Two and a half decades ago when Uganda began its recovery from years of civil war, unrest and declining economic performance, the Government decided to adopt the free market economic policies in order to encourage competition and attract investors.The telecommunications sector has evolved from the time when a phone subscription meant that you had to pay for both incoming and outgoing calls plus a monthly service charge, to a time when the monthly service charges were dropped as a result of the entry of a third mobile operator in the market, and finally to a time when charges were altered from the per minute rate to a per second rate. In the process, this has seen the price of telephone calls tumble and in just one year, the rate dropped by over 45%.The Uganda Communications Commission (UCC) was being seen as having initiated good policies that have led to this consumer friendly tide in the telecoms sector in Uganda. The removal of limits on the number of players, the change from regulating technology and shifting focus to service regulation among others left the consumer happier than ever before.

However, on the 13 of June 2011, the Monitor Newspaper broke the story of a new directive from the UCC requiring all Telecoms players to have a minimum price for both on and off network calls. This move stirred a lot of debate leaving many industry observers in shock. Despite the occasional gaffes that have been typically coming from the commission lately, this was the least expected of all.
There was therefore a sigh of relief when two days later, a denial of this move emanated from the same commission leaving many perplexed but nevertheless relieved.
A quick look at the guiding regulations for the UCC clearly shows that the decision to regulate the price floors was as stipulated by the Statutory Instrument 2005 No. 27 which states among others that;
• Where a tariff is specified as a floor, no tariff shall be fixed below the floor.
• The Commission shall determine whether the tariffs to be charged are just, reasonable and nondiscriminatory.
The crux of the argument though at this point is who UCC is trying to protect. Is it the consumer that is more vulnerable or the service provider? It seems like the UCC is faced with a double edged sword scenario. While UCC wants to ensure that subscribers enjoy low calling rates, the commission also benefits from a 1% levy off the revenues of the
Telecommunications Service providers. This fund facilitates a number of activities especially in line with the Rural Communications Development Fund.
Not all Telecoms have been paying this levy though. Mr Simon Kaheru, a Media Analyst, says that over the years, only one network has consistently made profits and paid their due 1% levy off those profits to UCC. “Not only do the other networks NOT pay their 1% levy every year as they were supposed to, by the look of things with these lowered tariffs and margins, they will be unable to do so ever,” he says.
According to Kyle Spencer, the government should not dictate the price of goods in a free market. This kind of move by the UCC will eliminate price competition which hurts everyone except the incumbents. The UCC should regulate Quality of Service, nothing more.
The intense competition among the telecoms is not about to cease. Airtel is giving a clear indication that it is targeting that hitherto ignored customer whose ability is to spend utmost USD 4 per month on communication, while MTN are on record as being uncomfortable about the falling Average Revenue Per User (ARPU) which is a measure of how much money the company makes from the average user.
As for the UCC, it is important that a clear and consistent message be passed across to the stakeholders in the industry to avoid the uncertainty of the proverbial drunkard’s cockerel which is never sure of being alive the following morning.