine the importance of STBs. The Department needed to take lessons from these countries, in order to ease up the process going forward.

Mr Davis said that it was evident that there is a gap where three million people will have to go out and buy the STB and these people are mostly indigent. It was a mistake to say that these people could afford to buy the STB. Mr Nkosi had affirmed that there are three million people that would need to be catered for in the subsidisation of STBs and the provision would be made for them at a later stage. This shows that there would be a need of an additional R2-3 billion. He asked why there was a discrepancy on who should qualify for the STB subsidy. How was the Department going to find the money to accommodate the three million people that were to be catered for at a later stage. He again requested the list of the companies that had been awarded the tender so as to see the value of the contract for each bidder. Section 2(1)(f) of the Preferential Procurement Policy Framework Act (PPFA) states that “the contract of the tender must be awarded to the tenderer that scored the highest points” and not tenderers. Which tenderer scored the highest points in the award of the tender for the project?

Mr Mackenzie said that SAPO was currently trading as insolvent and the fact that the entity was losing about R100 million a month was a growing concern. It was unclear how SAPO would be able to handle the finances that would be coming as soon as the project became operational. He asked if USAASA had any contingency plan to deliver STBs to the SKA areas of Northern Cape.

Ms Tsotetsi stated that it will be important for the Committee to be informed of the name of the manufacturers and ownership profile in accordance with the four racial groups in the country so as to assess service delivery and transformation. She wondered whether there was any mechanism in place to detect the problem of “fronting” as this was a common practice in a big project like this one.

Ms Shinn added that there was still lack of clarity on the processes that were followed on the awarding of the tender to the bidders as the assumption was that there would be a winning tender and then it was suddenly announced that there are 26 bidders that had been awarded the tender. The tender said there should be four winners of the tender and it was important for USAASA to explain on the legality of this process. She asked if Treasury was on board about funding the extra three million people to be subsidised with free STBs.

Mr Kekana appreciated that the Department and the entities were able to deal with the tendering process. He expressed dismay that Mr Nkosi kept on saying that “they a dealing with a credible process here” about the tender process as it simply implied that Members should just shut up as they did not know what they were talking about. It is important to insist that USAASA provide the Committee with the whole information on the tendering and Members should not have to beg for this information.

Ms Kubayi noted that the Department had initially decided to subsidise five million households for the STBs and the first category of beneficiaries was R0-1500 would be subsidised. However, the Portfolio Committee on Telecommunications and Postal Services appealed that it was impossible for a person who was unemployed to pay for part subsidisation of the STBs by paying R260. It is therefore essential to take into consideration that Members were part of the process that pushed the number of beneficiaries from five million to eight million households. The President had said that the project would be implemented in phases and therefore would continue for two financial years.

Mr Nkosi responded that with the recruitment of the installers, USAASA was required by the PFMA to advertise tenders through the government gazette for the procurement of goods and services that exceed R500 000 and the recruitment of the installers has to go through this process. It was unfortunate that USAASA was unable to go ward by ward in search of the installers and was using the existing structures to encourage people to respond to this kind of training. The wining tenderer would be required to appoint people from various areas in order to be employed to do the installation. Members would be provided with the full list of the companies that had been awarded the tender and it would also provide the name of manufacturers and owners of those who owned the means of production.

A policy was developed in order to guide how the tender for the project was to be awarded and the priority of the Department together with USAASA was to target the new entrants in the Information Communication and Technology (ICT) sector. It was never the intention of government to award the tender to one company and it was impossible to award almost R2 billion to one company. Therefore the intention of the tender was to ensure that it was opened up as wide as possible. USAASA has ensured that “fronting” was rooted out by enforcing the manufacturers to be as transparent as possible in providing detailed information on the owners. This could be given to Members as requested. He sincerely apologised if it had come across as undermining the question asked by Mr Kekana on the tendering process and assumed that he was clarifying the question that had been asked.

Ms Phumla Radebe, Chairperson of USAASA, indicated that it was an instruction from government that USAASA needed to work with SAPO on this project. USAASA will be focused on a contingency plan in the event SAPO is unable, logistically, to meet its obligations. She assured the Committee that there was never the intention to undermine or question what was asked by Mr Kekana and retracted the comments made unconditionally. The process of the project was still not complete as the final appointment of installers still needed to come to the Board of Universal Service and Access Fund (USAF) and the matters that came out strongly today in regard to the selection of STB installers will be taken into consideration.

Mr Frans Matlala, SABC CEO, appreciated the opportunity to make a contribution in the meeting and assured Members that the SABC is ready for this massive project especially when one considers the infrastructure in place including the encoders and decoders. There is a dimension called an Electronic Programme Guard and SABC was looking to partner with other broadcasters on this aspect. SABC already has had a DTT call-centre for a very long-time and was ready to partner with Sentech, which would provide the first line of support. There are other dimensions that relate to electronic or digitalisation of the content as well as the provision of digital storage framework and these are types of projects that are on-going and fairly advanced.

Mr Hlaudi Motsoeneng, SABC COO, added that SABC had been ready for local content as already released Request For Proposals (RFP) Book to ensure that there is production of local content. SABC has also intervened to ensure that small, emerging production houses are able to supply content for SABC and it was commendable to see actor interest in the production of local content in different languages from different provinces.

The Minister pointed out that the President had announced during the 2015 State of the Nation Address (SONA), that there would be a turnaround strategy for SAPO and the Department had managed to deal with a lot of capacity issues affecting the operation of the entity so as to be to deliver on this project. The Department would be finalising the appointments of the SAPO Board on 12 August 2014 and there are contingency plans in place in case SAPO is unable, logistically, to meet its obligations for this project but it would not be wise to write-off the entity at the moment as it had recovered from financial difficulty. On taking lessons from Mauritius, she noted that the country did not have a national standard for the STBs and compliance regime and had allowed inferior STBs in the market which could not be supported.

The Minister added that South Africa has now developed a national standard to protect consumer investment and put in place a compliance regime, hence there was also the involvement of SABS for the accreditation of the STBs. The public awareness campaign will mostly emphasise that South Africans should not buy cheap STBs which would not be complementary to ASO. The three million households are those who can afford to purchase the STBs and the cost of the STB was to be around R400-600 and the Department will monitor the uptake of the STB during the dual illumination in order to make any changes where required. The project was basically about the availability of the STB and there should be compliance with policy and ensure that historically disadvantaged companies are able to benefit from this massive project. The DoC was working together with the DTPS and all relevant entities to ensure that the project becomes a success.

Mr Nkosi added that USAASA has developed a training programme that is accredited by the Sector Education Training Authority (SETA) which the UIF is requested to fund and should that come through; the training will take place through TVET colleges based in rural areas. It needs to be emphasised that installers need to be trained as they would be the ones taking responsibility when there is a fault in a STB. USAASA will be doing the vetting of the installers that will be brought in by the bidders so as to ensure that these people are well-trained and qualified to perform the job of installing the STBs.

The Minister said that the Department was having discussions with the DoL and National Electronic Media Institute of South Africa (NEMISA) on the training of the installers and this project is aimed at contributing to the reduction of youth unemployment in the country.

Ms Prins congratulated the Department on the work that had already been done so poor people in desperate need of the STBs will be able to watch programmes that are difficult to access.

Ms Kubayi appreciated the work that had been done so far. She expressed concern about the budget shortfalls that had been identified as this was likely to impact on the operation of this massive project. This matter would need to be resolved in preparation for the next financial year. She urged Members to give support to SAPO in order to be able to play its role in the delivery of STBs.

The meeting was adjourned.