UCC to increase RCDF levy and telcos will not be happy

By Edris Kisambira September 01, 2009
Players in Uganda’s communications sector should brace themselves for a further cut in their profit margins as the industry regulator looks to further boost the Rural Communications Development Fund (RCDF).
The RCDF programme, which aims to deliver communication services to parts of the country that commercial players consider unviable, was set up by the Uganda Communications Commission (UCC) to drive its universal access agenda.
According to a draft Rural Communication Development Policy (RCDP)-II, UCC needs US$17 million per year to finance increased coverage of the RCDF activities across the country.
The 1% levy operators pay to UCC today off their annual profits can only raise $4 million and according to the draft policy, that amount does not ensure sufficient RCDF inflows.
“The law talks of a maximum of 2.5% and today we are still frugal at 1%. It is possible it can be revived downwards but it may go up if you look at the demand that still exists,” Mr. Patrick Masambu, the executive director UCC said. “The mandate to reduce or decrease the levy is with the minister but we will advice.”
Masambu was reacting to concerns raised by officials from the operators who reckon the levy should not be raised further because there are now more players in the sector than was the case when the first phase of the RCDF programme was instituted.
However, the policy also suggested other avenues of raising the $17 million. It could also take the form of making provision for it in the national budget and engaging development partners.
The new RCDF policy proposes to make it more collaborative, with other government arms with a view of mainstreaming some of the RCDF-initiated interventions into other sector strategies.
It also aims aim to achieve a target of 1 pay phone per village (with an adult population of at least 500 people) by 2015 by deploying at least 2,500 public pay phones per year in underserved areas only.
According to the draft RCDF policy 2009, although the geographical isolation gap has been substantially addressed by the increase of major telecommunications operators in Uganda, new demand for extending the RCDF is informed by the gap of inadequate ICT awareness that still exists and needs further tackling.
Others are the poverty gap that has not been addressed and very low functional ICT literacy is a gap that still persists and requires further RCDF intervention.
It said access to ICT services was improved by the first phase but coverage gaps and inadequate range of basic services still require RCDF intervention.
It said affordability has improved a lot but costs are still substantially higher than what is feasible for average income levels and RCDP-II should continues to catalyze further lowering of ICT costs.
The policy proposes the modernization and expansion of postal services by effectively supporting at least one initiative that aims to either modernize or expand coverage of postal services in Uganda.
Further, the new RCDF will support the establishment of at least one community information centre (CIC) per underserved local area (LCIII), as a profitable business providing essential ICT and related services (postal services, public pay phone, email and internet and financial services) aiming at a minimum of 150 CICs per year.
To ensure easier sustainability, RCDF-supported CICs should target viable points of population convergence such as trading centres, market sites, medium and large health units, local administration points and education institutions.
It will also support the establishment of at least a 40-workstation IT laboratory with broadband access in a total of a minimum of 200 educational institutions (including both Universal Primary Education and Universal Secondary Education schools) that are located in underserved areas per year.
RCDF will also support at least three collaborative initiatives (each year) to sustainably develop and disseminate local ICT content and its application in areas like health, education, market information, agriculture, local administration and commerce so as to encourage faster uptake of ICT.
It will support at least two institutions of higher learning each year to undertake research that explores new ways of using ICT to support rural development.
The new RCDF will also help disseminate the findings and support the improvement of sustainability by providing entrepreneurial training (including business planning) for the managers of all new RCDF supported projects.
With the increased funding, the draft proposes catalyzing the utilization of renewable energy sources (such as wind and solar) to power rural ICT projects and encourage use of the national fibre backbone for the delivery of broadband to underserved communities.
This will be done by the fund supporting the establishment of at least four regional centres of excellence each year that demonstrate the use of new technologies to address the challenges of ICT delivery and utilization in rural areas.
According to the draft, the first phase did not adequately address or document the human development impact and should be addressed in the second phase. It said underlying technology issues (unreliable power, last mile technologies, equipment requiring less maintenance) should not curtail the second phase.