Our newly rebranded communications regulator faces many challenges

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.