Viability of PPP option in digital transition

TODAY is June 17, the date set aside by the International Telecommunications Union (ITU) for member nations to transit from analogue to digital broadcasting globally.

Nigeria was a major signatory to the 2006 Geneva agreement between the ITU and member countries, in which an accord was reached that nations must switchover from analogue to digital transmission today.

Just like many other nations, and Nigeria, in the bureaucratic characteristics of its leadership, failed to meet the today’s deadline, owing to several factors, chief of which was getting the required budget from government to execute the task.

Digital migration refers to the shift from analog broadcasting to digital broadcasting, involving many changes of the transmission signals as well as making sure that members of the public can buy high definition television sets and dispose of their standard definition television sets.

Indeed, while the likes of sub-Saharan African (SSA) countries including Kenya, Tanzania, Namibia, Mozambique, claimed to have met the deadline ahead of time, leading power houses of the continent, including Nigeria, South Africa, Egypt, among others have asked for extension of between 12 to 18 months to re-drive the entire processes.

Setting up of the DigiTeam
Although, all technical issues revolving around Nigeria’s digitization process were said to have been perfected, according to the Head of DigiTeam, a Presidential Advisory Committee (PAC) set up to fastrack the country’s process of migrating, Edward Amana, no funding was gotten from government for the project.

The Director-General of the National Broadcasting Commission (NBC), EmekaMba, had at a forum in Lagos in 2014, said Nigeria required about N60 billion for the project to be executed successfully.

While the funding challenge rages, there were also issues around non availability of the key facility—Set-Top-Boxes (STB)—that will enable access to digital signals.
Trully, the plan marshalled by the PAC, in its report submitted in June 2009 had proposed the STB (decoders) to be mass-produced locally on or before June 17, 2012, which was also seen as a step that would have provided employment opportunities for Nigerians.

In the report, which was later adopted by the Federal Executive Council in April 2012, STB manufacturing companies were recommended to be licensed and mandated to produce the facility locally.

But because the DigiTeam Nigeria was not inaugurated until December 20, 2012, the manufacturing of STBs was not licensed until third quarter of 2014.

The Guardian reliably gathered that 12 manufacturing companies have been licensed for the production of (decoders) in the country.

78% Nigeria’s TV viewers at the risk of service disruptions
With the reality now dawn on Nigeria and ITU sanctions imminent, 78 per cent of the country’s television household population of 20 million homes may also start to experience service disruptions on their television sets any moment from now from neighboring countries, should they migrate.

The remaining 22 per cent penetration are benefitting digitally through their subscriptions to services of pay television stations like the DStv (which recently hike its access tariffs), Startimes, GoTV, StarSat, ACTv, among others.

Indeed, responding to The Guardianenquiries on the level of Nigeria’s preparedness to switchover, in March, Mba, an engineer, emphasized that the country was already going digital and that the transition was on-going at that moment.

According to him, “we have currently a digital television penetration of around 22 per cent of the total Nigerian TV household. The major outstanding task is ensuring that the remaining 78 per cent of our TV household population of about 20 million homes will have set top boxes for Free to Air television reception before June 17th, analogue switch off deadline.”

Huge economic losses
While the country also loses opportunities of creating jobs in the immediate, if it had switchover today, especially in the manufacturing of STBs, marketing and content creations, among others, Nigeria, just like a few other SSA countries, will miss its own share of the $82 billion ‘digital dividend’ by 2025, as projected by the Global System for Mobile Telecommunication Association (GSMA).

According to the GSMA, if the transition was properly and timely executed, it anticipated that the sale of analogue frequencies no longer used by broadcasters could bring the government over $2 billion.

Additionally, GSMA research indicated that through the release of digital dividend spectrum, SSA stands to increase its yearly regional GDP by $82 billion by 2025, while in the process earning $18 billion in incremental tax revenues and creates 27 million jobs.

Transition experiences from other nations that beat the deadline
At the 5th edition of the yearly African Digital TV Development Seminar, organized by StarTimes Group, leading Chinese Telecoms firm, last week in Beijing, China, some countries that met the deadline shared their experiences.

