Show me the money

Government insists it’s full steam ahead with the digital migration of South Africa’s television broadcasting, but who is going to foot the bill and why is the process not being used to introduce much needed competition to the sector?

This week at Constitution Hill, with grand fanfare, Minister of Communications Siphiwe Nyanda launched the Digital Dzonga Advisory Council, the body appointed to steer the country’s broadcasting sector through the choppy waters of digital migration.

The process will see South African’s broadcasting signal switched from analogue to digital, in line with countries around the world that are making the move to free up radio spectrum, a scarce resource.

This will mean all South Africans will have to buy a set-top box, which will convert the digital signal back to analogue, so it is compatible with their old analogue television sets.

Nyanda, who arrived at the event in his controversial new BMW 750i, appeared to be well out of his depth at the launch event, referring to the switchover as “monologue to digital”.

The minister also did not deal adequately with queries about the funding shortfalls government is facing in relations to the digital migration process, specifically its set-top box subsidy programme and the costs of distributing both digital and analogue signals in the switch-over period.

It has committed just short of R1.18-billion to Sentech, South Africa’s state-owned signal distributor, but will probably need to fork out a further R1.16-billion to the parastatal.

Government is also facing a major shortfall for its set-top box subsidy programme, with R400-million on the table, but an estimated R2.45-billion actually acquired.

On top of this, Nyanda said that only R20-million had been allocated for the vast educational campaign that will be needed to inform consumers about the digital migration process and he admitted that he was going to have to lobby the treasury for more funds.

The migration process means that since November 1 2008, South Africa has been broadcasting television signals to both analogue and digital and will continue to do so until April 20 2012.  This is the “dual illumination period”.

But this period of dual signal distribution is a costly exercise and broadcasters have called on government to foot the bill.  Nyanda confirmed during the launch event that government would fork out for dual illumination, stating that the government had set aside “R300-million” for this.

But Sentech says the operational costs of the dual illumination process will be close to R918-million and so far government has committed only R330-million.

If government does not meet the R588-million shortfall, broadcasters will have to pay Sentech for transmitting their digital signal.  Sentech has also requested R960-million from government for capex expenditure related to the digital migration process, of which government has committed R845-million, leaving a shortfall of R115-million.

“Sentech is engaged with government on the provision of the total amount that will successfully ensure the migration from analogue terrestrial television to digital terrestrial television for South Africa,” said Dingane Dube, Sentech’s executive of regulatory and government affairs.

Dube said that the R918-million that it requested from government is for the operational costs of running two multiplexes.

Dube said the money government has committed is for two multiplexes.  But the Independent Communications Authority of South Africa (Icasa) allocated three multiplexes earlier this month when it published its digital terrestrial television regulations.

This would mean that Sentech would require a further R459-million for the additional multiplex, assuming the costs of running each multiplex are equal.

This would place government’s shortfall owed to Sentech for the entire digital migration process at R1.16-billion.

Dube said that the Digital Dzonga launch Nyanda made a commitment to fund the entire operational expenditure associated with dual illumination through Sentech.

“Sentech will provide digital broadcasting signal distribution at no cost to broadcasters if government commits the entire funding requested by Sentech,” said Dube.

Nyanda also confirmed at the launch that government has set aside R400-million to subsidise the set-top boxes South African consumers will have to buy.

Government plans to subsidise the poorest 60% of South Africa’s 9.1-million television households so that the set-top box, which will cost in the region of R700, will cost these poor households only R210.

But Sentech points out on its website that a simple calculation would place the estimated cost of this subsidy close to R2.45-billion, which means government is currently sitting with a shortfall of more than R2-billion.

Attempts to get comment from Nyanda and the department of communications proved unsuccessful.

Digital TV migration discussion

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Show me the money