Monday,October 19,2020 20:50 PM
  • Home
  • News
  • Taxing Over-The-Top (OTT) will drive Uganda's economy even further 

Taxing Over-The-Top (OTT) will drive Uganda's economy even further 

By Admin

Added 4th June 2018 01:42 PM

As a country, we recognised very early on, the value of developing our communications infrastructure to support our national social-economic aspirations.

Taxing Over-The-Top (OTT) will drive Uganda's economy even further 

As a country, we recognised very early on, the value of developing our communications infrastructure to support our national social-economic aspirations.


By Eng. Godfrey Mutabazi 

Recently, President Yoweri Museveni held talks with various media stakeholders about the industry and the role it plays in our society. As always, he takes us back to our history, rightfully indicating that in order for someone to know where they are going, one ought to know where they are coming from.  

As a country, we recognised very early on, the value of developing our communications infrastructure to support our national social-economic aspirations. To this end, we adopted policies and strategies which included liberalisation and restructuring of the sector as well as establishment of the Rural Communications Development Fund (RCDF). The interventions that were made have greatly spurred growth of communications infrastructure and services in terms of level of usage, span of infrastructure, variety of services and technologies.

Today, the communications sector in Uganda comprises a diverse spectrum of businesses from the micro enterprises (like the payphone attendants) to the large enterprises typically known to us like the telecommunications operators. As a result, the communication industry in Uganda is among the top contributors to the economy in terms of taxation, employment (directly and indirectly through support businesses) as well as facilitation of operational efficiencies in other sectors of the economy and organisations.  

Today, we are in the digital era and, therefore, data connectivity is critical. We can only realise the full value of this digital world when there is adequate infrastructure, seamlessly providing connectivity anytime and anywhere. Trends in technology such as Internet of Things (IoT) resulting in a world of connected devices, are pushing increasing demand for connectivity and thus requiring us to have ubiquitous broadband access off a gigabyte or high-speed infrastructure.

However, globalisation and the Internet have opened up national boundaries in various sectors, including the communications sector. This has extended the Internet beyond just being merely an email tool and a source of information, to becoming a platform for transactions of products and provision of services.

Among these are information and communications technology (ICT) services like sending of text messages, voice calls, video calls, transferring images, video and other media services. These services are commonly provided by companies located beyond the national borders that neither operate a network nor lease network capacity from an operator to reach the user but instead ride "over-the-top" of the network a telecom operator.

The operator whose network is utilised for delivering the over the top (OTT)service has no rights or responsibilities for content or services of these apps and no claim on the latter, merely acting as a pipe between the source and destination.

These OTT companies also do not contribute in tax to the economy as they are not incorporated in the country. Some of the commonly known examples are YouTube, Skype, Facebook, WhatsApp messenger, WeChat, KakaoTalk and Netflix.

Without a doubt, though, the increased use of OTT applications increases the growth of data usage and which in turn creates demand for connectivity. In Uganda, 48.47% of the population is in the 0-14 year age group and 21.16% is in the 15-24 year age group.  This age group, which is considered the "digital natives", characteristically want to be "always online" or connected.

Unfortunately, though, despite all the opportunities offered by the internet, the main purpose of the digital natives wishing to be online is entertainment and social communication.

This trend of OTT communications players luring voice and messaging traffic away from telecom operators while the operators grapple with having to establish and maintain ubiquitous high speed networks for continued relevancy, has put significant pressure on the operators' revenues and cost baseline with a resultant need to improve cost efficiency. This, however, not only threatens employment and the survival of secondary local businesses, but also shrinks the Government's tax base.

This is the key concern of the Government of Uganda and some of the other developing countries around the world. How do we develop and maintain the high speed infrastructure required in the midst of these changes in business models in the sector? How do we ensure continued opportunities for employment for our people? How do we ensure consumer protection for the various services offered by OTT providers with respect to quality, data protection, security, fair terms and conditions of usage of the services and else? 

Earlier last year, I made a presentation to our custodians of the law, where I said I believe we are on the brink of a new revolution, where we will be seeing nearly everyone on earth having a digital identity. I also said this would potentially call for enabling technologies, architectural shifts and new business models.

At this same forum, I urged our lawyers to consider their role and involvement in enabling and regulating a world where technology is used for purposes of empowering us. It is the welfare of our people - and the improvement of their lives - that should give us direction and inspiration.  After all, we pursue technology not for the elegance of it - but in the belief that it improves our welfare. 

The economy of the over-the-top market is so huge, mainly making their money from advertising. Facebook, for example, relies on increasing numbers of subscribers on their platform, because, obviously, the more people it has online, the more attractive to advertisers and the money it can make.

With our President suggesting taxation of OTT usage, he is doing what many countries are timidly avoiding, but will inevitably have to face. We would welcome these OTT companies coming to partner with us or the operators to realise our national goals like how Facebook partnered with Airtel in establishing optical fibre in Northern Uganda.

I do personally subscribe to thinking that an appreciation of where we are coming from will shape our future.  For us in the media world, it focuses us not to take for granted the very freedom that was fought for by many.  

As Nelson Mandela said: "The time has come to accept in our hearts and minds that with freedom comes responsibility."  Today, for example, we feel free to share very intimate information on social media, availing such details to nearly everyone in the world, but without a thought to the consequences.

We must all wake up and take individual responsibility of the development of our country. This should start with taking responsibility for our communication in terms of what we communicate, to whom we communicate it and how we communicate it. This should be done cognisant of our cultural/traditional norms that kept peace in our societies and bought us the admiration of many.

The writer is the executive director of the Uganda Communications Commission


Related articles

More From The Author

More From The Author