For a man who came to the public limelight as the electoral commission’s boss, his first 100 days at the CA have been about shedding an old skin and wearing the corporate hat.
He spoke to the Business Daily on his first three months in office, regulatory decisions that have already landed him in court, why the balance sheets of Airtel Kenya and Telkom Kenya are keeping him awake at night, his role in the coming elections and plans for 5G rollout beyond the telcos.
The appointment of Ezra Chiloba as the new Director-General of the Communications Authority of Kenya (CA) came as a surprise to industry insiders.
For a man who came to the public limelight as the electoral commission’s boss, his first 100 days at the CA have been about shedding an old skin and wearing the corporate hat.
He spoke to the Business Daily on his first three months in office, regulatory decisions that have already landed him in court, why the balance sheets of Airtel Kenya and Telkom Kenya are keeping him awake at night, his role in the coming elections and plans for 5G rollout beyond the telcos.
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IT HAS BEEN SLIGHTLY MORE THAN 100 DAYS IN OFFICE AND YOU ARE ALREADY IN COURT FIGHTING THE BIGGEST MOBILE OPERATOR. YOU ARE ALSO AFTER BROADCASTERS. IS THIS WHAT A CHILOBA LEADERSHIP WILL LOOK LIKE?
I marked my 100 days in office on January 12, which is also a significant date in my life — yes my birthday. When I came in, in October last year, the strategy was to first understand the organisation. You need to understand the business, both internally as well as externally before you choose a path that you want to pursue as a leader.
I met my team here and picked a lot of insights in terms of the history of the organisation. It became obvious to me that there were low-hanging fruits that we needed to pursue.
If you look at the legal regime governing this sector, most of those instruments came into play in 2010. This is about 12 years later and there is an urgent need for reform because our sector is very dynamic.
We picked a number of reform agenda items and these include SIM card registrations, broadcasting, infrastructure sharing as well as policy issues around protecting critical infrastructure.
As we speak, we have draft regulations that we have submitted to our parent ministry and we are putting together a team to take that agenda forward.
IS THIS WHAT INFORMED THE CUT ON MOBILE TERMINATION RATES AND WAS THE MOTIVE TO HAND A LIFELINE TO AIRTEL AND TELKOM KENYA?
This business entails many actors. Do they have a fair playing field to thrive? We picked one aspect of competition in the telcos sector, more particular on the mobile termination rates as well as fixed termination rates, which is basically the cost of interconnection between the different operators.
We lowered the termination rates from Sh0.99 to Sh0.12 and the implication for that is that the small players now have an opportunity for savings to allow them to invest in new frontiers and perhaps improve on their products.
There were complaints in the industry that termination rates were high hence we undertook a benchmarking study that informed our decision.
This was a major regulatory intervention that is now in court as you are aware. Some of the players are not very happy with the decision and we hope we are going to prevail for the sake of the industry.
DOES IT CONCERN CA THAT THERE HAVE NOT BEEN ANY NEW ENTRANTS IN THE TIER-ONE SPACE TO COMPETE SAFARICOM, AIRTEL AND TELKOM?
This is a major concern for us looking at the market asymmetry. Our role as a regulator is to create an environment that allows competition and businesses to thrive, hence the MTR measures.
Safaricom #ticker:SCOM is a very successful company and it is a good thing because they demonstrate what is possible in this market and the future is theirs to lose but we also have smaller players like Telkom Kenya and Airtel. If you look at the balance sheet of Airtel and that of Telkom Kenya, it worries you as a regulator.
What we are thinking is how to create an environment that will allow another player to actually thrive in this particular space. People ask me, are you thinking about creating an entry for a new player? My answer is that I have no one in particular.
What I am concerned about is whether the regulatory environment will allow for this alternative player to emerge either through a restructuring that takes place. I think it is in the greater interest of the country to have an alternative player.
WHAT ARE YOU LOOKING AT ACHIEVING IN INFRASTRUCTURE SHARING AND NATIONAL ROAMING?
You have gone to places in this country and you find one tower by Safaricom, the other tower by Airtel and sometimes you can have a third one.
If you look at it, the question is why should all the three players have these towers at the same place? We should just have one tower and whoever owns it provides it as a service to the other players.
So any savings that accrue could be used for alternative investments which could add value to the product. We also have other players who have come into the industry, level two companies and their business is to put up infrastructure and allow other players to establish themselves on those towers at a fee.
Instead of the operator focusing on managing infrastructure, they will focus more on the products as their core business and customer experience.
