CCK links fines on poor service to share of telcom firms’ annual sales

Communications Commission of Kenya chief Francis Wangusi. FILE 

By MARK OKUTTAH, mokuttah@ke.nationmedia.com

In Summary

• Telcom firms will be fined 0.2 per cent of the annual revenues if they fail to meet the quality limits set by the Communications Commission of Kenya (CCK).
• The operators are currently fined Sh500,000 for breach of the quality of service standards and the State maintains that the penalty is too lenient.
• CCK found all the four mobile phone operators, including Safaricom, Airtel, Orange and yu did not meet minimum quality of service standards in the year to June.

The Communications ministry has increased the penalties against mobile phone operators who fail to meet the quality standards set by the regulator to a share of their sales.

The operators will now be fined 0.2 per cent of the annual revenues if they fail to meet the quality limits set by the Communications Commission of Kenya (CCK).

The operators are currently fined Sh500,000 for breach of the quality of service standards and the State maintains that the penalty is too lenient and has failed to make the operators comply.

The regulator found all the four mobile phone operators, including Safaricom, Airtel, Orange and yu did not meet minimum quality of service standards in the year to June.




This means that a firm like Safaricom, which generated revenues of Sh124 billion last year, will pay more than Sh250 million up.

“The previous penalty was lenient to the operators to the extent that some saw that they would rather pay the fine than invest on new masts and that the reason for the new penalty that is more deterrent,” CCK director general Francis Wangusi said on Friday in an interview with the Business Daily.

He reckoned the higher penalties are anchored in the new Kenya Information and Communication (Amendment) Act 2013, which was gazzetted on Friday.

“Please note that the penalties and indeed all the clauses in the new passed KICA cap 411A become effective 14 days after the amendments are published in the Kenya Gazette,” added Mr Wangusi.

The CCK expects the operators to achieve a score of 80 per cent on the eight indicators including speech quality, completed calls, call success rates and call drop rate

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Safaricom, Airtel and yu tied on a score of 50 per cent in the year to June while Telkom Kenya had a 62.5 per cent mark.

(READ: Telcos face heavy penalties for poor service)

In 2012, Safaricom had the worst score of 50 per cent while Airtel was rated at 62.5 per cent. Telkom and Essar both achieved 87.5 per cent.

The CCK attributed the drop in performance to the enhancement of the weight of the indicators. The higher fines are set to boost the coffers of the regulator, the top dividend earner for the State.

The CCK’s revenues stood at Sh8.78 billion in the year to June 2012, up from Sh6.47 billion in 2011. This allowed it to pay a dividend of Sh6.3 billion to the Treasury even as the operators continue to moan over the regulatory fees.

“The fees we pay to the regulators remain a significant cost and amount to approximately four per cent of revenues (Sh3.22 billion),” says Safaricom.

Kenya has followed in the footsteps of Nigeria and Rwanda, which introduced hefty fines against telcos that did not meet quality checks