Kenya’s Telecoms Firms Oppose One Percent Universal Fund

Telecoms

Telecommunications operators in Kenya have opposed plans by the industry regulator to levy a one per cent fee on their gross annual income to set up a universal fund. The bone of contention is that the Communications Commission of Kenya (CCK) plans to collect the levy under the proposed Universal Service Fund, and thereafter lend the money to the same entities as commercial loans.

The fee will be charged on all telecommunications licensees "with an annual gross turnover of over Ksh10 million ($128,205) at an amount not exceeding one per cent of their revenue with an exemption to the postal services, currently operated by state-run Postal Corporation of Kenya.

If adopted, the pool could potentially rival the Constituency Development Fund in three years, given an estimated Ksh700 million ($9.3 million) the telecom operators would pay to a proposed advisory board managed by the CCK.

Under the UN universal communications requirements, governments are mandated to provide the requisite infrastructure for communications services to all citizens under the Universal Service Charter.

The proposals as published in the Kenya Communications (Tariff) Regulations 2009, have brought about wide ranging measures including giving CCK the power to establish the Universal Service Advisory Council, which shall be mandated to manage the funds, advise on policy guidelines and identify geographical areas, and population groups that may benefit from the fund.

Most of the operators who spoke to The EastAfrican are opposed to the creation of the fund. "We are concerned about the management of the money, particularly the fact that the regulator will then be lending the same funds at an interest to operators to launch telecommunications services," said Safaricom chief executive officer, Michael Joseph.

This, Joseph, says would be tantamount to giving commercial loans to operators without recognising the fact that they have been investing heavily in network roll-out, product diversification and retail infrastructure.

Industry experts question the viability of the fund, which they say, according to the proposed regulation has fundamental loopholes in its setting, including factors like the expertise of its administration and the auditing of the fund's accounts. "The question is who shall be making these decisions and to whose interest?

The operators on the other hand say the coverage and service expansion are driven by the demand and supply and the population. "For example, it does not make business sense to roll out 3G services to the remotest part of Kenya where the population does not have the basic tools of accessing the Internet for commercial reasons, like electricity and laptops, it beats logic," said Rene Meza, Zain Kenya managing director in an interview.

Mr Meza says the issues of universal service should be best left to the operators who will roll out services based on business potential and a return on the investment, unlike where the fund will be used to roll out services that are premature in the selected regions.

The East African