Telecoms

R1bn set-top box stock sitting at USAASA warehouses

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USAASA acting CEO Dr Mashilo Boloka.
USAASA acting CEO Dr Mashilo Boloka.

Stock of set-top boxes worth over R1 billion is sitting at Universal Service and Access Agency of SA (USAASA) warehouses.

This is the immediate task USAASA acting CEO Dr Mashilo Boloka is looking to deal with, barely a month into the job.

Boloka, who took the acting role after the departure of Lumko Mtimde, spoke to ITWeb in an interview yesterday about the challenges SA’s multibillion-rand digital migration project is facing and the way forward for USAASA.

According to Boloka, the agency is looking to distribute over a million set-top boxes (STBs) that are at warehouses dotted across the country.

Just storing these boxes at the warehouses is costing government a whopping R56 million per year, he said.

Boloka said the total support value of an STB can be R1 100, including an aerial as well as the installation. This brings the value of the set-top boxes in the warehouse to over a billion rand.

“As USASSA, we want to do first things first by clearing the stock in the warehouse. For us, that’s the immediate task.”

As USAASA tries to disburse the devices, ITWeb recently learnt from one manufacturer, BUA-Microtronix, that it has resumed the manufacturing of 300 000 government-subsidised STBs, which it is looking to complete soon.

Converting signals

In line with the broadcasting digital migration programme, the South African government promised to supply free STBs to over five million households that depend on social grants and those with an income of less than R3 200 per month. The decoders are required to convert digital broadcasting signals on analogue TV sets.

In October last year, government said it will no longer be involved in the procurement of STBs, warehousing, transportation and installation of devices. This was revealed by then communications minister Nomvula Mokonyane.

However, less than a year later, the government said it is going back to the drawing board to “fast-track” SA's much-delayed move to digital terrestrial television (DTT).

In her budget vote speech in July, new communications and digital technologies minister Stella Ndabeni-Abrahams said within 90 days, the department will present the reviewed broadcasting digital migration delivery model in order to enable the swift release of the high-demand spectrum needed for the rollout of broadband and effective DTT migration.

“Last year in September, Cabinet approved that we change the model in which we procure set-top boxes and distribute them,” said Boloka, who also previously served as director-general in the Department of Communications.

“If you think about it, we go and procure set-top boxes; we have to carry the cost of transporting them; and we have to carry the cost of housing them, distributing them and so forth.

“So if we do a voucher system, a person will be able to redeem the voucher wherever they are. In other words, the same way one purchases a decoder for pay-TV. You go there and pay, then they install it for you.”

He pointed out the stock in the warehouses will be distributed in the Free State, Northern Cape and North West, as approved by Cabinet.

“If by the end of December, we can just be done with two provinces – Free State and Northern Cape – that will be good.”

According to Boloka, Northern Cape is more than half done because most of it required direct-to-home (DTH) boxes. “So we only need roughly 30 000 boxes there; and with serious installers, this can take us only two weeks to complete.

“We have done a lot of work in the Free State last year; the only area that we are struggling with is the southern-eastern part because of the mountains.

“The policy direction on spectrum can only be achieved if DTT is completed. So we are currently working with the interim board to stabilise the organisation, supported by the Department of Communications and Digital Technologies.”

Purchasing orders

USAASA, which is charged with managing the production and installation of STBs, selected only three out of 26 companies – CZ Electronics, BUA Africa and Leratadima Marketing Solutions – to kick-start production of the 1.5 million order.

Each company received a purchasing order (PO) for 500 000 decoders from USAASA. In terms of the PO, BUA Africa was contracted to manufacture the DTH decoders, while Leratadima and CZ Electronics were contracted to manufacture DTT set-top boxes.

CZ Electronics has completed its order of 500 000 DTT STBs, while Leratadima has since been placed into liquidation.

However, Boloka pointed out that for the DTT project to be successful, there can’t be only one entity that drives it.

“At the moment, the one that has just delivered is signal distributor Sentech; they are done,” he noted.

He believes DTT without a strong public broadcaster will never take effect. “You can’t just say to people, go and buy a box.

“The most important thing that people look for is content. Just think about it: the Rugby World Cup is starting but it won’t be showing on SABC. So we need to fix the problems at the SABC first as well. USASSA can do whatever it can but it still requires the SABC to add more channels and content,” he concluded.

Correction: 

Following the publication of the article based on an interview with the acting CEO, USAASA sent the statement below:

According to the Scheme of Ownership USAASA manages the procurement process of the Broadcasting Digital Migration ( BDM) wherein the Agency manages funding process of the Manufacturing process as well as the installation of the devices to the deserving households. The South African Post Office (SAPO) is in charge of the storage, registration process as well as the distribution of the STBs processes, USAASA does not have warehouses.

The STB stock at the SAPO warehouse as audited by AGSA as at 31 March 2019 is valued at R509 531 848,40 and not R 1 billion as stated in the headline.

The Acting CEO, discussed a number of challenges that have led to the continual delays of the project and uptake of STB by qualifying households, including but not limited to compelling content, hence the quest for a strong public broadcaster.

USAASA is committed to working closely with SAPO to ensure the clearing of warehoused stock in the Free State, North West as well as Northern Cape as per the Cabinet approved timelines. USAASA also awaits the new proposal from the Minister as committed earlier during the Budget vote speech 2019 so as to provide the necessary guidance regarding the future direction of the project. 

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