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EXCLUSIVE: UCC Toughens as Pay TVs Reject Charge on Shs 300bn Annual Revenue Base

On April 25, representatives of top pay TV operating in Uganda convened at the Uganda Communications (UCC) Executive Director’s boardroom on the fourth floor of the Commission’s Building in Bugolobi, Kampala.

Led by Charles Hamya of Multichoice, the operators had earlier planted full page adverts in the mainstream newspapers in Uganda, challenging UCC’s decision to change the licensing regime.

The Pay TV operators made it clear to all and sundry they were opposed to the idea of charging 2 percent on their Gross Annual Revenue in addition to the fixed license rates.

They went ahead and threatened to increase subscription fees, whipping up public sentiments against UCC.

They had earlier protested the idea of UCC approving tariffs whenever there are changes.

The operators also rejected the idea of carrying Free to Air channels and have them remain free while broadcasters operating from outside Uganda said they would not pay license fees.

The tone was already set and battle lines clearly drawn in the sand.

UCC officials had made it clear the pay TV operators were waging a war on the regulator which amounted to waging a war on the country.

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They insisted the legal and regulatory framework in Uganda dictated that rates and charges for Communications services were regulated and thus a statutory requirement.

“Investors are not above the law,” one of the officials charged.

The top 5 Pay TV operators last year made revenues of over Shs 300 Bn combined, a situation that gave UCC moral justification to implement a new licensing regime.

Secondly, Kenya, Tanzania and Rwanda charge percentage of Gross Annual Revenue (GAR) on pay TV operators hence setting a precedent for Uganda.

Kenya charges 0.5 percent of GAR, Tanzania levies 0.8 percent while Rwanda takes away 1 percent.

Therefore, why would the same Pay TV operators doing business in these East African countries oppose the implementation of the same licensing model in Uganda?

So, when UCC ED Eng Godfrey Mutabazi walked into the boardroom, many expected a fiery exchange of words.

“But he was calm and jovial,” recalled an official who participated in the meeting.

“Accompanied by senior legal officials, Mutabazi was assertive and expressed the desire to have a win-win situation for the operators and the regulator and the success of the industry.”

Chronology of events

ChimpReports has learned that on September 5, 2017, the Commission communicated to the operators on the licensing framework.

Contrary to the operators’ statement that they had not been engaged, it emerged during the meeting that the Commission met and held discussions with representatives of Pay TVs on the new licensing framework and fees right from 2015 till the close of the review process in September 2017.

On October 2, 2017, the Commission met the Pay TV operators and presented to them details of the new licensing framework and fees structure before urging them to make comments on the matter.

A month later, UCC legal officials incorporated comments made by the operators before gazetting the new licensing regime and fees structure.

Whereas other operators in the communications sector including local radio and television stations embraced the new licensing regime, foreign Pay TV operators raised many concerns about the new regime and thus made a formal submission.

A joint meeting was held on 21 November 2017 at UCC headquarters in Bugolobi where the Commission gave a long brief on the issues that had been raised.

For example, UCC informed Pay TV operators that this new licensing framework would take effect on 1 January 2018 and all Pay TV operators just like their counterparts were reminded to apply for the appropriate license categories before end of December 2017.

Defiance

It appears Pay TV operators didn’t buy UCC’s idea hence defying Commission.

Disappointed, on March 12, UCC wrote to the operators to “comply with the new regime within 14 days” from the date of the said letter or face enforcement action.

“It is therefore not factual for Pay TV providers to claim that they have never been given the right to be heard and that the Commission breached the rules of natural justice by publishing the notice regarding their respective,” UCC said in a brief statement on Friday.

“Pay TV providers shall further recall that after the engagements, UCC revisited many provisions in the license agreements to accommodate the views and recommendations of the operators, evidence that UCC did indeed take into consideration the comment raised by the operators,” the commission added.

The Pay TV operators, still not being satisfied with the licensing regime petitioned the ICT Committee of Parliament.

UCC says it provided its justification for the new regime to the ICT Committee.

After receiving a final reminder on 12 March 2018, Pay TV operators still petitioned other government bodies on the same.

UCC said while it could fault the operators for petitioning other bodies of government, it “maintains that the operators engagements without other agencies didn’t in any way affect the legitimacy of the licensing regime which should have been implemented.”

But the operators insist the new fees are exorbitant and amount to an increment of 2400 percent from the current dues of Shs 22m.

UCC described this claim as a “blatant falsehood”, saying the operators “will be expected to retract it and publicly set the record straight.”

The regulator further stated the operators “must acknowledge that they are indeed noncompliant owing to the fact that they currently hold no licenses yet they have continued to offer communications services thus causing uncertainty in the industry.”

“It is therefore a misrepresentation of facts for the Pay TV providers to allege that consultations with the Commission were still ongoing yet this process was closed at the end of 2017 and they were expected to apply for the appropriate license categories by start of 2018.”

Section 44 of the Communications Act requires every licensee, at the end of each year of business to prepare and submit to the Commission, a report on the operations and services of the licensee and the extent to which the conditions of the licence are followed.

UCC lawyers told operators that whereas the Commission has for the past 3-4 year been requesting for audited financial records under the current licensing arrangements, for one reason or the other, all broadcasters have not submitted them.

Consumer complaints

UCC further said there was an outcry from consumers of Pay TV services regarding Toll Free numbers.

For example, DStv doesn’t have a toll free line with customers spending their airtime to have their issues resolved.

The pay TV also charges customers the prevailing exchange rate against the dollar which is not provided for under the terms of its licence.

It’s understood UCC is looking into this matter with the view of taking action against DStv.

UCC officials told TV operators there was need to enhance transparency and accountability to consumers by all pay television operators offering services in Uganda.

They further said they wanted a fair and more competitive environment for all players in the market with emphasis on local content.

Way forward

During a joint press briefing, operators and UCC said a committee has been set up to look into issues related to new licensing system.

Stakeholders are anxiously waiting for the recommendations from the committee setup to look into and resolve the license fee issue.

UCC insists regulation of the Broadcasting sector should be consistent with international best practice and aligned to the rest of the Communications sector.

However, the fees paid by the Pay television operators should be fair, equitable with fees for similar services in the Communications sector and across the region.

Charges levied to customers by the Pay television operators should be transparent, reflective of cost, and justifiable.

UCC said the new licensing regime is focused on protecting consumers by allowing more regulatory visibility in the complaints and redress mechanisms of operators and as such do not expect excessive rate changes.

The only foreseeable challenge is that Pay TV operators will submit audited books of accounts for determination of applicable license fees and this has been contentious.

Statutory fines for breach of this requirement are likely to be seen.

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