Stage set for final battle in set-top box war

The Black Business Council and the National Association of Manufacturers in Electronic Components have slammed the push by e.tv for a control system in digital television set-top boxes. The criticism comes as a crucial cabinet decision on the issue looms. By Duncan McLeod.

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The stage is set for a final showdown in the protracted war between broadcasters and set-top box manufacturers over the use of encryption based on conditional access (CA) in the set-top boxes that South African consumers will need to buy to continue receiving terrestrial television broadcasts.

Cabinet is set to decide the issue once and for all at a meeting in the first week in December at which communications minister Yunus Carrim will set out the available options and their implications.

Ahead of that meeting, industry players are lobbying hard in the hopes of swinging the decision in a direction that will favour them. Whatever decision cabinet makes will have long-lasting implications for South Africa’s broadcasting industry.

The National Association of Manufacturers in Electronic Components (Namec) and the Black Business Council on Tuesday raised the stakes ahead of the cabinet meeting, warning that introducing CA could destroy any chance that emerging, black-owned set-top box manufacturers have of taking on local manufacturing incumbents Altech and Reunert.

The industry remains highly polarised on the issue, with e.tv lobbying hard for the CA system, saying it is necessary to allow free-to-air broadcasters to break the dominance of pay-TV incumbent MultiChoice, which owns DStv, and MultiChoice arguing that introducing CA would amount to unfair competition as it would allow e.tv and others to launch pay TV without the huge costs of deploying set-top boxes into people’s homes.

The e.tv position enjoys the support of the South African Communications Forum, while Namec shares the same position on the matter as MultiChoice. Government has already said it will subsidise set-top boxes for as many as 5m South African homes and is therefore a crucial player in the battle between the broadcasters.

E.tv’s position, however, is looking increasingly isolated after the SABC said recently that it would not support CA for free-to-air television.

At a colloquium in Sandton on Tuesday, Namec president Keith Thabo warned that CA would “increase the barrier to entry into this market for many emerging black manufacturers as they will need to be accredited by a CA vendor first before they can manufacture the set-top boxes”.

“Not only is this a costly exercise, but it can also take up to two years before a manufacturer is accredited. By that time, they would have missed out on an opportunity to participate in this project and contribute to job creation, development and poverty alleviation,” Thabo said.

Vijay Panday, chairman of Namec’s electronics manufacturing division, said the best approach would be to “kill” the idea of mandating CA in South African set-top boxes.

“CA will increase the total cost of ownership of the set-top box by at least US$43,” Panday told colloquium. “If you look at the card reader, at the cost of the card, the downloads that will be required, the head-ends that will have to be put in, the management systems that have to be put in to manage conditional access… When you look at total cost of ownership in conditional access, you’re going to pay, and this is taxpayers’ money.

“There is no African CA. There is no black CA. These CA players all come in from the outside, so you’re going to be controlled by those people. They will rule your life. They will tell you when to switch on, when not to switch on, how to switch on, and they’ll make sure they get their $3 or $4 a month from you,” Panday said.

“We are BEE manufacturers. We are not certified for conditional access. You know what a job we all have to go through to be certified? The minimum cost is $250 000 just to get those fellows to our factories to do one round of certification. This whole CA story will suck you dry.”

He continued: “CA will destroy us. It will set us back another four to five years, and the previously advantaged guys, who are rooting for CA, they know they are the only ones who can do this. Our recommendation is to kill set-top box control. Remove it, it makes our lives so much easier, makes the boxes so much cheaper and makes it easier for us to enter the ICT space.”  — (c) 2013 NewsCentral Media

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  • Andrew Fraser

    I’m with Greg. I’m opposed to MANDATORY CA. It makes no sense in terms of the DTT project.

    Your argument against the “tenderpreneurs” in NAMEC is exactly my argument against Reunet , Altech/UEC et al. Why should the taxpayer fund their(uncompetitive) business?

  • Andrew Fraser

    The reason that broadcasters use CA for premium content is not because it is mandated (like copy protection is) by the content owners, but rather because the license costs are linked to the size of the audience. By using CA, a broadcaster can limit the broadcast to their subscriber base and only pay a license fee for that audience. The SABC has, say, potentially 50+ Million viewers on it’s FTA channel, it thus has to pay a license fee equivalent to that audience… The costs of such a fee are unsustainable. OVHD on the other hand knows exactly how many decoders (let’s say 500 thousand for sake of argument) are in the market and pays a significantly lower fee for the identical content.

    CA is a commercial choice made by broadcasters, not content owners.

  • Andrew Fraser

    Er, yes there is.

  • Antonio

    Nothing wrong! If tax money goes towards aids prevention = nothing wrong. If tax goes to giving the millions of poor people decent TV – something like premium Discovery Channel – nothing wrong. Teach people to fish! Premium channels are not free of charge for a broadcaster. Use tax to educate people.

