Review of The KICA Regulations and Its Potential Impact on The Industry

This is a review of the proposed Kenya Information and Communications (Amendment) Bill 2023 and its potential impact on the telecommunication sector. The bill seeks to amend the Kenya Information Communication Act (KICA) to address emerging issues and enhance market regulation. Key changes include increasing the dominance threshold, waiving spectrum fees, and granting the Communications Authority of Kenya (CA) sole authority to determine market dominance.

Need for Amendment

The proposed amendments aim to address gaps and challenges in the KICA, ensuring its relevance in the evolving telecommunication landscape. The increasing complexity of the sector and the need for updated regulations necessitate these changes.

Specific Amendments

The bill introduces several significant amendments:

• Increased Dominance Threshold: Raises the threshold for determining dominance from 25% to 50% of total market revenue.
• Presumption of Dominance: Grants the CA sole authority to determine dominance, replacing the previous joint approach with the Competition Authority of Kenya.
• Dominance Criteria: Outlines factors for determining dominance, including market share, market power, how concentrated the market is, how much prices change, if the company can stop other companies from entering the market, if the company has better technology, if they can make very high profits, raise prices without losing customers or hurting other companies.
• Tariffs and Rates: Exempts dominant operators from obtaining prior approval for tariffs and rates.
• Spectrum Fees: Introduces a provision for waiving spectrum fees to promote universal service in underserved areas.

Impact on the Telecommunication Sector

The proposed amendments have several potential implications:

• Market concentration: The higher threshold for dominance means that market concentration is important. Companies like Safaricom may need to share their technology with other companies.
• Regulatory oversight: The CA’s sole authority over dominance may impact market regulation and competition dynamics.
• Tariffs and rates: Dominant companies will no longer need to get approval for their tariffs and rates, and this could lead to potential abuses of market power by dominant operators.
• Spectrum fees: Companies that want a spectrum license will pay less than before because the law might waive the fee, but this could also impact revenue generation for the government.

Critique

The bill says that only the Communications Authority of Kenya (CA) can decide if a company is dominant. This is a problem because the Competition Authority of Kenya (CAK) is also important for competition. The bill also says that dominant companies don’t need to get approval for their tariffs and rates. This could be a problem because dominant companies could change prices without any rules.

Conclusion

The Kenya Information and Communications (Amendment) Bill 2023 introduces significant changes to the telecommunication sector. While these amendments aim to improve market regulation and promote competition, they also raise concerns regarding potential unintended consequences. A careful assessment of the potential impacts and a balanced approach are necessary to ensure the bill effectively addresses the sector’s evolving needs while maintaining a competitive and fair market environment.