Introduction
The telecommunications sector in Uganda was much worse than the regional average before the implementation of key policy reforms — privatisation and liberalisation of the economy in the late 1980s. Prior to that period, telecommunications services were provided by a state-owned monopoly — the Uganda Posts and Telecommunications Corporation (UP&TC). At the time of the reforms, UP&TC had 115 exchanges with the capacity to handle about 62,000 lines though only 30,499 were in service. As a result, for the period 1985 to 1995, there were only 1.6 main lines for every 1,000 inhabitants in Uganda. The penetration rate was low even in comparison to that of countries with similar levels of per capita income.

The turning point for the sector was the establishment of a second national operator in late 1997, won by a consortium led by MTN of South Africa. This was followed by the selling of 51 percent of its shares in the state operator, UTL, to a consortium of Egyptian and German telecom companies. Today, MTN has over 500,589 GSM customers while Celtel has 69,747 GSM customers. UTL has over 200,070 GSM customers. As the second national operator, MTN is required to install between 60,000 and 90,000 fixed lines throughout the country. It had installed 12,247 by March 2004. There are also five smaller operators providing cellular telephone, mobile radio communication, paging services, mobile trunked radio services and public phone, and leased line services.

Performance of the Sector
Overall output in the telecommunications sector is estimated to have increased by 12% in 2003/04 compared to 9.6% in 2002/03. The three mobile service providers continued registering growth estimated at between 3.8% and 4.2% during the FY 2003/04. Although the latest statistics about the customer base of the three mobile service companies are not readily available, Ministry of Works, Transport and Communications say the three companies continued to register increases in the number of customers. The tariffs for communications services continued to fall as competition intensified while new data and Internet services were availed to Ugandans.

The number of radio stations hitting the airwaves continued to increase with at least ten of the over 100 licenced stations launch their broadcasts between June 2003 and June 2004. In a related development, the Broadcasting Council — the government body charged with regulating the sub-sector — embarked launched its operations with the enforcement of licence fees for both radio and television stations. According to the regulations that were announced in 2000, radio stations within a 100km radius of Kampala are meant to pay sh5m annually, followed by sh3m and the least being sh1m. Super FM, one of the popular stations in Kampala was temporarily closed down by the council as it moved to enforce the regulations.

The number of computers and computer accessories imported into the country also continued to rise although government is yet to establish their exact number and the size of the population that accesses such facilities.

Management of the Sector
The management and regulatory framework of the telecommunications sector was designed to promote competition. The relevant laws and licences created two bodies with powers and the mandate to assure fair competition.

The Uganda Communications Commission (UCC), created under the Uganda Communications Act, 1997, with the power to promote competition and regulate interconnection. The UCC has independent funding from licensing and spectrum fees. It also has a levy on the gross revenues of the operators (currently 1%) which is set aside in full for rural communications development. The law gives the UCC considerable authority to enforce its powers independently. All licenses must submit an annual report and the UCC can inspect their premises and logbooks, reports, data records and apparatus. It also has the power to regulate tariffs and interconnection and can impose default interconnection agreements if companies fail to reach agreement. It can also investigate apparent cases of unfair competition and require the operators to pay a fine or declare any anti-competitive contract null and void.

The Uganda Communications Tribunal was also established as the neutral oversight body that offers a process for dispute resolution. Aggrieved operators and others affected by the Communications Act can appeal the UCC or the Minister of Works, Transport and Communication’s decisions to the Tribunal. It can thus protect the operators from abuse of government power or favoritism to one operator, as well as from foul play by other operators. The Tribunal will consist of a judge, chairperson and two other persons recommended by the Judicial Service Commission and appointed by the President, along with up to four technical advisors appointed by the Tribunal. The Tribunal has the powers of the High Court and follows the same procedures, and its decisions can be repealed to the Court of Appeal. By June 2004, how-ever, the Tribunal was yet to be constituted.

Cabinet Approves the National ICT Policy
Uganda’s National ICT Policy was finally approved by Cabinet in October 2003 paving way for its implementation. The policy, which arose out of the recognition that ICT has a big role to play in stimulation of national development, is credited with creating favourable conditions for the fullest participation by all sections of the population. Specifically, it has created a specialized task force to harness the opportunities to harness developments in ICT.

The scope of the ICT policy covers information as a resource for development, mechanisms for accessing information, management of ICT as an industry including e-business, software development and manufacturing. The policy looks at various categories of information for different sectors, essentially aimed at empowering people to improve their living conditions. The sectors include: health, education, agriculture, energy, environment, business, science and technology.

Latest developments in the sector

The Rural Communication Development Programme (RCDP)
The establishment of the Rural Communication Development Programme (RCDP), a Fund to improve communication access in rural areas in July 2003 is one of the latest key developments in Uganda’s telecommunications sector. The objective is to ensure a minimum of one or two public access points to telephones in each sub-county by 2005. Under this World Bank/IDRC supported Fund, a total of 624 out of the 920 sub-counties currently gazetted are expected to have public access points to telephones by the end the 2004/ 05 FY. In addition special Internet Points of Presence (PoPs) are being established in every district to enable people living in rural areas access Internet and related services. By May 2004, a total of 27 out of the 56 districts had had their PoPs established, each associated with at least one cyber café. UCC estimates that five more districts will be covered under this arrangement by the end of this FY. Government also announced plans to extend the telephone network to 154 sub-counties, and to establish 32 cafes, and 20 multi-purpose community centres in this FY’s budget speech.

