1. SABC Digital Terrestrial Television Update to Parliamentary Portfolio Committee on Communications June 2010

2. Introduction SABC has been a committed and active participant in the Broadcasting Digital Migration process Over the past 2 years, the SABC has done extensive planning and testing of the DTT service in anticipation and preparation of a commercial launch The DTT trial was an important phase of the migration Many lessons have been learnt which will inform what we do next Many critical aspects that will enable successful rollout of the next phase are however still not in place

3. Critical Success Factors SUCCESS FACTORIMPLICATION More channels New channels licenced Development of new channels Affordability of STB Low priced STB Subsidy Education and marketingExtensive marketing campaign Customer Support National Call Centre Co-ordination of activity Coverage Quick rollout of DTT network Dual illumination period KEY ROLE PLAYERS ICASA Broadcasters Broadcasters/ Manufacturers, Govt. Broadcasters Digital Dzonga Broadcasters Signal Distributors To achieve a successful consumer led launch, several critical success factors need to be in place…

4. [Roof-top aerial] TV STB DTT Value Chain Customer Support Platform Management Broadcasters /Production Industry Broadcasters Signal Distributors Digital Dzonga Broadcasters/ signal distributors Marketing and Communication Digital Dzonga/ Broadcasters CUSTOMER SUPPORT Production of Digital Content or Digitisation of Analog content Packaging of content into channels CONTENT Playout Encoding and Multiplexi ng BROADCAST INFRASTRUCTURE NETWORK … and many role players need to co-ordinate activities to achieve the migration

5. –To begin first phase rollout of transmitter network –To allow for feedback, refinement and evaluation –To prepare and test services –To complete regulatory processes PHASE ONEPHASE TWOPHASE THREE –To make DTT services available to the market –To expand transmitter network to full coverage –Analogue and digital networks running in parallel –To begin phased switch-off of the analogue network –Reduced dual illumination as analogue is switched off –Maintenance of DTT network –Planning for digital dividend –Mass rollout of help schemes PILOT PHASE DUAL ILLUMINATION PHASE MIGRATION PHASE We are here Pilot switch on Nov 08 Phases of Digital Migration 2013/20152011 … over several years and several phases

6. Achieved 33% coverage of population (JHB, Pretoria, Durban) 10 channels, 19 radio stations and limited semi-interactive services Required participation of broadcasters, signal distributors, STB manufacturers, regulator, research company, installation support, call centre, consumers, content providers In excess of R80 million already spent on the pilot by the end of March 2010 Just under 3000 active participants! Has proved to be significantly more complex than anticipated and has provided very valuable insight into what can be expected at commercial launch Implementing the Pilot Progress has been made through the first phase with the SABC led DTT Pilot project

7. DTT does offer valuable benefits to the consumer: –Better quality picture and sound –More public service content opportunities –More free to air channels choice –Opportunities for additional services (information services and e-gov) Digital migration is an extremely complex process to rollout –Requires a clear plan and extensive co-ordination and monitoring –Requires time to reach all consumers –Requires an immense amount of communication and education –Requires a very clear plan Digital migration is an expensive process –Adequate customer support (call centres, installation assistance, communication) must be in place and resourced appropriately –Content investment is substantial for broadcasters –Will take time before broadcasters can generate real return on investments as audiences will take time to adopt new technology –Significant investment in co-ordination and project management is required –Significant amounts of research will be required to monitor progress Key Lessons From Pilot Phase (1) Many important lessons have been learnt about how to make DTT successful

8. Key Lessons From Pilot Phase (2) The attitude towards the new technology was very positive. 87.2% of the trialists stated that it was worth the effort to install the DTT STB. The technology works: MHEG, DVB-T, MPEG-4, HE-AAC for South Africa’s DTT requirements South Africa has the intellectual property and skills in order to locally design and manufacture Set Top Boxes. Interoperability between free to air and Pay TV was tested successfully and works. Access services on DTT is an essential service for persons living with disabilities. Network redundancy, fault monitoring & detection is vital for a DTT network. Accurate coverage predictions are essential. Many important lessons have been learnt about how to make DTT successful

