Politics and policy

CA loses power to regulate dominant telcos

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Communications Authority of Kenya director general Francis Wangusi. PHOTO | FILE

Communications Authority of Kenya director general Francis Wangusi. PHOTO | FILE 

By OKUTTAH MARK, mokuttah@ke.nationmedia.com

Posted  Tuesday, January 5   2016 at  04:00

In Summary

  • MPS stripped the CA of the mandate through the Statute Miscellaneous Amendments Bill, 2015 that President Uhuru Kenyatta signed into law before Christmas.
  • Parliament’s action specifically targeted Sections 84W (4) and 84W (5) which were amended to transfer telecoms sector regulations-making role back to the ICT Ministry.

Telecommunications sector regulator, the CA, has lost powers to independently monitor dominance and act against its abuse – leaving it with a narrow mandate of licensing new players and allocating frequencies.

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Parliament stripped the Communications Authority of Kenya (CA) of the mandate through the controversial Statute Miscellaneous Amendments Bill, 2015 that President Uhuru Kenyatta signed into law before Christmas.

Under the new legal regime, the CA will have to consult the Competition Authority of Kenya (CAK) before making a declaration of dominance and when assessing critical industry factors such as Significant Market Power before making a declaration of dominance.

Parliament’s action specifically targeted Sections 84W (4) and 84W (5) which were amended to transfer telecoms sector regulations-making role back to the ICT Ministry, in a move that Francis Wangusi, the CA director general, says is unconstitutional.

Mr Wangusi says the amendments run against Article 34 of the Constitution, which requires the CA to be free of government and political control and independent of commercial interests.

The CA, which in the past three years has shown little interest in exercising its constitutionally enshrined independence and has mostly acted as a department of the ICT ministry, now says the newly enacted changes will have the effect of increasing government involvement in the CA’s operations through the involvement of the CS, and the CAK.

“Transferring the power to regulate competition in the ICT sector from Communications Authority, whose responsibility is to manage competition ex-ante, to the Competition Authority, which is established to manage the competition for the entire economy ex-post, will undermine the CA’s ability to assert itself as the ICT sector regulator,” Mr Wangusi said, adding that the changes are likely to expose the CA to various forms of litigation and hinder efforts to attract investments to the sector.

Safaricom and Airtel declined to comment on the issue. The CA is the sector telecommunication and broadcast sector regulator while CAK is the overall Competition regulator in the country.

Mr Wangusi further reckons that under the new regime it will be difficult to implement the outcome of a study by the international firm the authority is seeking to hire to examine Kenya’s telecommunication and broadcasting sectors for market dominance and anti-competitive behaviour.

The CA in September started the search for a firm that, among other things, will identify the relevant markets (sub-markets) within the telecommunication sub-sector, the number of players and their respective market shares.

The consultant’s brief also includes review of existing policy, legal and regulatory frameworks on competition, recommending appropriate changes to enhance effectiveness as well as proposing remedies for issues identified.

“The authority will be unable to enforce ex-ante regulations, which are a key regulatory tool for correcting uncompetitive markets,” Mr Wangusi said.

The Act has also deleted the previous legal definition of dominance and provides that dominance is to be interpreted in line with Sections 4 and 23 of the Competition Act of Kenya, 2010, as amended by the Finance Act, 2014.

Mr Wangusi, however, described the definition in the Competition Act as unsuitable as it only makes reference to economic considerations while leaving out other factors that are pertinent to the communications sector.

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