1. DTT issues 24 April 2011 1

2. A definition: “Bigger, better, normal television” What is DTT?

3. Bigger – more channels Better – better sound, better picture, additional data services Normal – delivered over the air, requiring a normal aerial –Only new requirement is for a STB –DTT cannot be received on a TV set without a STB What is DTT?

4. Digital Terrestrial Television System TV Digital Playout Centre Production of digital content or digitisation of analogue content STB Transmitter What is DTT?

5. DTT is not Satellite TV – if you have DSTV or Top TV you may receive some of the new DTT channels but you will probably need a DTT STB in order to access all the new DTT channels DTT is multi-channel but not always Pay TV –most new DTT channels will be provided without the need for a monthly subscription What DTT is NOT

6. Migration to DTT happening worldwide Great spectrum efficiency realized from broadcasters moving from analogue to digital transmission systems Freed spectrum commonly known as “the digital dividend” - can be used for other services, including telecommunications This is the major reason why countries migrate to DTT What is DTT?

7. Timelines for migration 7 DSO on-going DSO completed Digital migration processes take on average 6 years to complete but many of those countries already complete had low FTA terrestrial share – unlike South Africa Source: Farncombe

8. UK case study Y1: 6% FREEVIEW (ONLY) HHs PENETRATION – OVER TOTAL HHs  Post-DSO population coverage: ~75% (all 6 MUX)  Feb 2011: 500k HHs (~2% of UK HHs) subsidised by DSO Helpscheme Source: Farncombe

9. DTT uptake in Spain was rapid, at 150% of the pace of average TV adoption and with a period of additional acceleration in the final year prior to switchover. Spain case study DTT uptake in Spain 2006-2010  For the first three years, DTT in Spain follows an uptake curve with parameters 50% above average for TV In the final year prior to switchover, DTT growth accelerates “outside the curve” as the remaining analogue homes are forced to purchase STBs Source: Farncombe

10. International case studies: What needs to happen for DTT to succeed Efficient cross- industry co- ordination Subsidy scheme: succeed in lowering barrier to entry (direct subsidies or enable instalments, discounts), at the right timing Co-ordinated efforts for EPG, CA system, communications to increase consumer trust on DTT Content differentiation: additional content has proven to be the primary factor driving adoption Clear communication strategy A conformance regime associated with a DTT brand/ logo Strong marketing initially advertising DTT benefits and later concentrating on warning about switch-off date No mention of subsidies prior to scheme launch Government support Funding subsidy schemes to low income/vulnerable households, Tax exemptions for DTT deployment Incentives to manufacture and sell DTT end-user equipment Source: Farncombe

11. The STB Estimated cost = R500 – R700 This is a one-off cost Will be available in retail Government committed to a STB subsidy for poor households – not yet finalised 11

12. DTT broadcasters MUX 1 SABC (75% must be PSB) Must accommodate TBN MUX 2 e.tv 50% M-Net 40% 10% for testing 12

13. Implications for broadcasters Compulsory migration Huge additional costs Fragmentation of audience Little additional revenue 13

14. DTT Launch 14 ICASA will decide on launch date. At launch, there should be:  60%-70% population coverage  Conformant STBs in retail  Limited help-scheme  Some new channels on-air  Marketing and communications campaign running including contact centre to deal with consumer inquiries Likely to be 2012