Only a sixth of DTTV subsidy allocated

Johannesburg, 12 Feb 2009

National Treasury has only allocated a sixth of the R2.4 billion that communications minister Ivy Matsepe-Casaburri initially said was needed to subsidise the purchase of set-top boxes (STBs) by needy households.

According to the estimates of national expenditure, released yesterday following finance minister Trevor Manuel's budget speech, the Universal Service and Access Agency of SA (USAASA) will receive R400 million, over a period of two years, for these subsidies. This will happen in two tranches - R180 million in the 2010/11 financial year and R220 million in the following year.

USAASA will also receive R50 million, also split into two tranches of R20 million and R30 million in 2010/11 and 2011/12, to help build its capacity for administrating the subsidy disbursements.

Matsepe-Casaburri said in post-Cabinet briefing in August that a total of R2.4 billion had been green-lighted by Cabinet to help subsidise an estimated 7.3 million households so they can afford to buy STBs. The devices are expected to cost about R700 each.

This is necessary as the country has embarked on a three-year digital TV migration strategy that entails switching off the aging analogue system in November 2011.

Neither the Department of Communications nor National Treasury officials were available for comment today.

However, one source says the extra money needed may come from the universal service contributions that are expected to increase this year, as value-added network services become licensed as telecommunications operators.

Matsepe-Casaburri has hinted in the past that she is also looking at raising these contributions, from 0.02% of a company's turnover, to a full 1%.

Treasury officials said yesterday that the subsidy will be managed by USAASA and will “flow” through the Universal Service Access Fund.

According to one treasury official, USAASA will be compensated for the distribution of the funds.

“The DOC is planning a large drive to distribute the boxes and that will require adequate funds,” the official said.

For the management of the fund, the agency is being compensated across all three years of the medium-term expenditure estimates. This year, it will receive an additional R10 000, next year another R40 000 and in the 2011/12 year it will get R55 000.

“USAASA will need funding to manage the subsidy distribution and the first instalment is intended as a start for it,” explained the official.

The process is still in the discussion phase; however, the official notes that, with the funding in place, the framework that will dictate how the subsidies will be allocated and how USSASA will deal with capacity, will be a formality.