Emerging empowered set-top box manufacturers are fighting to stay alive while the Department of Communications (DOC) dithers about which digital television standard to implement.
In 2006, SA elected to adopt the European DVB-T standard as the country switches from analogue to digital broadcast in anticipation of a global analogue switch-off in 2015. However, in April, the department controversially started to review the adoption, and proposed looking at the Brazilian adaptation of the Japanese ISDB-T standard.
Industry, which has collectively spent about R300 million on gearing up for digital TV, is waiting for a decision to be made. Until then, production lines are stationary and smaller companies are desperately seeking alternative sources of income.
In anticipation of going digital, several small companies set up production facilities to make set-top boxes (STB). The boxes are required to convert the old analogue signal so it can be viewed on older television signals.
About 10 million households will have to buy decoders, and the DOC has set aside R2.5 billion to subsidise STBs for the poorest households that cannot afford the R700 the boxes were expected to cost.
Industry expected to benefit from this market, as well as opportunities to export into Africa. However, at least two companies are scrambling to find alternative sources of income, or face closing shop. The total value of the sector, or how many companies have specificaaly started up to take advantage of the move to digital, is not known.
Skeleton staff
Arion Bomema Technology (ABT) is facing the threat of closing its doors if a decision is not made soon, and has already asked at least two senior staff to seek alternative employment. President and CEO Muzi Makhaye says the company has virtually come to a stand still because of government's indecision.
However, apart from confirmation of receipt of his letter and a meeting to discuss the issue, the matter has not been resolved, he says.
Makhaye explains that the empowered company transformed itself from an importer to an electronics manufacturer in 2006 in anticipation of SA moving to digital on the DVB-T standard. He says shareholders invested millions in production and development facilities.
Empty promises
ABT wanted to take advantage of government's promises that a local electronics manufacturing sector would be established, and there were huge opportunities to export STBs to Africa. “It gave us an opportunity, as a BEE company, to produce boxes here at home and look to the world as a potential market,” says Makhaye.
He says the company's shareholders have lost interest and its highly-qualified CTO and factory manager have been asked to seek alternative employment. Makhaye, however, will not disclose how many staff the company has, due to competitive reasons.
In addition, ABT has had to extradite itself from two factory leases, as it has no need for the space. Makhaye says this was a painful process.
The company is currently looking for other opportunities in the electronics sector to stay alive. Makhaye says if the ISDB-T standard is chosen, the company will end up importing boxes for resale and will not be able to create the 300 jobs it had envisioned in its business plan.
“We are in the situation not because of our lack of thinking... We are in this situation because of our own government,” says Makhaye.
On hold
Black-owned manufacturer Seemahale's STB manufacturing plans have been put on ice while it waits for a decision from government. Chairman Thabo Lehlokoe says the company had focused its energies on making STBs, and the current situation is “very tough”.
Lehlokoe explains that although STB manufacturing is only one part of what the company does, if the delay to choose a standard continues for much longer, the company will close its doors. He says Seemahale is a small company that was trying to build itself up.
The company is running on skeleton staff and its plans to create between 60 and 100 jobs and move into a factory to start manufacture have stalled. Lehlokoe says the company cannot afford to hire people when there is no clarity. “It's a very frustrating situation.”
ITWeb recently reported that other companies have shifted focus away from STB production. David Murray, CEO of Somerset West-based Elprom, said his company had stopped budgeting for STB manufacture, because of the uncertainty around what standard would happen.
Graham Meyer, CFO of Tellumat said his company has other product lines, and the impact of the delay has been minimal. However, the company cannot benefit from the potential STB market.
The DOC was not immediately available to comment this morning.
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