R6bn funding hole for digital TV

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 17 Apr 2015
Government is seeking ways of coming up with more money for digital migration.
Government is seeking ways of coming up with more money for digital migration.

South Africa's almost 10-year road to digital television is going to cost at least three times what government initially anticipated, and the state will have to find at least another R6 billion more in cash.

This is according to industry commentators, and comes after the Universal Service and Access Agency of SA (USAASA) revealed set-top boxes and satellite dishes or aerials will cost R800 for each of the millions of homes in which the state will install boxes.

As a result, decoders alone will cost a minimum of R4 billion - a figure that could balloon to R6.5 billion if government supplies free boxes to eight million homes instead of the initially mooted five million. This amount is also without the cost of installing decoders, which could add as much as R2 billion to the project.

Never enough money

However, USAASA is underfunded and government is going to have to come up with billions more so SA can successfully migrate. SA has been moving to digital TV since 2006, but will now miss the international 17 June deadline as the project has stalled several times.

USAASA CEO Zani Nkosi says the agency's "funds will never be sufficient". He says it will engage government to raise the balance, and currently only has enough cash to cover border areas and the Northern Cape - where the Square Kilometre Array is being rolled out - which are priority areas.

Nkosi says the available funding will cover slightly more than 1.5 million boxes at the moment as USAASA has R2 billion available. He says the agency has a calculated budget that is based on having to provide boxes to eight million homes.

ITWeb understands the Department of Communications, which has overall migration oversight, is in talks with National Treasury to figure out where the money will come from. In addition, telecommunications and postal services minister Siyabonga Cwele has apparently hinted the levy telcos pay to the agency could be moved from 0.2% of turnover to 1% of income.

Escalating costs

Marian Shinn, Democratic Alliance shadow minister of telecommunications and postal services, explains that as set-top boxes will cost R800 each and USAASA only has R181 million to spend, only 226 248 decoders can be provided this year.

These, says Shinn, will go mainly into the Northern Cape and border areas. The whole process will take up about 82% of USAASA's budget for the next year, leaving it without any cash to fulfil its mandate in terms of connectivity, she adds.

Shinn notes the "runaway" spending could increase because, although the Broadband Digital Migration policy only provisions for five million homes to get free boxes, USAASA has indicated this could be extended to 8.2 million houses.

As a result, providing set-top boxes and aerials or satellite dishes alone will run to R6.6 billion. This is without taking into account the amount needed to pay installers, for which USAASA has just issued a tender, or the almost R1 billion the post office will fork out for distribution.

LINK Centre senior lecturer Charley Lewis has said installation and configuration of the subsidised boxes could add a billion or two to the rollout.

Shinn says the project is "absolutely unaffordable". To qualify for free decoders, South Africans need to have a TV and valid licence, and household income cannot exceed R3 200 a month.

Government has known for years there is not enough funding, says Shinn. She notes it is irresponsible to kick off a project such as this without enough money as this is a "political landmine".

ICT commentator Adrian Schofield adds the deal could escalate to as much as R10 billion from government's initial set-top box subsidy of R2.45 billion.