The Communications Commission of Kenya (CCK) has given the four mobile operators—Safaricom, Airtel, Yu and Orange up to September 30th to phase out fake handsets from their network. Photo/FILE
More than three million mobile subscribers with counterfeit handsets may not be able to access telecommunication services from next month following CCK’s directive that mobile operators block such phones.
This sets the stage for massive job losses in a market dominated by fake handsets, whose value runs into billions of shillings annually.
The Communications Commission of Kenya (CCK) has given the four mobile operators—Safaricom, Airtel, Yu and Orange up to September 30th to phase out fake handsets from their network.
“Operators have up to 30th September 2011 to ensure that all such handsets are phased out of your network,” wrote CCK in a letter to the operators, adding, “You may share with us your detailed plans of phasing out these illegal handsets as directed.”
Objected
But the four firms have objected to the move, arguing that most of the subscribers may not be aware they are holding counterfeit handsets.
They also say they stand to lose revenues in a business environment where ongoing price wars have cut profits.
The Anti-Counterfeit Authority says that the country loses nearly Sh3.2 billion annually through tax evasion and sale of counterfeit phones, which is emerging as a money minting machine in downtown Nairobi and across major urban centres.
Attempts to curb the flow of the fakes through improved policing of the ports of entries and installation of a laboratory to vet imported ICT goods has failed to cut key supply lines in the bottom-end market.
And their lower pricing—about a third of the cost of genuine handsets—has made them popular among consumers faced with strained purchasing power.
Now, the regulator is turning to the mobile operators in what promises to shift the handsets market in favour of major manufacturers such as Nokia, Samsung and Sony Ericsson who claim that counterfeits account for between 30 and 40 per cent of Kenya’s mobile phone handset sales.
The regulator will be relying on the unique identify attached to the phones commonly known as the International Mobile Equipment Identity (IMEI) to identify counterfeit gadgets. Mobile operators say genuine phones register both the IMEI code along with callers number on their systems while the fake gadgets record only the caller’s details.
Already, the four operators have sent a protest note to CCK arguing that latest efforts to curb the flow of fake handsets could add another challenge in pushing sales in Kenya’s mobile telephony market where calling rates have fallen by more than half since last August—halving the monthly consumers’ airtime budget.
“A meeting has been set for 9th next month between the regulator and all the stakeholders to chart the way forward. Switching off the subscribers will cause consumer backlash,” said Steve Chege Safaricom’s head of regulatory and public policy corporate affairs division.
He added that the move will hurt sales as Safaricom races to reverse the 12.4 per cent drop in profits to Sh18.3 billion it posted in the year to March in part due the ongoing prices wars.
The Anti-Counterfeit Agency says the war against fakes has been slowed down by the fact that they cannot make arrests unless they receive complaints from handset makers, says Francis Kamau, a senior inspector at the agency.
The move will shake up the handset retail market as dealers move to boost their working capital to abide by the new dispensation despite low sales. Consumers are expected to adjust to the new price regime, slowing down sales. [email protected]
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