Set-top box specs wrapped up

Johannesburg, 14 Jul 2009

While the manufacturing specifications of set-top boxes have been finalised, manufacturers and distributors are waiting for government to issue a tender for subsidised decoders.

SA is in its three-year window of switching from the obsolete analogue broadcasting system to a new digital format that will allow a greater number of channels and more efficient use of spectrum.

Set-top boxes are needed to turn a digital signal into one that an analogue TV can display. Both Allied Technologies and Ellies are expecting manufacturing and distribution of these decoders to begin soon.

According to Altech UEC's business development director, Anton Lan, the technical committee dealing with the specification for the South African Bureau of Standards has wrapped up the process. “We are now just waiting for [the specifications] to be published and we expect that in the next few weeks, possibly days.”

Ellies CEO Wayne Samson says the company also hopes to have sign-off soon and expects the boxes to roll off production lines in the first quarter of next year. Ellies will then sell the boxes, branded with its logo, in retail outlets.

Waiting for Godot

However, despite the imminent publication of a specification, government has yet to issue a tender for either manufacturing or distribution of subsidised set-top boxes.

Last year, Cabinet approved R2.45 billion for the subsidisation of the decoders to the five million poorest households, with the expectation that the final costs of the units would be between R400 and R700.

Both Ellies and Altech UEC are gearing up to serve the retail segment of the market, meaning those households not receiving a subsidy to buy a decoder. Samson expects Ellies to take the lion's share of the retail market, since it already distributes devices for MultiChoice.

Ellies also wants to distribute the subsidised set-top boxes and is in talks with government. However, no tender has yet been issued for distribution, adds Samson.

Altech UEC is in a similar position. “We would welcome the opportunity to participate; however, we have been given no contract by government to manufacture for the subsidised segment.”

Steven Ambrose, MD of strategy at World Wide Worx, says he is concerned that tenders have not been issued for manufacturing of subsidised boxes. "Within the timeframe allowed, I don't believe there is any manufacturer in SA that can ramp up sufficiently quickly."

There has been talk of pushing the local deadline to switch off analogue to 2013. The international D-Day is 2015.

However, Lan says it is more a market constraint than a manufacturing constraint. “Give us the orders and I am confident we can produce; the capacity does exist to meet demand.”

He says a bigger problem lies in the fact there are only three years left for people to start migrating. “It is unlikely that the take up of the migration will be as fast as three years.”

Open for interpretation

The set-top boxes are being built with several key requirements: MPEG4, a USB port, and a large memory footprint.

Lan explains that the specifications had to take into account both cost savings and the fact that technology changes fast. “We had to try and find a balance between a forward-looking device, without being cost intensive.”

However, there are certain aspects to the standard that require input from broadcasters, and Altech UEC would need clarity on those before it could start to order parts. He explains that control standards (security, for example, when software upgrades are required) of the device have been left for the broadcasters to specify, which is information the manufacturer will need before being able to proceed.

“The outcome of the final cost of the box is dependent on the distribution chain. Altech UEC competes on an international stage and we can compete effectively.”