Just shy of a year after the production of set-top boxes (STBs) was put on ice, it has been revealed the manufacturers of the digital migration decoders have taken legal action for losses incurred.
Last year, the Universal Service and Access Agency of SA (USAASA) instructed manufacturers to suspend production until further notice.
At the time, USAASA said its decision to suspend production followed the Supreme Court of Appeal's ruling that use of unencrypted STBs was "unlawful and invalid" and should be set aside.
Although 26 bidders were awarded the tender to produce STBs and associated electrical equipment for digital migration, USAASA contracted three manufacturers ? BUA Africa, Leratadima Marketing Solutions and CZ Electronics ? to produce the first batch of STBs.
According to the agency, BUA Africa was required to manufacture direct-to-home STBs, while the other two entities had to manufacture digital terrestrial television (DTT) decoders.
It now appears the manufacturers are looking to be compensated for exchange rate losses incurred as a result of USAASA's suspension decision.
In a written parliamentary response, telecoms minister Siyabonga Cwele confirms three service providers have separately declared a dispute for arbitration.
Only Leratadima and CZ Electronics have filed their claims with the Arbitration Foundation of Southern Africa, says Cwele.
However, according to the minister, USAASA is not contractually liable to the service providers to pay for the variance in the exchange rate.
Cwele points out it was the responsibility of the service providers to hedge against fluctuations in the exchange rate.
"This was an express term of the purchase orders which are an integral and constitutive part of the agreements between USAASA and the service providers. The service providers at their own risk failed to hedge themselves against the fluctuation in the exchange rate. USAASA did not commit to pay the service providers for the variance in the exchange rate.
"In so far as the claim for consequential loss is concerned, the supply and delivery agreements with service providers stipulate that neither party shall be liable for the special or consequential damages suffered by the other party arising out of the agreement howsoever arising."
Playing catch-up
SA missed the 2015 deadline set by the International Telecommunication Union for all countries to migrate from analogue to digital broadcasting.
The communications department began the digital migration process in border-lying towns, as these households require the use of encrypted STBs for DTT.
While the process to migrate the rest of SA homes from analogue to digital TV is up in the air, pending a Constitutional Court judgement, the department continues to lead public awareness campaigns to encourage citizens to register for STBs required to transmit digital signals.
The highest court in the land will determine the technical specifications for subsidised digital TV decoders.
Government has committed to giving five million subsidised STBs to poor TV-owning households.
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