Sentech can't meet DTTV targets

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 13 Nov 2008

State signal distributor Sentech is in danger of not meeting its digital TV migration targets, as long as it remains under-funded.

The company issued this warning to the Parliamentary Portfolio Committee on Communications this week, saying it has a shortfall of R95 million for digital TV migration. It also requires R3.28 billion to build its countrywide broadband network.

For at least four years, the national signal distributor has been pleading for more funds. Its latest annual report shows that if its funding shortfalls are not made good soon, it will be unable to meet some of the timelines government has set for it. The annual report also shows Sentech has been unable to resolve the poor relationship that exists between it and National Treasury.

“It is not much fun being an organisation which National Treasury decides it has a problem with. However, I don't know exactly what the problem is,” Sentech non-executive chairman Colin Hickling told the members of Parliament.

Funding for digital terrestrial TV migration shows National Treasury has allocated R95 million and R120 million for the first two years that includes the 2007/8 financial-year. This was to pay for the preparation and pilot projects. However, National Treasury has only allocated R150 million per year for the following three years, leaving a shortfall in funding of R112.7 million in the 2008/9 year, R81.4 million in the 2009/10 year and R100.9 million in the 2010/11 year.

The switch on to digital TV happened at the beginning of this month and the analogue broadcasting system is due to be turned off on 1 November 2011.

Slipping objectives

In terms of the objectives set for Sentech, it is supposed to have 40% of the population covered by a digital TV signal by February next year. However, Sentech CEO Sebiletso Mokone-Matabane said these targets were unlikely to be met if funding is not forthcoming.

“The cost of the equipment we need to obtain in Europe is rising as the rand depreciates against the euro. This means more funding will probably be needed as the costs continue to rise and the shortfall is not made up,” she said.

Hickling also pointed out that the issue of who will pay for the cost of having two TV transmission systems broadcasting, during the dual illumination period, has not been resolved. The cost to Sentech was projected to be about R951 million.

“In Sweden, the government covered this issue by giving a soft loan to the national signal distributor and in Spain the broadcasters paid for it. The issue is not unique to SA, but Sentech cannot afford to pay for it,” he said.

Stumbling blocks

An indication of where the differences between Sentech and National Treasury lie is in the plans to build the national wholesale broadband network (NWBN). It is aimed at covering areas of the country, particularly rural areas, that the commercial operators either refuse or are reluctant to cover.

A key part of the NWBN is to connect 233 Dinaledi schools, those schools that have a particular emphasis on teaching mathematics and science, by March next year.

“National Treasury wanted us to roll out the network in the urban areas first, make money there and then roll it out to the other areas. But that was not the mandate given to us by the Department of Communications,” Mokone-Matabane said.

Sentech's annual report says that, should the funding requirements and business plan not be approved, the March 2009 deadline would not be met. Only R500 million of the total R3.8 billion had been allocated and so far none of the schools have been connected, although Sentech says the preparation of the sites has been completed.

Members of Parliament lent Sentech a more sympathetic ear than they did to the Department of Communications' annual report presentation. Questions were asked about Sentech's staffing issues, such as morale and shortage of skills; whether the NWBN would be part of the DOC's Umojanet project, to connect landlocked countries with a fibre-optic network; and why was Sentech funding its participation in undersea cable projects to the tune of R21 million when it was so short of funding in other areas.

Replies to these questions were that the staffing problems were related to the overall funding issues and that the NWBN would not be part of Umojanet. It was also indicated that the participation in the undersea cables was due to a situation where Telkom charged such a high price for international capacity that it made sense for Sentech to participate in an undersea cable project directly.

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