An ABT Presentation to

The Portfolio Committee on Communications

Committee Room V454, Old Assembly Building, Parliament

Wednesday, 21 September 2011

“ABT’s State of Readiness for the DTT Migration”

Discussion Points

1. Who is ABT? 2. B-BBEE Roadmap 3. From RRC 06 to 2010 4. 2011 Highlights 5. Are we ready yet? 6. ABT Plans, preparations and achievements 7. Conclusion and Recommendations

Who is ABT?

Our Profile

The company was started off doing importing electronic devices in 2002. Taking advantage of RRC06 the business model was adapted in 2006. Management and ownership changes were effected to strengthen our BEE credentials and refocus our business for the African market. Today, ABT is a fully-fledged set-top-box design, sales, manufacturing and distributions company with local presence in Kenya, Zimbabwe and Uganda.

Who is ABT?

Our Daily Ethos

• Strive For Perfection

• Be Innovative

• Do Something Unique

• Be Accountable

• Tough Times call for Tough Minds

• Be Positive

The ABT Core Values

We mean digital

1. Quality

2. Passion

3. Integrity

4. Respect

5. Collaboration

Internal

Stakeholders

&

External

Stakeholders

• Our employees

• Our Shareholders

• The board and management

• Government : DOC, the DTI, DS&T, etc.

• Our (end-user) customers

• The suppliers: technology vendors

• The operators : SABC, etv, Mnet, etc.

Our Stakeholders

ABT: A Corporate Citizen

A Proud product of

BEE Laws

A Proponent

of transformation

A Promoter of Women

Empowerment

A Protector of Human Rights

A Protagonist for all-round

value

A Pool of

Engineering Excellence

An Instrument

of Perfection

Pioneering

Pals

Bona fide African Electronics

Manufacture

African

beacon of

Hope

Youth

Employment

Who is ABT?

A good corporate citizen is

an instrument of perfection.

Try Us!

B-BBEE Roadmap

1998

BEE Commission established

2000

BEE Commission's

report released

2003

DTI released BEE

Strategy Document

2004

Jan : BEE Act gazetted

April : Drafting

Of Phase 1 of Codes began

Dec: Release

of first draft of Phase 1 for public comment

2005

Mar – Dec: Collation and comments on

Phase 1.

Drafting of Phase 2 began.

2nd draft

discussed with key private

Stakeholders.

Cabinet approved

Phase 1 in principle.

Release of

1st draft of Phase 1.

Release of

draft Of Phase 2.

2006

Cut off for public

comment on Phase 2.

Collation of

Comments on phase 2.

Simplified

Codes prepared for

Cabinet.

2007

Feb: Codes of

Good Practice gazetted

2008

Verification Manual

Drafting COGP - 3 main stakeholders –

• Government • Business • and Legal.

Phase 1 – Ownership and Management.

Phase 2 – Employment Equity, Skills Development, Preferential Procurement, Enterprise Development,

Socio-Economic Development.

B-BBEE: What does it mean?

A strategy aimed at substantially increasing black participation at all levels of the economy.

Definition of B-BBEE by Commission

Objectives of the Strategy

Redress the imbalances of the past by transferring more ownership, management and control of South Africa’s financial and economic resources to the majority of its citizens.

Ensure broader and meaningful participation in the economy by black people.

From RRC 06 to 2010

2002 : The DBAB recommended the DVB family of standards

Jun 2006 : South Africa signs the ITU’s RRC06

Nov 2006 : DMWG recommends DVB-T to Min of Communications

2006 : ABT founded as importers of STBs (under different ownership)

2006 : ABT remodeled to take advantage of RRC06 benefits

Sept 2008 : DBM Policy published by Minister

Oct 2008 : ABT Partnered with a Korean technology company

Nov 2008 : DTT trials started

2008 : ABT Participated at all industry-DOC Policy draft meetings

2008 : Cabinet approved the DMB Policy

ABT in 2011 : Highlights

2011 : Firmed up ABT’s grip on (some) African markets

2011 : Developed non-DTT (STB) business in SA and parts of Africa

2011 : ABT offloads Korean partners; rearranged a suite of technologies

June 2011 : “ABT DTT Migration Educational Campaign” launched

2011 : Lined up the licensed technologies and IP ownership strategy

2011 : Ensured a successful conclusion of the TC74

2011 : Reworked the ABT business plan

2011 : Revamped ABT shareholder structure

2011 : Reviewed all our supplier contracts

2011 : Secured two prospective funders

Are Manufacturers ready for DTT?

Despite the delays and changes since 2009…

Feb 2010 : Digital Migration Regulations were published

Mar 2010 : DTI organized the manufacturers into formal a structure

Apr 2010 : DOC held a 2-day DTT standards symposium

Aug 2010 : ABT set-top-box passed conformance tests with SABC and eTV

17 Jul 2010 : Presented to the Portfolio Committee meeting in Randburg

2010 : ABT participated fully at TC74 to date

2010 : DVB-T versus ISDBT farce wasted 9 months or 3 FYQs

2010 : Local delays… Africa here we come!

