Recently, the communications regulator
formerly known as CCK rebranded, and is now known as the Communication
Authority of Kenya.
During the launch ceremony presided over by none other than President Uhuru Kenyatta, the chairman of the regulatory board handed over to the Exchequer a fat cheque of
Sh4 billion in dividends from the previous year. An additional
sweetener of Sh2.3 billion was handed over to the Treasury in the form
of the ten-year renewal licence fee paid by Safaricom.
Clearly,
from a monetary point of view, the regulator has performed well over
the years, compared with many other government agencies that are always
seeking funds rather than contributing to the Treasury.
In
addition, the regulator has managed to maintain a fairly non-political
board and management team that has seen it avoid the political and
tribal scuffles that plague most Kenyan parastatals.
Compared with other regulatory bodies like the Energy Regulatory Commission (ERC), the National Environment Management Authority, (NEMA) or the Water Resources Management Authority (WRMA), the Communications Authority is clearly a cut above.
SOUND LICENSING FRAMEWORK
Regulatory
bodies have the primary role of promoting competition in the sector
while protecting both consumer and investor interests. Essentially,
investors interested in playing in the market should have an easy and
predictable mechanism for doing so through a sound licensing
framework.
Once licensed, the regulator ensures that
the investor or operator does not exploit the consumers through unfair
pricing, poor quality or uncompetitive market behaviour.
This
is where regulation becomes a very challenging task. Before the
regulator can claim that an operator is offering poor-quality services,
it must have parameters that determine what good communications services
are.
Before regulators claim unfair pricing and
penalize an operator for it, they must first determine what is a “fair”
price that would make the service affordable.
Uncompetitive
market behaviour is easier experienced than proven in a court of
law. For example, Microsoft was at one time sued by competitors for
abusing its dominant position when it offered its browser, Internet
Explorer, for free at a time when its competitor Netscape was still
selling its browser.
'SUCK MORE FROM SOCIETY'
It
took years of argument before a European court eventually ruled that
this was indeed uncompetitive behaviour. By then, Netscape had already
lost its customers and closed shop, allowing Microsoft to re-introduce
charges for its “free” browsers by hiding or recovering them from within
their flagship Microsoft Windows operating system.
Business
strategy analysts may celebrate this as a mark of ingenuity for the
company, but unfortunately the resulting monopoly position tends to suck
more from society than it is willing to give.
Indeed,
something similar has been playing out in the telecommunications and the
broadcast sectors in Kenya. For example, the leading communications
provider has previously disputed quality of service reports
published by the regulator while aggressively protecting the
closed-system approach for its highly successful mobile money system.
The leading private TV broadcasters have managed to delay the digital migration
process while their FM radio counterparts continue to air vulgar
content during what other civilized nations consider protected “family”
time frames.
These are some of the serious regulatory
challenges that cannot be wished away by handing Sh4 billion to the
Exchequer. Whereas the money is good and welcome, the re-branded
regulator has a bigger task of restructuring internally to meet the
emerging challenges of regulating a converged market where all services
are on the Internet platform.
Unless and until this is
done, the private sector operators will continue to dictate a future
that regulators will be trying to catch up with instead of regulating.
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