MPs’ call big setback to competitive telecoms sector

A communication mast. In 2016, the Communication Authority of Kenya commissioned British consultancy Analysys Mason to undertake a comprehensive study on the telecommunications industry. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • The report adopted by Parliament would appear to have set the country at least two years back from a competitive telecoms industry.

  • The MPs’ report stops at prescribing a new study with no rationale or justification.

  • The issue also brings into sharp focus the capacity of parliamentary committees to competently deliberate on and prescribe regulatory solutions in admittedly technical areas like telecoms.

The recent adoption of a report by the National Assembly’s Committee on Communication, Information and Innovation was a significant setback to the quest for a truly competitive telecommunications sub-sector in Kenya.

The committee’s intervention in the industry was motivated by what it framed as a need to inquire into the legislative and regulatory gaps affecting competition in the sub-sector with a view to proposing necessary amendments to them.

REGULATORY

But its report, which was adopted with just a single amendment when it came up for discussion on the floor of the House early this month, would appear to have set the country at least two years back from a competitive telecoms industry.

The report’s centrepiece recommendation was for a study to get a better understanding of the sub-sector with a view to using the results to prescribe the most appropriate regulatory and legislative measures for its optimal performance and, most importantly, protection of consumer interest.

But is this perceived paucity of bankable data and knowledge on the industry by Parliament the biggest challenge facing the sub-sector as the MPs would want the public to believe? Nothing could be further from the truth, if recent history is anything to go by.

True, there is no lack of a bankable study to guide regulatory and legislative action in the sub-sector.

In 2016, the Communication Authority of Kenya (CA) commissioned British consultancy Analysys Mason to undertake a comprehensive study on the industry. Specifically, the firm was to carry out a competition study of the telecoms sub-sector with a view to evaluating the competitive landscape of the market, which it proceeded to do between May 24, 2016 and February 2, 2017.

According to the CA, “the study was meant to foster a competitive telecoms market which can attract sustainable investments, provide more choices to consumers and improve consumer welfare through the provision of affordable, high-quality services.”

DOMINANCE

In its report dated March 20, 2017, Analysys Mason located significant dominance in two segments of the market: Mobile telephony and mobile money, with one telco controlling market share way above the global threshold. Importantly, it suggested remedial measures to cure the effects of dominance and eliminate barriers to entry in the sub-sector, including agent interoperability in mobile financial services.

Another suggestion was for the dominant player to allow other operators to roam on its network in identified counties for regulated tower sharing.

What followed was a ping-pong game, punctuated by delays and confusion. For instance, the mandatory Stakeholders’ Dissemination Forum, now a fixture in any public policy process thanks to the Constitution, was held after two inexplicable postponements.

It is, perhaps, the apparent inability by CA to provide leadership on the post-Analysys Mason report dispensation that has invited quasi-regulators to what is purely CA’s mandate.

First, there was the Competition Authority of Kenya (CAK), which has been animated by the process and some aspects of it, especially the interpretation and determination of market dominance. The parliamentary committee, chaired by Marakwet West MP William Kisang’, is the latest to latch onto the issue, albeit while professing a wider mandate.

SOLUTIONS

While some of the data that informed the Analysys Mason report may have moved, nothing has shifted fundamentally as to render it null and compel the need for a fresh study. The MPs’ report stops at prescribing a new study with no rationale or justification.

The issue also brings into sharp focus the capacity of parliamentary committees to competently deliberate on and prescribe regulatory solutions in admittedly technical areas like telecoms. There is also mounting concern that the processes, besides the huge taxpayer payload they come with, can potentially be captured, abused and even instrumentalised to achieve a certain end-game.

The committee’s report, if implemented by the regulator, will effectively postpone corrective action in the sector, pending the investment of taxpayer funds in yet another study, which the MPs say should be done in 12 months. This despite the existence of the Analysys Mason study, whose findings have not been empirically discounted, and which can be a solid, defensible basis for such corrective action.

The time has come for the CA to pick up the gauntlet and deliver on its mandate.

Mr Akumu, a former Nation business editor and telco employee, is a strategic communication consultant. [email protected]