Yes, ABT is ready

• All the key contracts are in place

• World-class production facility in Ekurhuleni, Gauteng

• Skilled personnel: design and electronics engineers

• Retail and Distribution plans

• Appropriate funding arrangements in place

• Installations and after service plan completed

• Public Education and Awareness Campaign running

Making hay while the sun shines

ABT Product Roadmap

FTA/CI/CAS

Mobile TV

Integrated

IP STB

HD

PVR

2012/13 2009/10 2011/12

FTA/CI

Pocket

Multimedia

Center

IP STB

Integrated STB HD PVR

CAS

Multi-Room

1-SEG

MPEG4 H.264

P-VOD

MHEG 5

Open TV

Bluetooth

STB

ACAP/OCAP

MULTIMEDIA

HOME

GATEWAY

DAB/MP3 DMB

Cutting-edge Technologies

ABT chooses as a chip vendor and a technical partner

STMicroelectronics

It’s about technology…

• ST Microelectronics is the market leader for STB solution in the EMEA region

• ST has publically announced that it will support emerging markets

• ST has the highest integration using the very latest technology

• The only chip vendor with a single chip T2 solution today

• ST provides good service from their regional and divisional departments

• A 10 Billion dollar international company

ABT Procures ST

…and the best support

STB design Process

ABT is committed to localize the design of our T2 DTT box offering. This requires various steps in collaboration with the chip vendor – ST and software partners

1. Sign agreements between ABT & ST including a development license agreement (STAPI License)

2. Get technical information and advise on the latest technology applicable to the DVB-T2 market

3. Purchase a DVB-T2 development platform + programming equipment from ST (+/- US$100 00.00)

4. Procure engineers/skills locally to start working on the localized T2 PCB

5. Produce, populate and test prototype PCB’s

6. Start testing/debugging with software (middleware) company

7. Re-spin the PCB if any peripherals (USB, memory, video, audio etc.) do not work

8. Continue testing and debugging the hardware with the software/middleware partner

STB Trial Procedure

Once a working proto-type exists, testing the box starts on the T2 trial network.

Testing includes the following steps:

1. Monitoring the box for reliable operation 24 hours per day

2. Ensuring that the box conforms to the local specification

3. Once the UI specs are known to ABT, we test the functionality and compliance of the UI

4. Many collaboration sessions take place between hardware and software engineers

5. Various versions of software are downloaded, flashed into the STB and tested 3 to 6 months

In Preparation for Production

• It must be noted that the procedures and project phases use an “open” chip. That means the proto-type chips get supplied by ST without any security and with all codec's enables for testing purposes. ST will supply a maximum of 20 sample chips to ABT.

• ABT then moves into the pre-production phase and complies with the following steps:

1. Reply to ST’s Silicon Request Form (SIRF – see PDF example attached).

2. This request form is necessary as the chips supplied to ABT will be specific to ABT and cannot be sold to any other company

3. ST uses the SIRF form to confirm that ABT’s local manufacturers are indeed licensed to use the features (Adobe, Dolby, MHEG5 etc.) requested by ABT. The license verification procedure is a legal procedure between ST and the various license supplier companies.

In Preparation for Production Cont.

At this stage it is ABSOLUTELY VITAL that ABT are in the possession of the following:

• Complete specification for the South African DVB-T2 box.

• Complete specification of any security (STB control, Conditional Access etc.) scheme that the DOC requires.

If ABT does not have this information available at this time, the chip set manufacturer (ST) cannot commence to produce chips. • Please be advised the standard lead time for DVB-T2 chip are currently 20 weeks.

Production Phase

Once the National trial commences ABT will supply the required quota of our boxes to this process for testing and evaluation

At this stage it is highly unlikely that any hardware changes are needed. However, ABT will collaborate within the trial framework and effect any changes needed – hardware or software to ensure complete compliance.

ST’s EMEA Market

EMEA market share in

excess of 50%!

Adverse Impact of Indecisions

• Confusion at home

• Contradicted the Cabinet decision

• Rendered our integrity questionable

• Eroded established leadership in our quest for African markets

• Cost jobs

• Put companies out of business

• Allowed Chinese inroads in what should have been South Africa’s “slice of the pie”

Three years ago this month, a spanner was thrown in the Policy works of the Migration

The STB Manufacturing Strategy

STB Manufacturing Strategy stipulates that: • The BDM Policy seeks to ensure that STBs are manufactured locally

• There’s a need to revive SA’s electronics industry, leading to:

1. Job creation

2. Skills generation

3. Electronics sector transformation

• Capacitate local manufacturers to

1. export to African countries

2. introduce new players

3. reinforce the value chain (installations, logistics, retail, call-centre, etc.)

The Case of Elprom

• Elprom Electronic Product Manufacturers was founded in 1991 in Stellenbosch • Employed over 350 people • Donated to Boland College's Strand Campus electronic components to the value

of over R25 000 on Friday, 13 August 2010. • In August 2011 it was liquidated; 350 jobs lost

A trend to be reversed

• The electronics manufacturing bled since mid-1990s

• Many factories closed over the last 10 years, including:

– Becker Radio

– Tedelex (from 1969 to June 2010)

– Eltron

– Elprom

• Since 2000, employment has more than halved

• Hence, DTI, Industrial Policy Plan specifically focus on uplifting the electronics manufacturing sector.

Losing more than jobs

• More than 350 Jobs wiped out

• Government revenues lost (VAT, rates & taxes, etc.)

• Socio-economic evils creep in (crime, ill-health, etc.)

• Global competitiveness impeded

The threats and the threatened

The STB Control System!

Scheme for Ownership Support

Coordination of functions, processes, agencies, etc

The very noble objectives of the STB Strategy

Conclusion and Recommendations

Harmonize efforts, coordinate tasks to save time and money

Ensure continuity of programmes to stimulate certainty

Incorporate lessons from jurisdictions that have migrated ahead of us

Communicate, communicate and communicate again to instill trust

Are We Ready?

ABT is ready

Our competitors are ready

The electronics industry at large is ready

Inkomu

Enkosi

Are We Ready?

Yes, we are!

Yes, we are!

Yes, we are!

Yes, we are!

Yes, we are!

Prepared and Presented by: Muzi Makhaye