  • Antonio

    You are wrong. Study the Botswana vs Sentech case! Sa is not an island like UK. Botswana had major issues to licence premium content like Bold & Beautiful. Botswana wanted to buy B & B Series 10 but SABC broadcasted series 10 before Botswana. So people swa the series on SABC Vivid befiore Botswana TV could broadcast same. That is why Botswana took Sentech to International Court – and WON. We are living in an area with many different markets. Content Owners licence content to different markets. Think. The only solution for premium content is CA.

  • Antonio

    CA makes 1000% sense. You can ring fenced premium content like Walt Disney, Discovery Channel, and millions more. SABC will start more channels – premium channels. How do you expect SABC to get premium content without CA that limits viewers to a physical area?

  • Antonio

    Because they want PREMIUM content. What is the use to pay $1 (one) dollar for a set top box with crappy and limited content? Rather pay more and get premium content from Walt Disney, Hollywood, Metro and many more!

  • Antonio

    It is a fact that people are paying for quality content. Use tax money to make money for SABC.

  • Greg Mahlknecht

    You keep repeating the same vague, stale lines. Why do you never address the serious questions? If this is such a goldmine, why do we need government to force a non-standard system on the entire country – why doesn’t SABC, Sentech, or some other company (like OpenView) push out a CA platform for others to use? I keep saying CA is a great idea. Mandatory, state-sponsored and state-controlled CA isn’t.

  • Greg Mahlknecht

    That was a satellite broadcast – what’s our terrestrial footprint like in Botswana? Right now, Botswana has access to our SABC analogue broadcasts if they’re in range. I see that SABC3 broadcasts Bold & Beautiful on their terrestrial signal – why is it OK for them to do that, and they’re not being sued? That’s a serious question, I’m not trolling.

    I’m not convinced a satellite broadcast precedent is relevant here.

    B&B Series 10 is 15 years old, BTW… Botswana must REALLY be starved for content to pirate that!

  • Antonio

    You are missing the point. This scenario was discussed at Sentech today. SABC, Botswana and other national broadcasters are buying older content – sometimes 10 years old – because of price. If SA broadcast a popular series before their neighbours like Lesotho or Swaziland we sit with a problem we have seen in Botswana vs Sentech. DTT is suppose to better a crooked catalogue system.
    BUT – please look pass problems with the neighbours because DTT will solve issues if they use CA.
    Please focus on premium content for the poor. Why should poor people be without good content? Use CA and purchase good content. Good content will influence millions to pay TV licences. The more people paying TV licences the less bail outs need to be paid.

  • Greg Mahlknecht

    You avoided the questions again – if you don’t know the answers, please just say so, then we can move on past this

    SABC have categorically stated on more than one occasion they will not deny access to FTA content by way of CA. CA won’t help at all with TV license collection. It’ll only help the tenderpreneur STB makers. That was the reason it was first floated. NOT for content.

    If SABC wants to start a pay-channel, they can damn well finance their own STB. I don’t want my money to subsidize it.

  • Andrew Fraser

    You do know that the English Channel isn’t very wide, right?

    Your arguments are verging on the ridiculous. Each time you are shown to be misled or lacking in understanding, you change the argument. You cannot compare signal bleed over borders of satellite and terrestrial signals.

  • Andrew Fraser

    Why is this our problem? Sentech can set up their antenna network to minimise bleed into neighbouring countries. That’s engineering, not CA.

  • Greg Mahlknecht

    From all this, I think it’s pretty clear that Antonio works in the industry and is pushing HARD for his agenda to get free state-sponsored CA for his company. Hey – Zuma can get free lawyers so why can’t Antonio get free CA, right?

  • Antonio

    Not really. We want to see the poor having access to good quality, premium, content. Secondly, what is wrong to create jobs in transport, medical, broadcasting using methods like CA?
    Do you want to keep people without jobs? If it takes CA to create jobs why not?

  • Andrew Fraser

    Jeez. I give up.

  • Greg Mahlknecht

    Please tell me – why is the ONLY way to create jobs in CA, to have the government sponsor it? Is the free market utterly and totally incapable of creating a market like this for itself? Why is your only solution to CA that the government run it. You know they’re just going to screw it up, don’t you?

  • Antonio

    Bleeding costs. TopTV pays licence fees for their number of viewers. OpenTV pays fees for their recorded viewers. Once you bleed over to Botswana, Lesotho, Swaziland, Mozambique and Namibia your required fees goes up. CA can change that.

  • Greg Mahlknecht

    You love to say people missed the point, and now you actually have. Read the question again. Have a good think, then reply.

  • Antonio

    SABC is not a government department. SABC is a paratatal like SAA. SABC should be allowed to purchase and broadcast premium content. SABC could make millions and millions more if they broadcast premium content. SABC might become self sustainable?

  • Antonio

    Bleeding costs. From Andrew Fraser “By using CA, a broadcaster can limit the broadcast to their subscriber base and only pay a license fee for that audience. The SABC has, say, potentially 50+ Million viewers on it’s FTA channel, it thus has to pay a license fee equivalent to that audience… “

  • Greg Mahlknecht

    So you’re saying the bleed can be minimized? With Botswana having a population of 2 million, how many can live within the thin strip of bled signal? It’s a rounding error, man – isn’t going to make a material difference.

