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CA to delay broadcasting permits for telecom firms

Communications Authority headquarters
Communications Authority headquarters. FILE PHOTO | NMG 

Telecoms sector regulator the Communications Authority of Kenya (CA) said Monday it will not issue telecoms operators such as Safaricom #ticker:SCOM with digital broadcasting licences until ongoing assessment of sector competition is completed.

Francis Wangusi, the CA director-general, said that the agency will not consider the matter until a report on sector competition is out.

“The board made a decision that we will not look into the matter until the competition study results are out. We are not under any obligation to give them a licence,” said Mr Wangusi in an interview.

The CA two years ago commissioned consultancy firm Analysys Mason to assess competition in the ICT sector, whose outcome is yet to be determined.

Preliminary findings of the draft report, which was leaked last February, indicated that Safaricom had been found dominant in both voice and mobile money, with more than 80 per cent of the market-share but had not abused that dominance.

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Safaricom’s application for a broadcast licence has been pending with the regulator since 2015. It was targeting to operate a commercial free-to-air television station through the permit.

The firm joined the hundreds of investors who moved to take advantage of the migration from analogue to digital broadcasting, which allowed them to set up TV stations without having to put up expensive infrastructure such as transmitters.

The company sought to increase revenue by connecting homes to the Internet using fibre, or a fixed network that was to help its subscribers stream movies from platforms like Netflix and NatGeoWild.

Safaricom chief executive Bob Collymore

Safaricom chief executive Bob Collymore. FILE PHOTO | NMG

Safaricom also enjoys dominance of the network infrastructure and has the bulk of cell phone towers in marginal and sparsely populated areas.

To level the playing field, the report had recommended that Safaricom provides 2G, 3G and 4G roaming on its network to other Tier mobile operators in the counties identified for regulated tower sharing.

But Safaricom has opposed such recommendations, arguing that they are likely to kill competition, stifle creativity and innovation in Kenya’s robust mobile phones market.

The recommendation was also seen as placing Safaricom in a difficult position in which it has to develop a pricing formula based on the long-run incremental cost (LRIC) of providing national roaming services to under-served areas.

Besides, Analysys Masion recommended that an interoperable mobile money platform be established to allow other mobile money service providers and consumers to plug into the interoperable system and reduce.

The CA has already acted on this part of the recommendation with the recent establishment of interoperable mobile money platform that is, however, not a single wallet.

Safaricom chief executive Bob Collymore, who has in the past criticised the quest to force Safaricom into sharing its infrastructure with rivals, yesterday said it would be wrong for CA to peg issuance of the broadcast licence on the outcome of the dominance study.

“We keep being promised that it will soon come but much seem to hang on the dominance report although I can’t see the relevance,’ said Mr Collymore.

In the past, he said, the CA has made multiple attempts to impose regulatory measures forcing Safaricom to share its infrastructure with rivals that only amount to punishing success.

Mr Collymore said Safaricom’s dominance is the result of a carefully executed market strategy, innovation and continued investment in the business that should not be punished. Some experts have argued that the regulator should consider introducing lower, asymmetric call termination rates to facilitate growth of smaller operators. Call termination rates are the rates a telecommunications operator charges for carrying another operator’s calls.

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