Set-Top Box Subsidy Programme State of Readiness Portfolio Committee on Communications Wednesday, 21 September 2011

2 Discussion Background Subsidy Model Implementation Progress to Date Considerations and Dependencies

3 Background

4 Policy and Legislative Background The Broadcasting Digital Migration Policy of South Africa (August 2008): – This policy recognized the need for Government to support Needy TV- Owning Households to migrate to Digital Television – This support was said to be through subsidies from the Universal Service and Access Fund (“USAF”) towards the purchase of a Set-Top Box (“STB”) Electronic Communications Act 36 of 2005: – Section 82(5) mandates the Agency to manage the USAF The Agency is therefore required to manage the disbursement of subsidies to needy TV-owning households

5 STB Subsidy Approvals Cabinet approved a subsidy level of R490 or 70% per TV-owning household towards the retail cost of a STB 5 Million TV-owning households were approved as households that will require a STB Subsidy A total STB Subsidy budget of R2.45 Billion from the USAF was approved

6 Objective of the STB Subsidy Programme The key objective of the programme is to ensure the migration of the needy TV-owning households to Digital TV, by December 2013 This will be achieved by ensuring that: – There is a criteria for ensuring that only deserving households are subsidised; – There are relevant systems and processes for the effective disbursement of subsidies to deserving households; and – Deserving households are well informed of the programme and its benefits

7 Subsidy Model

8 Models for Subsidy Disbursement In a number of industry forums, three models have been discussed for the disbursement of subsidies: – Manufacturing, where subsidies are disbursed at Manufacturer level; – Distribution, where subsidies are disbursed at Distributor level; and – Retail, where subsidies are disbursed at Retailer level The Retail Model was proposed by the DOC’s “SOS Implementation Strategy” document This model will require the Agency to work in partnership with retailers throughout the country

9 The Retail Model In the retail model, the following will apply: – The approved retailer orders STBs from manufacturers – The manufacturer delivers STBs to the retailer’s warehouse, where they will be distributed to retail outlets throughout the country – A household applies for a subsidy from USAASA – USAASA verifies information and if approved, the household receives a subsidy coupon – The household uses the subsidy coupon to purchase a STB from any approved retailer, at a discounted price – Following the transaction, USAASA reimburses the retailer with the appropriate amount

10 Implementation

11 Phased Implementation Approach USAASA will implement the STB Subsidy Programme in two phases – Phase 1 is to build internal capacity, which involves developing all required systems and processes, ensuring that USAASA is fully geared to disburse subsidies post Digital TV launch – Phase 2 will be the actual disbursement of subsidies to the approved 5 Million needy TV-owning households

12 Outcomes Phase 1 Outcomes – A “Qualifying Criteria” as a means of determining needy TV- owning households – Systems and processes for application of subsidies by needy TV-owning households (incl. Subsidy Coupon) – Communication Strategy and Plan for communicating the programme to deserving households – Agreements with key stakeholders – A pilot of the application and verification systems and processes Phase 2 Outcomes – Subsidies disbursed to all needy TV-owning households, in time for the analogue switch-off – These households must all have STBs by the time of the analogue switch-off

13 Progress To Date

14 Capacity Building Due to internal capacity, USAASA appointed a service provider to assist in its plan of implementation and capacity building Deliverables were as follows: – Development of a Qualifying Criteria – Identification of Needy TV-owning Households – Designing and Prototyping a Subsidy Disbursement Model Investigating Application and Verification Infrastructure Application Form and System – Development and Implementation of Stakeholder Engagement Plan and Communication Plan – Identifying and Partnering with Key Stakeholders – Piloting of the Subsidy Disbursement Model

15 Progress Thus Far Qualifying Criteria awaiting final EXCO approval Application and Verification System completed, awaiting Qualifying Criteria Key stakeholders identified and engaged 8 Provinces have been engaged with regards to gaining support on the programme Achieved full support from Mpumalanga Province, which will be used as a pilot site for: – Piloting of Application and Verification Process; – Piloting of Application and Verification System; and – Compile lessons learnt for review of systems and processes

16 Progress Thus Far – Stakeholder Engagements These key stakeholders were engaged and working relations have been established: – SABC for verification of TV Licenses – Sentech for rollout of Digital TV network and alignment of activities to network availability – SA Post Office for subsidy application processing and possible STB distribution – Retailers for retail of STBs

17 Progress Thus Far – Provincial Engagements Provinces that have been engaged and their respective offices are: – Eastern Cape: Office of the Premier – Mpumalanga: Office of the Premier and COGTA (most advanced) – North West: Office of the MEC of Local Government – Kwazulu-Natal: Office of the Premier and GCIS – Limpopo: Office of the Premier – Free State: Councillors from FS Local Municipalities – Northern Cape: CHOGSTA and GCIS – Western Cape and Gauteng: No engagements as yet

18 Progress Thus Far – Mpumalanga USAASA engaged the Traditional Leaders Forum and the Premier’s Council Forum to seek support for the programme, which was fully supported Provincial COGTA pledged their Community Development Workers (CDWs) to assist in building a database of needy TV- owning households throughout the province A workshop with CDWs (from all local municipalities) was held and was a great success – Over 90% turnout of CDWs – Week of 19 Sept. to 25 Sept. dedicated to communication – Data gathering to commence from 26 Sept. to end Oct. (CDWs will be going house to house to collect data) This database will assist in determining the retail need in Mpumalanga

19 Progress Thus Far – SA Post Office and Retailers SA Post Office: – Post Office was engaged is keen to work with USAASA and the DOC in the programme – The proposal outlines involvement in: Subsidy application and verification STB Distribution to approved households Reverse logistics, as part of ongoing support and warrantees SMME empowerment and job creation – Week of 26 Sep to engage with Post Office team on technical work Retailers: – Shoprite, PEP Stores, Boxer Superstores, Edcon, Ellerine Holdings and JD Group were engaged on their possible involvement in BDM – All are keen to be involved and want to work in partnership with USAASA

20 Next Steps USAASA and SA Post Office to enter into an agreement Qualifying Criteria to be finalised and submitted to Minister for Gazetting USAASA and SA Post Office technical teams to commence work on all processes proposed Continue with the work in Mpumalanga Finalise working relations with other provinces

21 Considerations and Dependencies

22 Key Considerations Proposed Qualifying Criteria – A South African Citizen (a valid South African ID as proof) – TV Owning (a valid TV License as proof) – Household income in the LSM 1 – 5 bands, on a sliding scale between 70% and 100% Subsidy LevelIncome RangeSubsidy Level 1R0 – R1,050100% Level 2R1,051 – R2,10090% Level 3R2,101 – R2,80080% Level 4R2,801 – R4,25070%

23 Key Considerations Subsidy Coupon – Electronic based coupon (as opposed to paper based) linked to ID Number and TV License Number Application by qualifying households – Compiling needy TV-owning households database before commercial launch This will assist in allocation of subsidies pre commercial launch – Post Office to be used for on-going applications post commercial launch

24 Key Dependencies Availability of DVB-T2 STBs for full piloting of subsidy disbursement model Commercial DTT Launch to disburse STB subsidies to needy TV- owning households The full rollout of public awareness campaigns by all stakeholders involved

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