South Africa, Politics

Op-Ed: Minister Muthambi should be fired for digital migration disaster

By Marian Shinn 26 October 2016

Government must stop prevaricating about the failed and stalled Broadcast Digital Migration (BDM) programme to convert to Digital Terrestrial Broadcasting (DTT). It must urgently review the process so it can prioritise switching off the analogue broadcasting signal to free up spectrum for the rapid and widespread introduction of wireless broadband. By MARIAN SHINN.

Marian Shinn is the Democratic Alliance’s shadow minister of Telecommunications and Postal Services.

The first step would be to consider declaring invalid the tender process by which set-top boxes (STBs) or decoders that government will give to 5 million identified indigent households was managed because of serious supply chain management and Public Finance Management Act contraventions.

The second step is to instigate criminal investigations under the Prevention and Combating of Corrupt Activities Act to hold accountable those public officials and beneficiaries of the tender process who may have unduly benefited from the numerous irregularities, as well as those who asserted any undue influence over the amendment of the BDM policy.

The third step would be to instruct Minister of Communications Faith Muthambi to withdraw her application to the Constitutional Court for leave to appeal the judgment of the Supreme Court of Appeal that found her unilateral revision of the BDM policy was wrong. This hearing is set for February 17, 2017.

The fourth step would be to hold a two-day public hearing during which stakeholders from the Information Communication Technology sector could thrash out a new path for the digital switchover to rapidly bring all South Africans into the dynamic interconnected world.

During the past eight years the ANC government has spent well over R8,5 billion on preparing for Digital Terrestrial Television (DTT), a worldwide programme initiated and overseen by the International Telecommunications Union (ITU) though which countries would switch off their analogue broadcasting signals by June 15, 2015.

South Africa is one of the countries that is listed on the ITU website of transitioned and transiting nations as “Not Started”. Member states are responsible for updating their status on this website.

Since inception the project has been riddled with policy uncertainty, ill-informed political meddling, vested-interest power plays and now a National Treasury investigation that reveals a tender pr4ocess that was rotten to its core.

During the past month shocking information has seeped into the public domain about the state of the project and the threat of escalating costs. These include:

  • The process by which the producers of the STBs were selected is riddled with irregularities and exorbitant costs, and the Minister of Communications has yet to act on a National Treasury-commissioned enquiry into the irregularities that she received in March. She declined to reveal details of the investigation, carried out by Price Waterhouse Coopers, at a joint meeting of the parliamentary portfolio committees on communications and telecommunications and postal services in September, yet posted on the Department of Communications’ (DoC) website some of the its details.

These include serious breeches of Supply Chain Management policies, National Treasury regulations and the Public Finance Management Act; contracts going to the highest bidder; alarming cost escalations, tender specifications being adapted after publication, and prices for STB production being adjusted upwards. The cost of each subsidised STB with installation is now R1 670 per household. The retail cost of a similar installation is about R599.

Minister Muthambi promised the joint sitting that she would release the full report promptly. As she has failed to do this I have submitted a Public Access to Information Act (PAIA) application for the full report.

  • Sentech – the government owned signal distributor – may have to request funding from the fiscus to refresh the analogue broadcasting transmission equipment it should have retired a year ago. Failure to do so will jeopardise the quality of TV and radio broadcasts nationwide;
  • Sentech will need funding to replace some of the R1 billion worth of digital transmission equipment it has steadily installed since 2008 as it becomes obsolete. There has been minimal return on investment because the failure to fully switch to digital broadcasting;
  • Sentech is bearing the cost of keeping both analogue and digital transmission systems operating. Last fiscal this dual illumination cost R107 million, and it received only R75 million. This year the cost is R160 million. As this was not budgeted for by the Department of Communications (DoC)– custodians of the digital migration project – the Department of Telecommunications and Postal Services (DTPS) stepped up to the plate with R100 million.
  • The perpetual losses from under-funded dual illumination and threat of equipment obsolescence threatens Sentech’s sustainability.
  • The Universal Service Access Agency of South Africa (USAASA), which is also a DTPS entity, has responsibility for project managing the procurement, distribution and installation of the STBs. It listed in its annual report a contingent liability of R1.3 billion of potential wasteful expenditure on the STBs delivered by March 31, 2016. These were ordered by USAASA while the legal challenge to the BDM policy was in progress and which is now subject to the decision of the Constitutional Court in February.
  • As of August 31, 2016, 643 813 STBs were delivered at a total cost of R441,422,345. Should the Constitutional Court uphold the SCA judgment the 620,513 DTT STBs would need to be software-upgraded to enable signal encryption at a cost of $6 per unit.
  • In August 2015 USAASA issued purchase orders for 500,000 STBs to each of the winning bidders – CZ Electronics, Leratadima Marketing Solutions and BUA Africa Investments – to be delivered in three tranches. In June 2016 USAASA’s board halted the procurement process in light of the National Treasury inquiry, requested by Minister Muthambi in October 2015 in response to my concerns about the procurement process. I understand that the STB producers are challenging the halting of the procurement process.
  • Most of the STBs delivered, and their attendant satellite dishes and antennae, totalling 1,1million items, are being stored in 14 South African Post Office warehouses at a cost of R3 million a month. This cost was not budgeted for.
  • Funding for the national call centre, to assist STB users with technical queries, has not been allocated, so the project has not started. Minister Muthambi told the September joint sitting of the parliamentary portfolio committees that she needed R152 million to establish this.
  • There is insufficient funding for a marketing campaign to encourage TV owners of the benefits of digital television. The Minister requested R80 million from National treasury and received R800,000. But then, until she has a digital TV product to sell there is not much point in marketing it.

In May, six weeks after the National Treasury passed on the PWC enquiry report to her, I posed a parliamentary question to Minister Muthambi asking whether she would consider re-opening the STB tender as the portfolio committee on telecommunications and postal services had been that there were irregularities in the STB tender process.

Minister Muthambi’s reply was: “The tendering process will not be re-opened because it was an open process.”

The fifth step, to be taken by ANC government leadership, is that Minister Muthambi, who has clearly been out of her depth in managing this project, be fired and possibly face criminal charges in terms of the Prevention and Combating of Corrupt Activities Act. DM

Photo: Communications Minister Faith Muthambi addresses the Media Development and Diversity Agency (MDDA) community broadcast stakeholder engagement workshop at Birchwood Hotel in Boksburg, 24 June 2016. (Photo: GCIS)

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