Shocking Details: N1.7b DSO equipment outmoded, unlicensed -Reps

Stakeholders in the Digital Switch Over from analogue broadcast in Nigeria have called for a judicial inquiry into the alleged expenditure of N1.7 billion on the Jos Pilot project of the DSO after a House of Representatives Adhoc Committee report adopted found that “equipment deployed so far were discovered to be outmoded” and “has no back up to equipment failure”.

The report also confirmed that ITS  is not licensed as a signal distributor and did not pay any license fee to the National Broadcasting Commission.

The N 1.7 billion was released by the Federal Government last year to Integrated Television Services (ITS) Ltd, a subsidiary of the Nigerian Television Authority (NTA) specifically for the procurement and installation of the required ultra-modern digital signal broadcast equipment towards a successful launch of the Jos Pilot Project.

The House committee report also stated that “the quality of delivery and service is below par” and recommended that this issue be further investigated in order to assure Nigerians and ensure standards in line with global best practices adding that “the actual amount paid to ITS by NBC must be ascertained for the records.” The report found that ITS did not acquire a signal distribution license neither did it pay any license fee to the NBC “despite being funded by the Government”.

The report also said another company, Inview Technology should be further investigated on public procurement infractions observed during the investigation as well as status of funds generated and utilized adding that “all parties that were not contemplated by the White Paper but were somewhat brought in albeit inadvertently by the regulator in furtherance of this process should be excised in the spirit of equity and integrity of the process as well as the country in general”.

It ordered that analogue broadcasting should not be switched off until 95% DSO coverage is achieved in the country while the Information Ministry and NBC should ensure regional collaboration on DSO timelines/final switch off date.

The Report said there should be an enactment of a new broadcasting law to encompass elements of digitisation, define roles and responsibilities of the Federal/ State/Local Governments and the Private Sector.

Already, the social media has been swamped by a flood of agitated comments on the site www.swansylinks.com/report-adhoc-committee-investigate-process-digital-broadcast-switch-dso-nigeria/  where the report can be found with expressions of concern about the looming possibility of another hitch in the DSO already thrice postponed and seemingly stalled after only the FCT successfully switched on in December last year and Kaduna and Ilorin awaiting commissioning six months past the rescheduled deadline of June 2017.

A stakeholder Ayo Salami who spoke to reporters condemned the “conspiracy of silence” between NTA, NBC and the supervising Information Ministry which owe a duty under public accountability to clear the air on the issues of N1.7 billion said to have been expended on procurement and installation of obsolete equipment discontinued by the manufacturer and the glaring failures of regulatory duties.

• Signal Distributor facilities’ integrity

• The Committee visited the transmission site of the two signal distributors and observed that the Integrated Television Services (ITS) transmits from Jos, Plateau State while Pinnacle Communications transmits from Abuja.
• The Committee discovered that ITS does not have signal distribution license but was allowed to operate as a Signal Distributor, neither has it paid any license fees to NBC despite being funded by Government.
• The quality of delivery and service is below par. Equipment deployed so far were discovered to be outmoded and lacking in redundancy. Investigation also shows that ITS has no back up to equipment failure.
• The Committee observed that the Shareholding structure of the Company was inappropriate. The 50 Million shares of the Company were held by serving Civil Servants whereas, as the National Signal Distributor, its shares should be held in trust by the Ministry of Finance Incorporated (MFI) in line with extant laws guiding such Government interests.
• There is an urgent need for the Federal Government of Nigeria through the Ministry of Information and Culture to redefine the structure of ITS in line with a private enterprise so that Nigerians can begin to realise the benefit or dividend of this investment.
• A visit to the Pinnacle site revealed heavy investment in the purchase of state of the art equipments that could compete favourably with the western world. The fact that the company bought and air-freighted equipment into the country at own cost in order to meet the DSO dateline showed their commitment and confidence in the process not mentioning financial competence.
• The only challenge by the Committee was the non-coverage of the entire FCT as envisaged. This was said to be because the mandate given to the Company by NBC was to cover FCT Metropolis only. However, areas that were not covered due to terrain and the intense rainy season would be incorporated using gap fillers
• Its license terms and conditions were said to have been infringed by NBC actions. Its operation and business as a Signal Distributor have been disrupted by NBC’s inability to follow strictly the provisions of the White Paper report from the beginning of the process. This has ultimately deprived the Signal Distributors of anticipated income as earlier observed.
• It is the considered opinion of the Committee that the Regulator must ensure that enabling environment is created as well as a level playing field is provided for all stakeholders in the DSO process to practise their trade without let or hindrance nor confer undue advantage on anyone to the detriment of another such that each and all participants are able to realise the benefit of their investment.

Summary of Findings.