9. –To begin first phase rollout of transmitter network –To allow for feedback, refinement and evaluation –To prepare and test services PHASE ONE PHASE TWO –56% coverage minimum required –New channels launched –STBs in retail –Does not require subsidy PILOT PHASE DUAL ILLUMINATION PHASE We are here Pilot switch on Nov 08 Mar 2011 Earliest Public launch Phases of Digital Migration DTT Licences Confirmation of funding for key stakeholders Clear rollout plan Customer support Entity to co-ordinate all aspects of migration (Digital Dzonga) Conformance regime STBs available Platform mgmt. company Requirements to move to phase two DTT Regs DTT Licences Feb Dzonga resourced Sep Channels ready Testing Dec Conformance in place Dec May 10 Minimum 6 months from licences to launch But several critical aspects MUST be in place before we can move to phase two making the earliest possible public launch date Mar 2011

10. PHASE THREE –80% coverage minimum –+90% penetration per area –Minimum 5m STBs –Subsidised STBs and Help Scheme MIGRATION PHASE Public Launch Phases of Digital Migration Help scheme in place for at least 5 million households Confirmation of funding for help scheme/customer support (+R3 billion) Clear switch-off plan Entity to co-ordinate switch-off (Digital Dzonga) Subsidy scheme in place and tested Regulatory framework for digital dividend Requirements to move to phase three Jan 10 Switch-off can only be planned once sufficient penetration is achieved PHASE TWO –56% coverage minimum required –New channels launched –STBs in retail –Does not require subsidy DUAL ILLUMINATION PHASE Mar 11 Nov 2011 is not achievable! Only 8 months to Nov 2011 Phase three (switch-off) cannot occur without sufficient penetration and the help scheme implemented which makes November 2011 impossible.

11. Critical Success Factors SUCCESS FACTORIMPLICATION More channels New channels licenced Development of new channels Affordability of STB Low priced STB Subsidy Education and marketingExtensive marketing campaign Customer Support National Call Centre Co-ordination of activity Coverage Quick rollout of DTT network Dual illumination period KEY ROLE PLAYERS ICASA Broadcasters Broadcasters/ Manufacturers, Govt. Broadcasters Digital Dzonga Broadcasters Signal Distributors But more than anything, NONE of the critical success factors are in place yet

12. TIME TO LAUNCH : –Potential of missing 2015 deadline for analogue protection which will affect SABC’s analogue services STRATEGY: –Could result in a satellite pay-TV led migration as satellite pay-TV players (DSTV and TopTV) continue to grow rapidly –Increased competition in the market will erode SABC’s audience share and consequently SABC’s revenue base –Will compel SABC to explore other digital distribution platforms until DTT is launched The Impact of Delays There are implications for the SABC if DTT is delayed significantly.

13. Solving the Critical Issues –To move forward in the digital migration process, the following key fundamental issues need to be resolved; Issuing of broadcast licences for new DTT channels A STB Conformance Scheme to enforce compliance to the SABS STB standard SANS 862 Making affordable STBs available to ensure swift take up and access to all citizens Putting in place a comprehensive customer support scheme Development of a well coordinated and clear national rollout plan which requires the re-establishment of a co-ordination body Confirmation of sufficient funding to support the process until completion There are several steps to be taken to unlock the process.

14. SABC has already invested significant resources and put in place extensive plans in preparation for a DTT launch Significant progress has been made and valuable lessons learnt through the pilot phase and SABC is much closer to being able to launch DTT as a result However, finalisation of our plans are dependent on resolution of the key outstanding factors Delays in the digital migration process will impact on our sustainability in an increasingly competitive environment However, we remain committed to the process and will work closely with all stakeholders to find solutions to the current challenges Conclusion