  • Antonio

    According to discussions at Discop it is not only Botswana. Count all your neighbours: Swaziland, Lesotho, Moz, Zim, Bot and Namibia.

  • Andrew Fraser

    Seriously? The number of viewers in the bleed areas is so small as to be inconsequential. There are potentially 50 million viewers in Soutj Africa. Botswana’s total population (not those in the bleed area) is all of 2 million. I don’t think your argument holds any water. Spotting a trend here?

  • Greg Mahlknecht

    Got any actual numbers? Are we talking hundreds of thousands? Millions? Tens of millions?

  • Antonio

    Bleeding is definitely not the major case for CA. Bleeding was mentioned at Discop as one driver for CA. The most important cases for CA are premium content and job creation.Let’s focus on the serious issues. Bleeding stands last in the queue. so let’s ignore bleeding.

  • Greg Mahlknecht

    Okay well “job creation” is another term for tenderpreneuring – we’re just going to buy from china and repack. So we can throw that out the window right now. It’s clear those guys are just at Discop to drive their agenda. So we can ignore bleeding and job creation. What’s left?

  • Antonio

    Job creation might be the reason for DOE to decide to go with CA. Government must create jobs – we sit on a time bomb. If CA can create jobs why not? Most TV’s are imported and boxed here. It keeps hundreds of workers happy and out of your home.

  • Greg Mahlknecht

    So you’re basically admitting you’re happy to pay people taxpayer money to pack boxes. That’s the reason for CA. Your entire argument has devolved in to that. Aiysh.

  • Antonio

    Missing it again. We are saying that Department of Comms might use job creation as their major reason to go with CA.
    We are more interested in premium content for all.

  • Marcan

    You are seriously deluded to think it’s a primary, core function of any government to supply the masses of the country with Premium content TV, that has very little direct educational value.
    Most people will accept that their hard earned money that goes to SARS pays for education for all to some kind of acceptable standards( not the present Motshekga/Ndzimande levels), to healthcare for the poor, and for infrastructure.
    But to support the highly inefficient, wasteful SABC/Sentech in further expansion is total madness. And that’s exactly what the present ruling party wants. R 2-3 Billion is already spent on DVB-T2 transmission equipment by Sentech. The original approved amount of R 2.4 Billion to subsidise the state controlled local production of STBs for the poor is never going to be adequate, as some sources report the DoC is considering also to include aerial and installation. A R 5-6 Billion is the more likely outcome, born by the taxpayer.
    At the big ANC Mangaung conference last Dec, the ruling party pledged full support to the SABC and willingness to fund them up to 70%. The SABC has requested R 7 Billion to expand their number of channels, AFAIK not yet approved. The SABC has hardly repaid the R 1.5 Billion bailout it received some years ago, after it went in reality totally belly up under the “excellent” stewardship of human rights lawyer Adv Dali Mpofu.
    The country could have gone fully Digital 10 years ago when Sentech would have done anything useful with their Vivid platform. Decoders were very poorly marketed, very hard to come by, and ridiculously expensive. I believe R1140 was the lowest price ever, while on could pick up a Philibao Sat receiver which had cracked the Nagravision CA system, and included PVR USB capabiliy on a separate flashdrive for R280 just across our borders. Sentech should have taken out the encryption, CA from their Vivid signal and SA should have allowed free import of Sat receivers.
    The hugely increased income from commercials, because of the bigger audience, could easily have paid the content providers. After all, at least up till recently SABC got 80% of their income from advertisements. And only 18% from TV licenses. In that way we could have shut the analogue signal a decade ago. And got rid of the TV license, which only 30% of households pay anyway, at the same time. For premium content we could make use pay TV broadcasters.
    Antonio, please try to sell your CA to North Korea, Iran and Turkmenistan. Three of the most authoritarian, undemocratic countries on this planet. I watched a very interesting travel program earlier this year on my FTA Sat receiver(No CA, encryption) on a West European station about Turkmenistan. Absolutely surreal. Every step of this camera team was watched by Government guides and security staff. And they still had to erase most recorded material. Only through trickery they managed to smuggle anything out of that country.
    But as we in SA have spend already Billions on DTT, the best is to scrap CA, scrap this Governement program of production ad distribution of STBs and subsidy for the poor. leave the manufacturing and distribution totally to the free market. Abolish TV licenses, and after SA has auctioned of first SAA and Telkom, SABC/Sentech should be privatised. In that case it might be very well that no commercial broadcaster is interested to purchase and maintain the large terrestrial Sentech transmission network.

  • Andrew Fraser

    1000% sense to you, maybe. I withhold my opinion on how relevant your views are.

  • Vuyo Singiswa

    It really pains me that in November 2014 South Africa is still bickering on access issues on the digital terrestrial platform which I am pretty sure isn’t even future proofed for IPTV. Somebody shoot me Pleeeeeeeease!

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