Telecom firms to pay hefty penalties for poor service

Telecommunication firms are set to start paying a share of their annual revenues and not a flat rate of Sh500,000 as penalties for providing substandard services to customers.

The Communications Authority of Kenya (CA) said on Wednesday the firms would be fined between 0.1 and 0.2 per cent of their annual revenues if they fail to meet the set quality standards.

Director-general Francis Wangusi reckons the current fine is too lenient and has failed to make the operators comply.

This comes as the CA starts the search for an independent firm to conduct quality tests after telco operators termed reviews by the communications regulator erroneous.

“We have put a proposal before the board to increase the penalties to either 0.1 per cent of their gross revenue or 0.2 per cent,” Mr Wangusi told the Business Daily in a phone interview on Wednesday.

“The new penalties will come into force once the management gets an approval from the board.”

A firm like Safaricom, which has in the past failed the CA quality tests, would pay Sh288 million based on its annual revenue of Sh144.7 billion should the board opt for the 0.2 per cent charge.

Kenya will follow in the footsteps of Nigeria and Rwanda, which introduced hefty fines against telcos that did not meet quality checks, if the new fines are effected.

In 2012, Nigeria fined four telcos a combined $7.4 million (Sh636.4 million) for failing to meet minimum service standards.

In 2011, Rwanda revoked the licence of Rwandatel for poor service and slapped MTN Group a daily fine of $4,000 (Sh347,000) due to substandard services and network failure.

The financial penalty was applicable until the South African tech giant fixed the problem. In Kenya, the quality assessment started four years ago.

READ: Safaricom disputes regulator's assessment of its voice service

The reviews done by the CA required the operators to achieve a score of 80 per cent on the eight indicators, including speech quality, completed calls, call success rate and drop rate.

None of the four mobile phone operators, including Safaricom, Airtel and yuMobile, met the threshold in the year to June last year.

Previously the CA, had been conducting the survey independently on an annual basis, but under the new regime, the quality tests would be done by a private firm quarterly.

The regulator will also include other offerings like data, mobile money transfer services and telecoms infrastructure in the reviews.

The previous tests focused on the voice quality. This means that Internet service providers like AccessKenya, Wananchi Group and fibre optic companies such as Jamii Telecoms and Liquid Telecoms would be subjected to the quality checks.

By reducing the review period to four months from 12, the regulator has addressed concerns by Safaricom that it was too long and that by the time results were released, they did not reflect the situation on the ground.

“The annual time frame was too long, it was not possible for us to go back in the areas under survey, and of course by the time we were releasing our results, some of the operators may have improved their services or the quality of service come down,” said Mr Wangusi.