Phone Operators Differ Over CCK Reform Proposals in Kenya

Telecoms

Telecommunications operators are divided over new proposals meant to promote fair competition and guard against abuse of market power. Of particular contention is a clause that calls for a 30-day notice to the Communication Commission of Kenya before any tariff changes, and another one touching on the definition of a dominant operator.

Safaricom raised the issue that the two clauses were specifically targeting the company and would undermine its ability to compete effectively, adding that they should be deleted. Safaricom's head of legal and regulatory affairs Nzioka Waita said the way the regulator defines a dominant operator targets Safaricom as a company.

Part of the clause defines a dominant operator as one that controls more than 25 per cent of the market share. He spoke at a forum that started yesterday called by the Communication Commission of Kenya (CCK) to deliberate on the way forward on the 14 new regulations it intends to implement beginning next year.

The regulations are contained in the Kenya Communication Amendment Act 2009. "The clause should target the abuse of dominant position, but not target an operator due to its market size," said Waita.

A study by Renaissance Capital notes that Safaricom controls 83 per cent of the market revenue. "Despite market fears that irrational pricing by its competitors could threaten the company's market share position, the company has maintained 83 per cent as its prices are little changed over the past half a year period," read part of the Renaissance note.

CCK director general Charles Njoroge said the regulations deal with the entire sector, following changes in the market, and denied claims that they target a specific operator. "Tariffs regulations are not targeted to any company but keep in touch with the changing market, we should remove that fear," said Njoroge

The purpose of these regulations is to provide a regulatory framework for the promotion of fair competition and equal treatment in the communication sector, as well as protect against anti- competitive practices. Njoroge said that while the market has had two mobile operators Safaricom and Zain in the past, there are two new entrants, Telkom's Kenya Orange and Essar's Yu.

This, he said, called for new regulation that can ensure fair competition. "If the behaviour of the dominant operator goes unchecked consumer welfare can be eroded," he said.

Stephen Kiptinness, the head of regulatory affairs at Telkom Kenya, said it would be wrong to term Telkom Kenya a dominant operator. The firm, he said, was the only fixed telephone line provider because of government failure to license a second landline operator.

Julius Kinyua, the chief executive of local loop operator Flashcom, said the high interconnection rates by the big operators was locking consumers into their networks.

He said that it was not necessarily true that they were getting better value for their money.

Business Daily