Exempt media from universal service payments, says CA study

A study commissioned by the Communications Authority of Kenya has proposed exemption of media firms from paying 0.5 per cent of their gross revenue as levy for universal service access.

Media firms such as Nation Media Group, Standard Group and Royal Media, the study recommends, should be exempted from contributing to the Universal Service Fund (USF) due to low market penetration.

The recommendations contained in Access Gap Study, commissioned by Communications Authority of Kenya (CA) and released on Tuesday, observe that television broadcasting is yet to be categorised as a universal service.

The study indicates that the television household penetration stood at 32 per cent of the country’s 12 million households as at 2014 and for the television services to be considered a universal services the digital TV penetration ought to be at 75 per cent.

If adopted, the recommendation will come as a relief to media firms that are facing low business and registering losses or reduced earnings.
“The consultant therefore recommends that broadcasters should not necessarily be required to contribute to the USF until this point is reached.”

“The study considers digital television broadcasting service not to be part of universal service since penetration of television ownership is reported at only 32 per cent of the population in 2014,” read the report.

Effected in July 2013, the kitty has collected Sh3.94 billion. Telecoms, postal and courier service operators pay an equivalent of 0.5 per cent of their annual turnover while the CA contributes 25 per cent of its surplus revenue to the fund.

TV penetration
While the media houses have not made any contribution to the kitty in the last three years, the CA director-general Francis Wangusi said the agency has been working on a new licensing to enable such payments.

“The consultant view was based on the penetration of the television infrastructure. It did not consider other issues such as local content development which the fund can help to promote,” Mr Wangusi said.

According to the study free-to-air broadcasting is still the primary access method in more than 85 per cent of TV households, with pay-TV services in cities accounting for about 561,500 of the country’s 12 million households.

“Whereas there is a need for additional transmitters ... the sector has commenced with adequate facilities for a number of programme providers to distribute content via the national distribution networks,” the study noted.