Digital TV set-top boxes: Subsidies and targets

Approximately 6% of South African households are currently expected to receive subsidies from the Universal Service and Access Fund for the set-top box (STB) required to receive digital TV signals by the end of the 2013 financial year, stated a National Treasury document released during the budget speech.

The Department of Communication (DoC) announced in January 2011 that South Africa’s transition from analogue to digital broadcasting is to be completed by December 2013.

As part of the budget speech delivered by the South African Minister of Finance, Pravin Gordhan, National Treasury also released documents detailing the allocated budget, expected expenditure and expected outcomes for that money for various government departments.

According to the document covering the South African government’s communications spend, the Universal Service and Access Agency of South Africa (USAASA) was allocated R180 million in the 2010/11 financial year to subsidise poor households to purchase set top boxes as part of the migration from an analogue to a digital broadcasting platform.

USAASA is to receive R220 million in the 2011/12 financial year for the subsidies.

The allocation is expected to result in 448,980 STB subsidies for poor television-owning households in the 2011/12 financial year and 408,163 subsidies in the 2012/13 financial year.

According to population projections from UNISA’s Bureau of Market Research there are expected to be over 14.5 million households (14,689,879 ) in South Africa by 2013. Using this estimate, the approximate percentage of South African households to be subsidised is 5.8%.

It should be noted that no subsidy targets are set for USAASA for the 2013/14 financial year, though analogue switch-off is set to happen within that year (December 2013).

No households were subsidised in the current financial year as “the process has been delayed due to the review of the digital terrestrial television standards.”

The DoC caused confusion and a heated battle between digital standards when it announced that South Africa was reconsidering its earlier decision to use the European DVB-T standard for digital broadcasting.

In January 2011 the current Minister of Communications, Roy Padayachie, finally announced that the DoC had selected DVB-T2 as South Africa’s digital terrestrial television (DTT) broadcasting standard.

Manufacturing and subsidy strategy deadlines

The budget document detailing government’s communications spend also lists a number of other milestones expected of the Department of Communications.

One of these is a local and digital content development strategy that has to be submitted to Cabinet by August 2011. Another is a set-top box “manufacturing sector development strategy” and subsidy scheme for poor television owning households that is set to be presented to Cabinet by June 2011.

It is understood that the manufacturing strategy could have a significant impact on the cost of STBs in South Africa.

During the battle between DTT standards last year, a proponent of the ISDB-T standard which competed against DVB-T and DVB-T2 for South Africa warned that industrial policy determines the cost of STBs, not necessarily the standard.

Masa Sugano, first secretary of economic and commercial affairs at the embassy of Japan in Pretoria, held up the current SANS specification for STBs and called it “a recipe for an expensive STB.”

He explained that both domestic and international competition in the STB market is important, as is the ability to produce lower specification STBs.

Gerhard Petrick, who is active within the technical committee of SADIBA, explained that the SANS specification was mostly driven by the DoC. Requirements such as interactivity and STB control came from the DoC and not industry.

“Without these things the DoC deemed mandatory for a minimum spec STB one could very well derive a lower cost STB,” said Petrick.

Allowing cheaper, lower spec set top boxes seems to require sacrificing the knowledge that all your citizens will have televisions with a certain minimum capability, however.

In a report prepared by the National Association of Broadcasters in South Africa (NAB), Farncombe Technology warned that optional specifications risk being ignored. “As manufacturers compete for prices and time-to-market they are more likely to avoid implementing additional features,” the report says.

“As a result, the base of devices with middleware and return paths to receive advanced interactive services is fragmented and may not provide the minimum addressable market for broadcasters to offer new services economically.”

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Digital TV set-top boxes: Subsidies and targets