The Department of Communications (DOC) aims to conclude the rollout of subsidised set-top boxes within the next two years, but apparently only has enough funding to cover 500 000 decoders a year.
In addition, the ultimate cost of the decoders is expected to skyrocket to as much as three times the previous estimated cost, because of the extras to be taken into account such as distribution, and the tender to make the boxes specific to local requirements and hi-tech specifications.
The DOC recently told Parliament that it aims to place orders for 450 000 boxes by the end of March, at an expected cost of R432 million. The DOC is funding as much as 70% of the cost of the box, an aerial and installation.
However, the figure works out to R960 a box, which is far more than the previous estimate, given by the DOC, of R400, and more than the DStv decoder, at R499 including a dish and installation.
Taking into account installation at a cost of R110 a box, and an estimated aerial cost of around R70 for the cheapest receiver, the decoders will now cost taxpayers as much as R546 each, leaving the poor to find R234 per box.
On pause
About 11 million South African homes will need the decoders, to convert digital DVB-T2 signal so that it can still be picked up on analogue television sets. The DOC will subsidise 70% of the cost of the decoder for about half of these households.
The department's state of readiness presentation indicates the tender to make set-top boxes, which should have been awarded at the end of October, was being held up by a legal wrangle between it and free-to-air broadcaster etv.
The broadcaster took the department to court over its decision to allow Sentech to handle conditional access. Set-top box controls will render stolen subsidised boxes useless and protect the local manufacturing sector.
The judgement, expected some weeks ago, has yet to be handed down. The DOC says 37 companies submitted bids to handle the manufacture of subsidised boxes, which will be split between several entities.
Finding concerns
Democratic Alliance shadow minister of communications Butch Steyn says, although the DOC plans to provide 1.5 million decoders a year for the next three years, it can only afford to pay for 500 000.
According to the department's presentation, it plans to place a seed order for 350 000 terrestrial decoders and 100 000 satellite boxes this financial year, which ends in March 2013. The satellite boxes will be rolled out in more rural areas where there is minimal or no terrestrial coverage.
Currently, the DOC has R230 million available for the current financial year, but R400 million has been rolled over from previous years. It has asked National Treasury for permission to use the rollovers.
Steyn cautions that there are hidden costs to the rollout, such as the amount that distribution will cost, which could take the total final cost of the box up to as much as R1 500. The DOC plans to roll out the boxes using the post office's current network.
Enough capacity
SA's electronics manufacturing sector is characterised by large, middle-sized and small manufacturers with the primary focus on making consumer items such as TVs, telecommunications equipment and decoders, the DOC has said.
Currently, as far as ITWeb is aware, there are only two entities that are ready to push the green button to manufacture sustainable volumes of decoders. Altech's UEC facility can make three million decoders a year, a figure that can be doubled through the installation of new lines, which would take about three to four weeks, Altech CEO Craig Venter has said.
Electronics company Reunert has been investing in its set-top box facility for about six years and has the capacity to make more than two million boxes a year, says DiViTech COO Bertus Bresler, its STB arm.
Bresler says once manufactures get off the ground, capacity will no longer be an issue as long as the supply chain is in place and there is enough demand.
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