Pay-TV providers have blamed the low penetration of their services on import duty imposed on decoders.
Taxes paid on TV decoders account for 45 per cent of the cost of the gadget.
Operators say a 16 per cent tax would enable them to reduce prices, a view the government said it was evaluating.
“Import taxes on decoders are a major discouraging element in the uptake of pay television services in the country,” said MultiChoice Kenya general manager Stephen Isaboke.
Information and Communications PS Bitange Ndemo said yesterday that the high taxes on decoders could also stifle migration to digital broadcasting.
“We need to review import taxes if we are to achieve a smooth transition of the digital migration and also to boost pay TV,” said Dr Ndemo.
On average, a pay TV decoder costs Sh6,000.
Service providers said the price can fall to Sh3,260 if import duty is waived.
The uptake rate of pay TV currently stands at one per cent with DStv dominating the market for the last 15 years.
The service provider has 100,000 clients compared to 35,000 for its nearest competitor Zuku. SmartTV and Pay TV are new entrants in the segment.
Kenya has set next June as the date for the switch to digital migration, ahead of the global deadline of 2015.
The move will require more than 2.5 million household TV owners to acquire signal decoders or upgrade their sets using set top boxes. “Most governments such as the US which has successfully migrated had to subsidise the gadget or buy them for their citizens,” Mr Ndemo said.
Smart TV chief executive Daniel Kagwe said that the public needs to be sensitised on the switch from analogue to digital.
“We need to have a clear policy on decoders so traders can decide on whether to start importing the gadgets,” said Mr Kagwe.
Increased competition among pay TV service providers has seen DStv introduce cheaper bouquets that cost as low as Sh900 compared to Sh3,000 five years ago.
Wananchi, which offers Zuku TV, has also cut prices of its products to between Sh999 and Sh2,999.
The company has applied to the Communications Commission of Kenya (CCK) to be allowed to offer its services through mobile phones.