Emerging electronics manufacturers have given up hope on SA's migration to digital television being a catalyst to ignite the sector and create employment, saying endless delays have led to wasted investment and lost opportunities.
SA's long-delayed move to digital television, the biggest step in local terrestrial broadcasting since switch-on in 1976, was meant to drive a flagging electronics sector and create thousands of jobs.
However, although the state has put some measures in place to boost the sector, such as the Broadcasting Digital Migration Policy, which requires that set-top boxes (STBs) be sourced from local manufacturers, with minimum local content of 30% and a 15% tariff on fully-built boxes, the emerging sector is dead.
As part of migration, Cabinet approved an STB manufacturing sector development strategy, which was gazetted last September. The strategy aims to "lay a foundation for the long-term growth and development of the electronics sector in general", aiding economic growth.
Cabinet also approved a scheme of ownership, which will see the state subsidise 70% of the cost of a box for five million poor households. According to the strategy, the subsidy "serves as an incentive to encourage new players, especially manufacturers owned by previously disadvantaged individuals, thereby transforming the industry".
Laudable aims
The strategy focuses on those areas where SA has the necessary expertise to ensure the final assembly of STBs locally for domestic and export markets. It aims to increase the sector's contribution to the real economy, improve growth and facilitate job creation.
It also seeks to facilitate investment into the upgrading and establishment of local STB manufacturing operations, bring about transformation, and promote innovation and research and development. It notes that the decoder-manufacturing sector is dominated by a few manufacturers that do not have the capacity to make all 11.5 million decoders.
"Interventions are required to ensure that there are more players in the market in order to satisfy the demand." South Africans will need decoders to convert the digital signal - DVB-T2 - for viewing on analogue sets.
The Department of Communications (DOC) says the strategy, if fully realised, will lead to the sector creating 23 500 direct and indirect jobs. Employment in the electronics manufacturing sector declined from 12 562 in 2001 to 7 750 in 2009, as manufacturers shifted away from complete knock down (CKD) to semi-knock down (SKD) operations, which requires less manual labour.
Much delayed
Digital migration has been plagued by delays since it was first mooted in 2006. Government initially decided to use the European DVB-T standard, and industry started gearing up to take advantage of the opportunity to sell local technology in SA and into Africa.
Migration stalled in 2010, when the DOC decided to investigate the use of the Brazilian upgrade to the Japanese ISDB-T standard. Former communications minister Roy Padayachie announced in mid-January 2011 that SA would use DVB-T2, along with most countries in the region.
Switch-on was finally set for the end of last year, but a court tussle over conditional access has delayed the process. Communications minister Dina Pule has said etv and the South African Broadcasting Corporation (SABC) have yet to advise the department on the system. "This has resulted in the current delays we are facing."
SABC spokesperson Kaizer Kganyago has said, in principle, the ball is in etv and SABC's court. "Etv's court case last year delayed the process and now we are working together with them to finalise the matter."
Currently, it seems switch-on will not happen in mid-year, and SA is not likely to migrate off analogue in time for the International Telecommunications Union (ITU) mid-2015 deadline. However, the delays have cost the emerging electronics sector.
Takes time
Some 36 companies responded to the DOC's invite to bid to make the subsidised boxes, but the tender, meant to be issued in October, has yet to be awarded because of the conditional access hold-up. The controls are meant to help protect the local sector by stopping grey imports, among other things.
Currently, as far as ITWeb is aware, there are only two entities - Altech UEC and Reunert's DiViTech - that design locally and are ready to push the green button to manufacture sustainable volumes of decoders.
DiViTech COO Bertus Bresler says it will take at least six to nine months after controls are sorted out before boxes are on shelves. He notes that the manufacturing industry needs "all the help it can get", as SA needs to create jobs.
DiViTech has built a successful business exporting STBs into southern Africa, adds Bresler. He believes the 15% tariff, although low, will protect SA's declining electronics manufacturing industry and build local expertise.
Bleeding
Thabo Lehlokoe, chairman of Seemahale Telecoms and Fibretronic Sales, says companies that invested in capital without the benefit of a partner to carry cost are probably gone. He says Seemahale has decided not to hire any staff to work on decoders, but is keeping operations "lean and mean" with the help of partners for when SA finally blows the whistle.
The company had hoped to benefit from SA's move to digital television, and the need for about 100 million boxes on the continent, which had looked to SA to fill its requirements due to a lack of capacity.
Lehlokoe says "the window is pretty much gone". He adds that thousands of potential jobs have been lost, and money spent gearing up has been wasted in the sector.
The delay, which has favoured the incumbents, has led to many emerging companies in the sector giving up, says Lehlokoe.
In January, government also issued a 15% tariff on imported finished STBs, which Altron says reinforces the drive that STBs should be bought locally.
Lehlokoe says the tariff should have been at least 25% to discourage imported boxes. He says this is not sufficient to spur on the local sector, as it does not stop companies setting up simple assembly lines, which do not create jobs, as they are automated.
Arion Bomema Technology (ABT) president and CEO Muzi Makhaye says the DOC has failed emerging manufactures, and digital television is no longer a catalyst to create a thriving electronics manufacturing sector.
ABT, which came close to closing its doors in 2010, has retrenched staff and lost investors, Makhaye said. Digital television is a lost opportunity and another stimulus will be needed to get the sector going, he adds.
Makhaye adds that the tariff will not aid emerging manufacturers. "On its own, it's useless, it's actually become a burden." ABT is not focusing on digital television, he notes.
The department was not able to respond, as it did not understand what the manufacturers expected it to do, how the window of opportunity has closed, and how there are potential job losses.
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