Uganda: Anxiety as Regulator, Pay TV Operators Dispute Over Fees

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In a war that initially played out in paid adverts in the dailies, a dispute between Uganda's pay TV operators and the communication regulator is keeping consumers on the edge.

The Uganda Communications Commission (UCC) wants a bigger slice of the pie it says pay TV operators in the country have been enjoying while paying a paltry amount in annual license fees while pocketing profits in billions of shillings.

"We know their revenue that is why we are saying they should pay us this much," Pamella Ankunda, UCC spokesperson said without confirming the figures.

The industry, according to sources at the UCC say it rakes in about Ush300 billion ($81 million) a year.

The Pay TV operators have been locked in back-to-back meetings with the UCC over a flat rate of Ush540 million ($145,800) under the new licensing regulations that came to effect early this year.

The new flat fee is a departure from a percentage sharing that UCC charged saying it had benchmarked the practice from neighbouring countries like Kenya.

UCC's Manager for Consumer Affairs, Ibrahim Bbosa said "a committee has been setup comprised of all players to come up with a percentage rate for Uganda taking into consideration what's happening within the region."

"Initially we had opted for a flat fee due to challenges related to obtaining broadcasters audited financial reports," he added.

Section 68(3) of the communications Act requires UCC to levy not less than 2 per cent on the gross annual revenue of all broadcasters, a category where Pay TV operators falls under.

Under the previous licensing structure, a broadcaster licensee was charged Ush20 million ($5,400) per base station.

Therefore, to operate an effective nationwide service, a broadcaster needed 27 stations which translated to approximately Ush540 million ($145, 800).

Digital migration

Following the digital migration, the commission said it undertook an extensive consultative process taking into consideration views of all the stakeholders before concluding the introduction of new licensing frame work effective January 1, 2018.

UCC said it increased its charges after conducting a survey on digital migration in other east African countries where there was need to review fees for preferred licenses in the new licensing regime considering pay TV operators were having more channels per frequency, clear images, and on top gaining more returns on investments.

In the region Kenya charges a percentage fee of 0.5 per cent on gross annual revenue of Pay TV operators. Tanzania charges 0.8 per cent and Rwanda 1 per cent.

Section 44 of the communications Act requires every licensee to submit to the commission a report on the operations and services of the license and the extent to which the conditions of the license are followed at the end of every fiscal year.

The EastAfrican understands that for the past 4 years, the commission had been requesting for audited financial records under the current licensing arrangements in which all broadcasters failed to submit them.

In a statement dated March 23, UCC wrote to all broadcasters to comply with the new guidelines or risk their businesses closed.

The Commission further advised the public not to deal with non-compliant broadcasters to avoid inconvenience that may arise out of enforcement.

Presently, none of the Pay TV operators in the Ugandan market has been licensed by UCC in the current financial year.

Figures from UCC show that there are over 3.4 million TV sets in the country with about 2.5 million people using digital terrestrial broadcasting.

During the digital migration, pay TV operators reduced the cost of their services to as low as Ushs5,000 ($1) with some giving out free set top boxes.

For example, in 2015, StarTimes had about 450,000 subscribers but after digital migration, the number grew to about 550,000 subscribers as at the end of 2017.

Currently, most pay TV platforms in the Uganda market charge between Ush33,000 ($8.82) to Ush334,000 ($90) though many subscribers still find the prices exorbitant.

The operators, however, say any change in the rules will be passed on to consumers directly.

The Uganda Pay TV market is dominated by Chinese giant StarTimes, South African Multi Choice -- owners of Dstv and GOtv, Zuku TV, Kwese TV, StarSat TV and digital terrestrial transmission (DTT).


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Publish date : 2018-05-05 06:19:31
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