Tanzania’s Minister of Information, Culture, Youth and Sports, Dr. Fenella Mukangara, said the country started migration in phases from 2009 into 2012 and completed the process on April 30, 2015.

Mukangara said though, the process was challenging, “but with government support, massive awareness and sensitization by the agency in charge, we were able to complete switchover ahead of the June 17, 2015 deadline.”

She informed that in the process, government of Tanzania provided tax reliefs among other incentives for the importation of Set- Top- Boxes (STB), stressing that about one million was sold recently and that the country currently enjoys about 51digital channels.

Like Mukangara, the Director-General of Communications Authority of Kenya, Francis Wangusi, said after signing the Geneva agreement of 2006, the country established a task force, which saw it developed an Information and Communications Technology (ICT) policy that gave meaning to the process of migration.
Wangusi said by August 2015, Kenya should have attained 70 per cent migration, stressing that only areas without television would be left out.

According to him, some of the benefits the country enjoys now because of the migration includes; release of digital dividend spectrum for roll-out of other non-broadcast services, such as mobile broadband in the 694MHz to 800MHz; improved environmental conservation, because operators now share infrastructure; quality digital picture with a target to have 40 per cent local content channels by 2017; creation of business opportunities and employment (content development; STBs manufacturing) and opportunity for Kenyans to have variety of channels.

Exploring PPP option in Nigeria, others
While Nigeria looks at the next 18 months to migrate, hopefully by December 2017, the President of StarTimes Group, Xinxing Pang, who is really pained that the country could not meet today’s deadline, recommended a PPP option for SSA countries.

Speaking at the China forum, which had 119 attendants from 29 nations, Pang said countries that failed to meet today’s deadline, should prepare for signal interference from border nations.

Pang, who said China has achieved migration, described digitalization as an irresistible trend, stressing that the process is about clear image on television and more convenient services that appeal to customer experience. According to him, China will always be ready to assist countries that are ready.

According to him, government of each country should lead the digitization process, while operators will follow. He stressed that the vision of Startimes was to help countries attain the level they never thought of in the information age, “and we have started that in Africa, currently in 28 African countries.”

Explaining the relevance of a PPP, Pang said StarTimes is ready to set up a Joint Venture Company or entity (hereinafter called “JV Co.”) with the enterprise designated by the government, stressing that the JV Co. shall be the project operator.

He said government consigns JV Co. franchise right to undertake the basic business of digitizing television, and will grant operating license and necessary frequencies for operation to the JV Co. and be responsible for the concessional loan application and consigns the JV Co. preferential policy.

“StarTimes shall be responsible for the self-financing of the preferential buyer’s credit, project construction and personnel training; the JV Co. shall be responsible for the operation and loan repayment after the construction accomplished”, he stated.

On the DTV Basis Business, the StarTimes Group President said the firm would provide transmission service for national and private TV stations, and charges transmission fee.

“Subsidizing STB and provide each family who has a TV set with a STB (STB Price after subsidy: $10); providing basic program package (more than 30 channels including FTA TV channels, $2 to $3 monthly fee) and providing free STBs for government-designated poor households, providing digital TV programs of national TV station for free to achieve universal digital television service”, he added.

In the area of financing, Pang projected $192 million, among which there will be concessional loan of $162 million (normally Loan to Value ≤ 85% of total investment amount), with a period of 20 years, at two per cent yearly interest rate and five years Self-funding amounting to $30 million, invested by StarTimes (normally self-funding ≥ 15% of total investment amount.

In the project implementation, Pang said StarTimes shall be responsible for the construction works, while JV Co. shall be responsible for the operation and repayment with a construction period of two years and repayment period of 18 years.

Explaining the win-win situation, Pang said government will bring in capital, technology, management skills, talents, and training and cultivate a new industry; realizing national digitization on schedule, flourishing broadcasting and TV industry; improving national quality and social development; releasing spectrum resources; boosting IT industry development and obtaining digitalization dividends.