Economy

Regulator seeks law to guide Safaricom, Airtel sharing of infrastructure

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Competition Authority of Kenya (CAK) director-general, Francis Wang’ombe. FILE PHOTO | NMG

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Summary

  • The Competition Authority of Kenya (CAK) has asked Parliament to enact laws that will force telecommunications firms to share their infrastructure on a commercial basis.
  • The regulator made the recommendation Wednesday when it appeared before the Senate Standing Committee on Information, Communication and Technology which sought to establish whether Safaricom is engaged in monopolistic practices.

The Competition Authority of Kenya (CAK) has asked Parliament to enact laws that will force telecommunications firms to share their infrastructure on a commercial basis.

The regulator made the recommendation Wednesday when it appeared before the Senate Standing Committee on Information, Communication and Technology which sought to establish whether Safaricom is engaged in monopolistic practices.

CAK Director-General Francis Wang’ombe Kariuki told the committee that Safaricom is not abusing its dominance and that its market share in mobile subscriptions has dropped in the past decade.

He, however pointed out that increasing efficiencies in infrastructure sharing has the potential to further boost competition and increase options for consumers.

Safaricom’s financial muscle has seen it outspend its competitors to roll out the latest technological infrastructure in most parts of the country, making it the only choice for customers in some cases.

“The authority’s view is that ab initio infrastructure provisions in the sector should have been separated from the mobile network operators. Primarily regulations should have been developed to ensure that third parties provide the infrastructure. Unfortunately, this did not happen,” Mr Kariuki said.

“It is with this reality that we opine regulations should be promulgated and enforced in regard to infrastructure sharing on commercial basis and in case of dispute, the sector regulator [Communications Authority of Kenya] may act as the arbiter.”

He added that in passing the proposed regulations, Parliament should ensure it addresses several key issues.

They include encouraging investment while ensuring benefits of economies of scale, maintenance of the shared infrastructure and the role the Universal Service Fund (USF) in expanding to otherwise uneconomical areas.

USF is funded from government contributions and levies on telecommunication firms, with the money used to build infrastructure like masts and fibre networks in rural and other un-served areas.

Players that received USF funds to build such infrastructure are required to share them with their rivals on a cost basis.

CAK wants specific regulations to be passed to entrench infrastructure sharing on a commercial basis, putting players on an equal footing and enabling those making the capital investment to earn a return on their outlay.

As things stand, firms that invest heavily in expanding and upgrading their infrastructure can stay ahead of their competitors by maintaining an ability to take in more customers without compromising the quality of their services.

Safaricom, which has the broadest national coverage and was the first to launch the cutting-edge 5G technology, has been spending more than Sh30 billion each year on its infrastructure.

The capital expenditure of its rivals is not disclosed but Safaricom’s is by far the biggest and is part of the reason why the Nairobi Securities Exchange-listed firm has maintained its leadership in most services including voice, fixed data and mobile money services.