Media owners lock horns with CCK over law

A legal battle between the Media Owners Association (MOA) and industry regulator Communications Commission of Kenya (CCK) is simmering over contentious clauses in a new law that is due to be enforced by the end of this month.

The enforcement would have begun at the beginning of the year but CCK, which will implement the law, had not received the go-ahead from Information and Communications minister Samuel Poghisio.

The Business Daily exclusively reported on Thursday how the Kenya Communications (Broadcasting Regulations) 2009 law would restrict cross media ownership; reduce foreign content on television and radios; bar foreign ownership of broadcasting stations except on a reciprocal basis; stop unfair business practices in the sector; and eradicate hate speech.

Matters have come to a head as the CCK board prepares to discuss the enforcement of the legislation with the ministry following a threat by media industry lobby MOA to take legal action if the contentious provisions are not withdrawn.

“We still have several options, which include going to court or back to the two principals who had called for a truce between media houses and the government,” said Mr Martin Khafafa, the MOA vice chairman. Last year, President Kibaki and Prime Minister Raila Odinga directed the Information ministry and the Attorney-General’s office to review the contentious clauses.

In a submission to CCK, the lobby says that restriction of a media house to one frequency in a region (not defined in the regulations), a renewable five-year term for licences, and quotas on local content should be withdrawn.

MOA says the rule on cross media ownership was not in tandem with the global best practice and would stifle returns from present investments and discourage future investments.

The provisions on cross media ownership stand on shaky ground because they are not contained in the Kenya Communications Amendment Act 2009 from which the regulations derive a legal basis.

However, the issue of cross ownership had been embedded in the Broadcasting Policy of 2006. “Regulations are subordinate to the Act and must not be in conflict with it. If implemented it (cross ownership) will seriously undermine operators in the media business and has the potential to lead to business collapse,” reads part of the submission seen by The Business Daily.

The restriction against cross-subsidisation of services (using profits from one business to underwrite a reduction in the cost or price of another) is common among virtually all classes of licences issued by CCK — Network Operators, Content Providers, and Applications Provider. “Competition law requires that, except in certain exceptional situations when the price may be fixed by law, the only factors that should determine the price of a product are the forces of demand and supply,” said Mr Michael Murungi, a legal expert on ICT and broadcasting matters.

Competitive prices

He said the intention of such a provision was to ensure that products and services are sold at competitive prices and that an operator in a certain market does not use anti-competitive tactics to compete with other operators, the same rationale advanced by CCK. “This creates a healthy market situation in which operators can compete by qualitatively differentiating their products as opposed to artificially manipulating the prices,” said Mr Murungi, citing a situation where a dominant operator might provide a service below the market rate or below the cost of production as a way of countering potential or existing rivals.

The regulations require investors with more than one allocation for either radio or television within the same coverage area to surrender the extra channels to the commission within a period of five years, in this case 2015. MOA also wants the licence validity to run indefinitely, instead of the five years proposed. The US experimented with the one-region one-frequency allocation criteria but abandoned it after the Federal Communications Commission said the scarcity model that assumed endless demand for spectrum was flawed. “The scarcity rationale for regulating traditional broadcasting is based on fundamental misunderstandings of physics and economics, efficient resource allocation, recent field measurement, and technology. It is outmoded in today’s media place,” the commission said in annexes attached to the MOA petition.

The petition also wondered how content quotas would be enforced in the case of news only stations, sports stations, and others that are in vogue by new entrants.

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