The Communications Authority (CA) last year disbursed Sh2.1 billion from the Universal Service Fund, money contributed by telecom firms for projects to bridge the digital divide in Kenya.
In a statement to the Business Daily, the regulator said most of the money went towards expanding voice infrastructure in underserved regions of the country.
Mobile network operators were awarded contracts worth Sh1.25 billion to expand their voice services to 78 sub-locations across the country. These sub-locations were identified in a 2016 study on the gaps in access to telecom services and most of them are in northern Kenya.
In addition, the CA says that it is spending Sh837 million to subsidise the connection of 896 public secondary schools from the 47 counties to high speed Internet. This project is being carried out in partnership with the Ministry of Education.
The CA signed the contracts for connecting the secondary schools last year with three companies — Liquid Telecom, Xtranet Communications and Comcarrier Satellite Services.
Under the project, the CA is meeting the initial costs of setting up the connectivity and part of the operating costs for an initial period of five years.
Telecom operators contribute the equivalent of 0.5 per cent their annual turnover to the USF, which in turn, is managed by the Universal Service Advisory Council.
The CA contributes 25 per cent of it surplus revenue to the fund.
The USF levy became effective in 2013 and as of July 2017, the CA said Sh5.3 billion had been collected for the kitty.
While Internet penetration and ICT use has grown fast in Kenya, swathes of the country are still in the dark. In most cases these regions are sparsely populated and would, therefore, not bring in the revenues sought by commercial mobile operators.
With the USF money, the CA subsidises operators, incentivising their expansion into these regions.
Information from a 2017 report on competition in the sector suggests that the operators may get 12 months exclusive use for the infrastructure they set up in these areas before they are required to share the towers with other telecoms at a regulated fee.