Conducting ICT Training at Buwama Community Multimedia Centre.

BROSDI pioneers Open Source Software (OSS)
Another important development was the establishment of the Busoga Open Source and Development Initiative (BROSDI), a private project that runs a multipurpose telecentre using Open Source Software (OSS). Located in Mayuge district, eastern Uganda, the telecentre is pioneering OSS training in the country especially among schools and training institutions. The centre, which was established in November 2003, is also promoting awareness about ICTs and development through specially formulated knowledge sharing seminars for students, administrators and community leaders. With support from UCC and international development partners, BROSDI is being envisaged as one of the answers to the prevailing condition of uneven and unequal access to information and communication technologies in rural areas in Uganda.

National broadcasting body due
In May 2004, Cabinet approved a proposal to merge Radio Uganda and Uganda Television (UTV) in order to streamline their operations. The move is aimed at establishing a first class public service broadcaster that would raise broadcasting standards in Uganda. If, as expected, the Bill is approved by Parliament, it will lead to the creation of a new body, the Uganda Broadcasting Corporation (UBC). This would run the stations under the merger professionally. The establishment of the Corporation will also pave the way for the establishment of radio stations in every region to reach out to the masses.

Mobile phone price wars heighten
Although government did not announcement further increments to mobile phone airtime tax during this FY, mounting competitive pressure has forced mobile telecommunications companies to adjust their services’ rates in a market whose growth is beginning to taper off. Celtel Uganda kicked off the storm by introducing UgandaOne, a single tariff rate for calling across all networks in April 2004. Inevitably, Uganda telecom’s mobile telecommunications arm, Mango, followed suit with their Mango Jazz and Mango Extra, with the aim of reducing calling costs. In May 2004, MTN also came up with YelloGo and PayGo, in which the service fee was collapsed into airtime with discounts on calling rates only coming by buying Y’ellotime. The price cuts were received with mixed views as some analysts were quick to brand them a price war while others argued that they signified nothing but business acumen and market aggressiveness. UCC officials however see the changes as a reaction to market forces resulting from competition.

Celtel dominates East Africa
The telecommunications sector acquired a regional outlook when Celtel International bought a 60% stake in Kenyan mobile operator KenCell. The acquisition by Celtel International, the parent company of Celtel Uganda, will make it the only mobile operator covering East Africa. Mr. Marten Pieters, Celtel International’s CEO said the move shows that his company is committed to developing African networks with over US$300m in existing operations. The firm will invest US$250m to acquire take-over shareholder loans and develop the business.

Challenges facing
the Telecommunications Sector
Although the telecommunications sector is arguably the fastest growing in Uganda, it faces a number of policy, institutional and structural challenges. Firstly, government’s decision to scrap its guarantees for loans for financing telecommunications infrastructural development has hampered investment plans. Even if the private telecommunications companies are now grappling with raising equity, there is no doubt that they still needs to finance major capital investments. Unfortunately, the banks are not ready to listen to their requests unlike government reverses its policy of not guaranteeing loans to private entrepreneurs.

Secondly, the sector faces the daunting task of implementing the national ICT policy. Eight months after the policy was approved for implementation, government is yet to set up a steering committee to ensure that the policy framework is translated into practical programmes for the promotion of ICTs. A recent informal survey showed that 70% of the population is even not aware of the existence of this policy. The implication is that the policy is likely to gather dust on the shelves of its makers.

Improvement of rural incomes is another big challenge facing the telecommunications sector. Latest estimates by the Ministry of Finance, Planning and Economic Development indicate that nearly 27% of the population can be described as poor. This means that they can ill-afford telecommunications services especially in the countryside where the poverty levels are high. There is therefore need to implement poverty alleviation programmes to target the rural communities. This will not only improve living conditions but also provide market for telecommunications services such as mobile phones, computers and internet.

Widespread levels of illiteracy have also worsened the situation. Although government introduced Universal Primary Education (UPE) in 1997, it is yet to make a significant impact on the literacy levels of the population. The implication of this on the telecommunications sector is that only a few people understand and appreciate its services. A small portion of the population is ready to absorb the new technologies by the telecommunication companies. This poses a serious challenge as the affected companies fail to establish how much infrastructure is needed. This directly impacts on the level of their utilization, demand and penetration into the countryside.

Other major challenges facing the sector include poor infrastructure in most parts of the country, lack of power supply and poor signals for radio and television transmission in most parts of western, northern and north-eastern Uganda.

© Martin Malunga

Conclusion
Having registered such a fast growing rate amidst enormous challenges, government needs to implement the policy and structural problems facing the telecommunications. Of utmost importance is the need to develop the basic infrastructure notably the roads and power plants to enable the private telecommunications companies roll out their services to the otherwise inaccessible areas with ease. The implementation of the eagerly awaited national ICT policy; a driving force to the prosperity of the telecommunications sector is another key policy issue that needs urgent attention.