DTT readiness 20 September 2011

Introduction e.tv grateful for the opportunity to make this presentation to the portfolio committee e.tv faces its biggest challenge yet with the compulsory migration to DTT World over DTT migration processes have been complex, costly and time-consuming SA DTT has already seen multiple delays since 2008 when DTT was first supposed to launch

Introduction (2) Delays meant that … Project lost momentum DTT platform credibility was damaged The broadcast environment became more competitive (pay TV has grown significantly) Technology evolved – e.g. DVB-T2 commercially deployed Some investment was wasted Notwithstanding the challenges, there now seems to be renewed commitment by all stakeholders to get behind DTT. This has driven e.tv to plan for the launch of DTT in 2012

TV landscape Important to consider the TV landscape when planning for DTT Most South Africans get their television signal via analogue terrestrial delivery on a free-to-air basis – over 8 million households A very small number of South Africans use the terrestrial pay TV service, M-Net – approx 100k households About a quarter of South Africans access TV through pay digital satellite, mainly DSTV, and are not directly impacted by migration to DTT

Terrestrial TV landscape Yesterday viewership 20 212 Includes viewership through DSTV. On terrestrial network only viewership is 286 000 15 216 14 353 10 070 5 419 955 Source: AMPS July 2009 – December 2010 Main Branded

Implications of TV landscape 3 out of 4 South Africans rely on free-to-air TV 3 out of 4 South Africans will need access to a FTA DTT STB before analogue transmissions can be switched off The success of the migration to DTT therefore depends heavily on the free-to-air broadcasters Given the aggressive growth of the Multichoice satellite platform, the FTA broadcasters’ future survival also depends on the DTT platform being strong

Implications of TV landscape (2) In order for government to reach its policy objectives, it also needs the FTA DTT platform to be strong. If the FTA platform fails, these objectives are not met: Job creation e-government services Digital dividend Greater diversity of content in broadcasting including local content and growth of independent production sector which is largely supported by the free-to-air broadcasters Above all, planning for DTT must be guided by how to build a strong free-to-air DTT platform

Building a strong DTT platform Providing new channels is a key way to make the platform strong Both national free-to-air broadcasters will be investing in new channels as a priority for building the FTA platform But there are also other factors which can strengthen the free-to-air platform These factors need to be put in place by stakeholders in the FTA platform – they do not concern M-Net / Multichoice which is focusing on its own platforms

Key features needed for strong FTA DTT What the FTA DTT platform must offer the consumer 1. Additional functionality for FTA STB 2. Affordable and “easy to get hold of” STB 3. Ability to plug and play STB 4. Reliable service 5. Clear communication

How to achieve this What the DTT platform must offer the consumer How to achieve this 1. Additional functionality Ensure FTA STB spec retains functionality – HD, STB Control 2. Affordable and “easy to get hold of” STB Put STB subsidy in place (in due course) and work with retailers and distributors to build strong retail market for STBs 3. Ability to plug and play STB Ensure the transmission parameters promote robust coverage 4. Reliable service Ensure STBs are subject to a conformance testing scheme and digital tick marketing scheme 5. Clear communication Ensure there is good consumer marketing The only area where we are not on track is functionality where M-Net / Multichoice is opposing additional functionality in the free-to-air STB

DTT implementation DTT implementation consists of at least 5 sets of issues which are inter-dependent: Internal broadcaster issues Those issues pertinent to free-to-air broadcasters Those issues relevant to broadcasters sharing MUXes Issues which all DTT broadcasters must jointly drive Issues which government will drive

e.tv internal processes Requirements for launch: Business plan sign off Playout ready Studio ready MUX ready Linking arrangements in place Channels ready (scheduling, on-air, marketing, publicity) Sales strategy and rate cards ready e.tv on track with internal processes External processes more complex

External processes Mux 2 issues Multiplex configuration Capacity allocations Transmission network Interactive applications Negotiations with M-Net ongoing Free-to-air issues STB Control Free-to-air EPG Free-to-air platform brand (e.g Freeview) Supply chain issues SABC and e.tv working closely General DTT issues Technical specs Central collation Conformance Consensus achieved among free-to-air broadcasters but process remains hampered by M-Net objections Issues which government will lead Consumer education Viewer support Subsidy scheme Some progress but deadlines slipping Progress on external issues is uneven, but there is movement

e.tv approach e.tv wishes to launch a DTT service within next 9 -12 months. Together with SABC we are planning on a soft launch in April 2012 and a full commercial launch between July and September 2012 Meeting deadlines will require the focused attention of e.tv and will require strong collaboration of industry and government e.tv keen to work with other broadcasters, government, ICASA and other role-players to ensure DTT plans are aligned and that the FTA DTT platform will be successful

e.tv approach (2) e.tv believes there are only two major roadblocks standing in the way of a FTA DTT launch in mid 2012: Continuing delays in decision on STB control Possible amendment of ICASA regulations to reduce incumbent multiplex capacity If these issues can be addressed urgently, all other issues can be managed to secure a launch in 2012

Conclusion e.tv is committed to launching DTT in 2012 But we need external processes to be finalised and roadblocks to be removed Need leadership to resolve these matters speedily