5.1       Digital Switch Over Deadlines, Guaranteeing quality and cost effective service delivery

Active contributors included the Minister of the Federal Ministry of Information and Culture, Lai Mohammed, Chairman of Digiteam, Director General of NBC, NCC, STB Manufacturing Association, Signal Distributor, Chairman of BON, RATTAWU, NUJ etc

The Committee examined the feasibility of the switch off deadline, affordability in the overall context of the regulatory and infrastructure environment and in the realm of specific indicators which measures the cost effectiveness of the current process.

• The Committee gathered that the DSO Process was not driven by a legal or legislative framework. Failure to meet the 2012 and 2015 deadlines was due to lack of political will by successive Governments as they failed to appropriate funds for the digital transition. Budget to implement the switch over was not factored into the 2017 Appropriation Act despite the importance of the project in the light of the dateline for the DSO.
• The DSO process was not implemented according to the Federal Government White paper on digital transition in Nigeria. Investigation revealed that the mandate of Digiteam, the body set up to implement the DSO in the country, was usurped by the Management of NBC in the past, leading to total disconnect in the policy framework as reflected in policy inconsistency and regulatory irregularities that characterised the current process.
• The Ministry failed to effectively supervise the digital transition process in line with the policy framework. It is important to note that the decision to propose appropriate legislative and legal framework and amendments to existing laws and enactment of new legislation to realise the switch over as well as the task to ensure adequate communication with the Parliament resides with the Ministry only.
• The Minister maintained that the Signal Distributors, Content Aggregator and the STB Manufacturing Companies were licensed during the immediate past Administration, hence oblivious of utilization of Funds generated therefrom. This was considered a huge negligence of the supervisory role of the Ministry. Government is a continuum and Projects of national benefit like the DSO should be duly implemented irrespective of a change in Government.
• The Committee noted that NBC generated N34 billion from the sale of the 700MHz bandwidth to MTN, N650 Million as license fee from only one of the Signal Distributors and N50 million naira license fee from some of the Set top box Manufacturing Companies. These funds, being public funds, were not utilized in the manner prescribed by the National Assembly as provided in Section 80 of the 1999 Constitution and the Fiscal Responsibility Act, 2007.
• Licensing of STB manufacturers was inconsistent with the provision of the White paper report. The manufacturers were recommended to be selected based on their financial viability and offered trade incentives to encourage local manufacturing. The off takers guarantee account arrangement embraced by only seven (7) of the Manufacturing Companies was distorted mid-way by EFCC over alleged non-compliance with the TSA policy against NBC on the N10Billion deposited in Zenith Bank following existing commitments to the Companies. The controversy did not only delayed the transition process but led to huge demurrage and interest charges on loans collected by these Companies.
• With respect to quality and standard of DSO equipments, the Standard Organisation of Nigeria (SON) is the only body mandated by law to coordinate and develop standard for products and services in Nigeria to ensure compliance with approved standards. The Video compression and transmission standards as well as STB standard specifications were approved without adequate consultation with the organisation
• Investigation revealed that SON was not carried along in the DSO project from its conceptualization, thereby denied the opportunity to include the standardization and conformity assessment issues into the DSO project as provided in Recommendation 21 and 22 of the White paper report on Technical standards. Different specifications/models of the STBs were observed during the investigation.
• The White paper envisaged a self-sustaining digital transition policy given the guaranteed market for STBs. The Digiteam, in the scheme of things, was mandated to determine the end user price of STBs using economic indices, in order to ensure cost effectiveness of the transition. The Committee discovered that Subsidy on STBs, was not contemplated in the report but came up as part of efforts to meet the June 2017 DSO deadline, specifically to make STBs affordable for all categories of households in the country.
• Investigation revealed that the subsidy was evaluated on an initial cost of N3,500 per STB box based on a box retail price of $20 when $1-150 naira. Presently, each STB cost $45. With current exchange rate of $1-N350/N500 each STB would cost between N14,000 and N21,000 with removal of subsidy. While the Subsidy was clearly unsustainable, considering Government dwindling revenue, trade incentives so far given by NBC have neither reduced the cost of STBs nor achieved massive manufacturing of the Boxes locally as envisaged by the White Paper.
• The Committee noted that the actual cost of each STB was $40dollars; the remaining $5 dollar was paid directly to Inview Technology Ltd, the Middleware contracted by NBC. Thus, for the 620,000 Boxes imported and delivered to CCNL, the Content aggregator, observed during the oversight visit to STB Manufacturing Plants, about $3.1 million dollars have been paid directly to Inview Technology. The sum recognised as digital access fee (DAF) and shared 70:30 in favour of NBC was neither envisaged in the white paper nor driven by any existing law and thus, an unauthorized regulatory activity of NBC. This Fee collection, for good order sake, must be legalised or discontinued.
• The DSO pilot scheme launched in Plateau State on the Platform of ITS, as earlier observed, achieved digital switch over only in Nine (9) of the Seventeen (17) Local Government Areas of the State despite the N1Billion Naira expended by the State Government on the Pilot Scheme.
• The STBs were sold at a subsidized price of N1,500 and a N1000 Conditional Access Fee (CAF) was charged to activate the Box. The CAF which is a yearly routine fee for Subscribers was increased to N1500 in 2017 for unexplainable reasons.
• The DTT offers 21 channels of the 30 agreed by NBC. The roll out in Abuja in December, 2016 achieved on the Platform of Pinnacle Communications offers 30 channels of programming with high picture quality, reliability and redundancy.
• While quality and cost effective service delivery is most unlikely with the current implementation process particularly with subsidy removal by the Federal Government, allowing market forces to determine the cost and preferences of the viewership like any other electronic appliances in the market space as proposed by STB Manufacturers Association during the investigation, would defeat the essence of the DSO innovation in Nigeria.
• The Committee observed that State Government involvement in the DSO process was part of the new implementation strategy unveiled recently by NBC. The Strategy was adopted mainly to finance bulk purchase of STBs for indigenes of the States.  While it was commended, given the social element it represents, selective implementation of the switch over within states, as observed in Plateau State was condemned.
• The Committee condemned the proposed partnership of ITS/Startimes of China to achieve the switch over, given NTA/Startimes spread all over the Country. The Committee observed that the arrangement would require appropriating public funds for the Joint Venture. This strategy would be a disservice to the nation, hence the need to immediately redefine the nature and structure of the relationship.
• Investigation revealed that the recruitment of Nigcomsat Signal Distribution Centre to serve or function as a Multiplex Operator for the DSO as arranged by the Agency would guarantee a timely and cost effective medium for the switch over in Nigeria. However, Recommendation 12 of the White paper report (b) approved that Satellite signal distribution of NigComSat should only be available to all Signal Distributors on a commercial basis rather than being exclusively subsumed as part of the infrastructure of one of the Signal Distributors.
• The Committee submitted that facilities available within Nigcomsat should have been exhausted before foreign satellite providers and DTH/DTT operators were considered.

