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New tax to pay for internet speed

InternetPlayers in the local ICT sector would begun contributing to the Universal Service Fund since July in a move meant to intensify the penetration of mobile and internet services in the country.

Communications Commission of Kenya (CCK) licensees will be required to remit 0.5 per cent of their annual revenues as the fund finally starts after more than two years after it was created through an Act of Parliament.

The delay was caused by the failure of Information minister Samuel Poghisio in naming a board to run the fund and also due to disagreements among major players on how it should function.

But, CCK said that most of the issues have been settled, and a consultative meeting is likely to take place after the March 4 General Election to achieve a full consensus between the regulator and operators.

The CCK director general Francis Wangusi said that they had tried their utmost to solve those outstanding issues, and they are prepared to start collecting the levy in July this year. They have planned a meeting with the industry stakeholders to iron out all the details of the project, but they are required to start giving their contributions.

The new levy is meant to expand the reach of modern information and communication services to remote areas that market players do not consider to be commercially viable.

The fund would be administered by an advisory council that has been charged with making decisions about which projects would be given priority.

Mobile operators, while agreeing on the importance of contributing to the Universal Service Fund, have remained divided over the question of how the money should be utilised and the composition of the council to administer the fund.

While only yuMobile has so far committed to start remitting its contribution to the fund in its current form, other operators have cited concerns which they say must be resolved before they can participate.

yuMobile chief executive Madhur Taneja, in a statement, said that they supported the decision and would contribute the relevant tax when applicable.

But the other operators, although are in agreement with the idea behind the Universal Service Fund (USF), maintain their stand that a few concerns have to be settled before they can begin contributing.

At the top of the list of demands is a direct representation on the advisory council, the decision-making body of the fund. As contributors, they are of the opinion that they should have a say on which projects receive priority funding.

Safaricom corporate affairs director Nzioka Waita said that in the present condition there was no industry involvement in the administration of the fund. They would also like to know beforehand what the regulator intends to do with the fund and what projects will receive priority.

But, Mr. Wangusi last week insisted that the commission had given the players a chance to forward names of the nominees for the advisory council, but the positions were limited.

Mr. Wangusi added that they had written to the licensees a long time ago to forward names and CVs of their nominees to the council, but most of them had delayed in sending the information. No one should complain that they were not given a chance to be represented on the board. The CCK had nothing to conceal and everyone understood the purpose of the fund.

He also said that the CCK was considering creating an oversight committee comprising of representatives of all the licensees to keep a watch over the decisions of the advisory council and monitor how the fund would be used.

Mr. Wangusi also said that they would be suggesting that the mobile operators and all the other licensees should come together to play an oversight role. That was important as they would be positioned to ensure that the fund was being deployed to the intended purposes.

The tax would be applicable to all licensees in the information and communications sector including mobile operators, broadcasters, internet service providers and postal/courier service providers.

The fund would be part of the strategy Kenya was employing to fulfil the objectives of the five-year national ICT master-plan that was launched last week. The road map visualises connecting every Kenyan household to high speed and affordable Internet service by 2017.

It also projects that more than 500 new companies would have been registered in the sector in Kenya with more than 50,000 jobs created in the ICT sector as the country is transformed into a middle-income society.

Under the new scheme, the Universal Service Fund would serve the purpose of spreading connectivity to remote parts of the country providing the possibility of accessing government services online.

Image courtesy: FreeDigitalPhotos.net

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