Digital TV uptake hit by high prices

Television viewers are shying away from buying set-top boxes because of the high prices, sellers say, blaming it for the slow uptake of the device.

High-end market brands of the recommended MPEG4-enabled boxes are currently priced at Sh10,000 and the lower end versions at between Sh6,500 and Sh7,700 — which they say is prohibitive to most buyers.

Prices were expected to drop early this year following last December’s directive by President Kibaki to Treasury and the Information ministry to work out how to give consumers a tax break and make the gadgets affordable.

The tax relief is expected to bring the costs within the Sh3,000 to Sh5,000 range that the government says is the right pricing for the Kenyan market.

Currently, the boxes attract 25 per cent import duty and a 16 per cent VAT levy.

The boxes, which convert analogue television signals to digital, enable viewers to have high quality sounds and pictures and access the internet using television sets.

Consumers can also record programmes or news items remotely and watch later.

James Mwangi, a retailer of the gadgets along Luthuli Avenue, said the number of enquiries have been growing but buyers are put off by prices.

“I can get five enquiries daily, but converting these to sales is proving difficult because of the pricing,” said Mr Mwangi.

“The prices are yet to come down since currently we get the gadgets mainly from one major supply contracted by KBC”

Information ministry officials last year said they had put a proposal to Treasury and were considering exempting the equipment from Value Added Tax (VAT) and import duty.

The KBC managing director, David Waweru, said they are still waiting to hear from the Treasury and ministry of Information about tax relief.

“Dealers are holding back on importing the gadgets mainly because they are still waiting for the tax cut by the government” said Mr Waweru.

The high cost of the boxes could slow down Kenya’s migration to digital broadcasting that the government says should be complete by 2012.

Kenya has slightly over five million analogue television sets that will require a similar number of set top boxes to receive digital signals.

The government has spent Sh200 million on the first phase of the migration and plans to spend another Sh3 billion on the project by 2015.

The government wants dealers to import set top boxes that are Digital Video Broadcasting Terrestrial (DVBT) and MPEG4 – enabled because Signet, the KBC subsidiary that is transmitting the digital signals has installed similar equipment.

Migration to digital TV is a global project that began at the 2006 telecommunications conference in Geneva that set June 2015 as the deadline by which all broadcasters are expected to have migrated.

Transition period

Kenya has set its own deadline of 2012, leaving a three-year transition period.

CCK is expected to switch off all broadcasters who will not have migrated by the deadline.

The migration is also seen as an attempt to level the playing field by removing the high cost of equipment that has acted as an entry barrier to potential investors.

All broadcasters will be required to sign transmission contracts with Signet upon licensing by the CCK.

The establishment of a single signal distributor leaves broadcasters with the task of generating content, opening a new competition front.