. Recommendations

1. That there should be an enactment of a new broadcasting law to encompass elements of digitisation, define roles and responsibilities of the Federal/ State/Local Governments and the Private Sector.
2. Amendments to existing legislation to incorporate Government policy recommendations on digital broadcasting in Nigeria and to legalise Digital Access Fee (DAF) and Conditional Access Fee (CAF).
3. There should be an amendment to the NBC Act to strengthen its regulatory responsibility and develop a standard regulatory documentation for digital broadcasting as contained in the White paper report.
4. There should be an effective collaboration between the Ministry of Information and NBC on the digital switch over process. NBC and the Ministry should develop the proposed National Media Content Policy for the Digital TV era, covering a media content master plan including media content fund (MCF) to fund content production. Management of the fund should be as proposed by the Ministry with necessary legal backing.
5. That optimal management of Spectrum for the DSO should be ensured by the Ministry. It is equally important to confirm the total amount harvested from the sale of the spectrum by NBC and how these monies were expended.
6. That Standard Organisation of Nigeria (SON) should be involved in the activities of STB Manufacturers to ensure standard and avoid a situation where the Country is turned into a dumping ground for substandard and obsolete equipments.
7. That NBC should collaborate with Nigcomsat on the best way to use its facilities for the switch over to enable the country conserve foreign exchange.
8. The Government should offer more incentives to STB Manufacturers to encourage local manufacturing of STBs but not necessarily subsidy.
9. That the license issued to Set Top box Manufacturers who have failed or neglected to establish manufacturing plants to engage our teeming unemployed youths and create other opportunities in pursuit of local content should be withdrawn forthwith in accordance with the terms of the license and consider licensing or replacing them with Nigerian companies who have capacity in accordance with the provisions of the White Paper.
10. The Ministry and other key stakeholders should initiate effective public enlightenment programme to create awareness on the process and expectations of the digital switch over.
11. That the ongoing phased/State implementation of the DSO strategy should be thoroughly supervised and monitored by the Ministry. Signal Distributors must exhibit capacity to cover at least 80% of an assigned state before being allocated or proceeding to another state.
12. That the issue surrounding the quality of equipment purchased by one of the licensed Signal Distributors as observed during the oversight tour of the Committee, should be further investigated in order to assure Nigerians and ensure standard in line with global best practices. The actual amount paid to ITS by NBC must be ascertained for the records.
13. NBC should coordinate activities of STB Manufacturers and the Content Aggregators in the manner recommended by the white paper.
14. That Inview Technology should be further investigated on public procurement infractions observed during the investigation as well as status of funds generated and utilized.
15. The Ministry and NBC should ensure regional collaboration on DSO timelines/final switch off date.
16. That Analogue broadcasting should not be switched off until 95% DSO coverage is achieved in the Country.
17. That all parties that were not contemplated by the White Paper but were somewhat brought in albeit inadvertently by the regulator in furtherance of this process should be excised in the spirit of equity and integrity of the process as well as the country in general.