National roaming gives consumers an option to retain their lines as they enjoy the services of another player. I don’t have to have two SIM cards basically. The way you have international roaming, you can also enable it to happen locally. But of course, it comes at a cost and this cost has to be negotiated between the operators.
We also put together a multi-sector task force that brings together the CA, tower companies as well as mobile operators together with the IEBC [Independent Electoral and Boundaries Commission] in my first 100 days to map up coverage issues and to ensure that the services will be available when needed and where there are risks or gaps, we can jointly address them.
DO YOU MISS IEBC?
I don’t miss it. I had my time, I did my part and now someone else carries out that responsibility.
WHY ARE WE STILL NOT ABLE TO ELECTRONICALLY TRANSMIT ELECTION RESULTS NATIONWIDE?
I have read newspaper reports on coverage but that is not true. If you compare 2017 and 2022, we are worlds apart. In 2017, we had 78 percent coverage of the population in terms of 3G and 4G, which is the technology required to enable transmission, and that explains the challenges we faced with the 11,000 polling centres. But today, we are at 96 percent in terms of coverage, which is significant.
BUT 96 PERCENT IS NOT 100 PERCENT.
Our role is not to determine how the electoral commission will go about managing transmission. Ours is to ensure that the operators who are providing this service are available with that particular service and where there are gaps, in this case about four percent, IEBC will have to make that decision in terms of alternative ways.
In my recollection, IEBC had about 1,500 satellite phones which they can deploy to cover those areas. Where we do not have coverage are far-flung areas with very few polling stations and very low numbers of registered voters.
WHAT ABOUT THE QUALITY OF SERVICE?
This is the question that we are more concerned about. Our responsibility is to work with operators to ensure that the quality of connectivity is maintained for purposes of the election.
We have technology monitoring systems across the country. When they report that we got the country covered, it must be the same through our verification reports.
The other progress we have made since 2017 is in the number of trans receivers, the kit that enables the 3G and 4G. In 2017, we had only 42,700 trans receivers, but today, we have a total of 103,000. So there should be no fear at all for the transmission of results.
WHERE IS KENYA IN 5G ROLLOUT AND HOW IS THE COUNTRY LOOKING AT THE RISKS AND OPPORTUNITIES?
I think there is going to be a great opportunity for the country. We already have resources allocated in terms of spectrum for every country. We have had a draft 5G roadmap that was subjected to public consultation in October and November last year and we are currently reviewing some of the feedback that we got.
Now we have to take it to the next level of validation. The roadmap gives us the framework of how we deploy. With 5G you start thinking about telemedicine. Then there is the automotive industry and robotics.
There are those who say 5G will give you cancer. So far there is no evidence that it actually does. But as for everything else, we just have to keep monitoring. Safaricom has carried out a pilot and we are expecting feedback from that pilot to inform some of the decisions we are going to make.
It is not a must that only telcos will have the 5G frequencies. This is an opportunity availed to anyone else who wants to deploy 5G in future. So if you are a car manufacturer and you see opportunities in robotic science then you can leverage 5G spectrum.
WHAT IS YOUR VIEW ON THE CENTRAL BANK'S DIGITAL CURRENCY?
I was pleasantly surprised when I saw that discussion paper by the Central Bank of Kenya in terms of digital currency. It is a good thing to explore. As technology evolves, you cannot say you do not want to get into this space. The least you can do is to actually explore it and understand how that space works.
WHO IS REGULATING CRYPTOCURRENCY IN KENYA?
The problem is that we don’t have a legal regime governing that space. It is really like free for all. I know of an incident of a gentleman who was arrested for trading in crypto, then the question was which law has he violated? This is just an example of how globalization and technology affect us.
HAS AIRTEL KENYA MADE AN APPLICATION FOR THE EXTENSION OF A WAIVER ON THE 30 PERCENT SHAREHOLDING REQUIREMENT OR WILL IT BE SELLING SHARES?
When that policy was gazetted, a lot of international companies sought waivers and the waivers were granted by the Ministry of ICT. Airtel still has one more year or so since they got the waiver in April 2021. Since they were given three years, technically the time has not lapsed and it means they are still compliant.
We have had a discussion with them and they have two options to ensure they have a 30 percent local shareholding or listing on the Nairobi Securities Exchange #ticker:NSE.
We have asked them to come up with a proper plan in terms of how they want to travel that journey. If they have to seek an additional waiver in terms of time extension, that is the ministry of ICT that has to deal with it and not ourselves.
