SA is the only country in the Southern African Development Community (SADC) with the manufacturing capability to produce the 30 million set-top boxes that will be needed when the region switches to digital broadcasting.
The sub-Saharan region's shift to digital television has the potential to be the one of the South African economy's single biggest job creators, as the region admits it does not have the capacity to make its own boxes and looks to SA to fill demand.
Moving to digital television will spur the creation of a new industry, with the potential to create a decoder manufacturing sector with space for about seven players.
SA, along with most SADC countries, is going digital with the European DVB-T2 standard. The region has set itself the ambitious target of turning off analogue broadcast by the end of 2013, a year-and-a-half before the global deadline.
Migration will create a new electronics sector, which - in turn - will boost government's job creation goals. Communications minister Roy Padayachie previously indicated that about 2.4 million direct and indirect jobs can be created through SA's set-top box manufacturing plan.
Digital migration is an “enormous opportunity” to create new industries and jobs, Padayachie said yesterday, speaking at the opening of Altech's new decoder factory, in Durban.
About nine million households in SA will need to buy set-top boxes to convert the new signal for viewing on older television sets. In addition, countries in SADC will need decoders, taking the total potential market demand to about 30 million.
Padayachie says 22 SADC countries are looking to SA to make decoders, admitting they cannot create the manufacturing capacity needed. The minister is also heading up the region's committee to drive digital adoption.
By the end of this month, government expects to wrap up key issues that will give the green light to existing manufacturers to start manufacturing decoders, and for new entrants to invest in production facilities.
Huge demand
SADC wants SA to provide decoders rather than importing them from Europe or China, says Padayachie. He expects a total of about seven manufacturers in SA. “We will have to see how they respond to the challenge before them.”
Set-top box producers will contribute towards the ICT sector's aim of creating a million jobs by 2020, notes Padayachie. The sector will also be the catalyst to revive SA's flagging electronics industry within the next five years, adds the minister.
By 2020, Padayachie wants to see a thriving electronics sector that is able to produce decoders for SA and the rest of Africa.
“Digital migration creates an opportunity to build a globally competitive export sector,” says Altech CEO Craig Venter. The economic spin-offs will be huge and range from technical support to retailing, he explains.
Venter anticipates about four major manufacturers locally to fill the demand, with a value chain of smaller enterprises being created. He expects new manufacturers to “pop up” to cater for the need.
However, Venter cautions that a manufacturing facility is not something that can be developed overnight, as SA is still suffering from a skills shortage. He says quality is vital: “You can't have boxes going into the SADC that don't work.”
To do list
Before manufacturers can start making boxes, vital aspects of SA's migration process still need to be wrapped up and government is working to finalise these by the end of this month.
Padayachie says a key challenge is sorting out standards for set-top boxes, without which manufacturers cannot push the start button to make decoders.
The South African Bureau of Standards should wrap up standards by next month, comments Padayachie. Manufacturers have indicated it will take around eight months for boxes to be on shelves after the standards have been finalised.
Government is targeting a switch-on date of April next year, which gives the industry only eight months to design and manufacture decoders for the retail sector.
Padayachie's biggest concern is finalising the subsidy scheme for set-top boxes and sorting out how it will work in reality. Cabinet previously set aside R2.45 billion to subsidise boxes for poor households in SA.
In addition, the department also needs to work out how the subsidised boxes will be dispersed. However, this scheme is set to be finalised by the end of the month, he says.
The set-top box strategy, which has been on the cards since the middle of 2009, should receive Cabinet approval by the end of this month, notes Padayachie. The plan will guide emerging electronics manufacturers to take advantage of digital migration and create a new electronics sector in SA.
Once the strategy has been wrapped up, the department will be able to select preferred manufacturers to make subsidised boxes by November, Padayachie previously said.
Padayachie adds government needs to make sure there is a coordinated strategy for moving forward. At the moment, he explains, the process is too decentralised. The department has created a digital migration office, staffed with about 30 people, which is coordinating SA's migration to digital.
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