CA reforms don't reflect intertwined technology landscape

In recent months, the Communications Authority of Kenya, commonly known as the CA, has been undergoing rapid change, mainly driven by the need to comply with the demands of the 2010 Constitution.

The new Constitution anticipates an "independent" regulator for the communications sector and so changes were made to the Kenya Information and Communications (Amendment) Act to allow for a more open process for appointing the board members of the authority.

Previously, these were selected without an open, competitive process, but currently the board members have to go through an interview process managed by the Public Service Commission before being appointed by the Minister or the President.

Whereas this does provide some form of independence, it does not address the fact that the regulatory landscape has changed tremendously over the past decade and so requires a completely new approach to regulation.

Having an independent board of directors is one thing. Delivering an effective, modern communication regulatory authority is quite another. Even though the role of the regulator has largely remained the same — enabling quality service provision by promoting investments in the sector — the rules of the games have changed dramatically due to the ever-changing technological and structural landscape.

Three regulatory eras have so far emerged, documented as Herding the Elephant, Herding the Sheep and Herding the Cats.

In the old days of Herding the Elephant, the communications sector was under one big, state monopoly and the regulatory role was limited to ensuring that prices of communication services remained affordable. Even though this was good for political reasons, it was absurd economically as the monopoly became a giant loss-making utility with no motivation for quality, profits, or service expansion.

The introduction of liberalisation at the turn of the century witnessed several players coming into the market, and the regulator’s role became predominantly one of ensuring a level playing field for the many competitors.

'DYNAMIC, FUZZY PICTURE'

Pricing issues were left for the markets to discover as competitors rushed to meet previously suppressed demand for communication services. This was the era of herding the sheep.

Regulation was still fairly manageable since the players, their services and customers were quite distinct and segmented. If one of the sheep stepped out of line, it was very easy for the regulator to identify them and come down hard on them with the relevant sanctions.

The technology landscape, structures and relationships have not only disrupted telecommunications markets but also the old paradigm and rules of regulation. The old paradigm works only where the market players, their services and customers are uniquely segmented and not intertwined in a complex web of market inter-relationships

In such a complex market structure, the regulator must maintain a dynamic, fuzzy picture of who the players are, their services, market power, their customers among other regulatory indicators. In the event of a breach of license, the regulator can longer zero in one specific player for sanctions because the services are no longer offered purely by one provider. Welcome to the era of herding cats.

In today's world, the internet has blurred and continues to mesh together what were originally clearly segregated markets. Today, a media company can offer internet services, while an internet company can offer media services. A telecommunications company can offer banking services, while a bank can offer telecommunications services. Additionally, any of these players can be a customer to the other, over and above their traditional core set of customers.

PERENNIAL HEADACHE

The challenges of regulating such an environment are already evident, with the issue of quality for service provision in a situation where those services are delivered by multiple players over different platforms becoming a perennial headache for the regulator.

As an example, whom does the regulator blame for a delayed or even fraudulent M-Pesa instruction to your bank, given that the point of failure exists across the broad spectrum of systems between the two providers? This is the dawn of a new regulatory regime that requires completely new approaches and sets of rules.

Think of managing only five cats, your job being to direct them to move from point A to point B within a given time frame and other conditions. You cannot use the same tactics that worked when herding the sheep or the elephant. One must design a completely new regulatory paradigm that is appropriate and relevant in the new dispensation.

It is difficult to tell if the recent and ongoing changes at the regulatory agency are alive to this fact. Changing board members and senior management alone will not sufficiently address the new regulatory environment and is therefore likely to be inadequate.

Mr Walubengo is a lecturer at the Multimedia University of Kenya, Faculty of Computing and IT. Twitter:@jwalu; email: [email protected]