Review of The KICA Regulations and Its Potential Impact on The Industry
The Kenya Information and Communications (Amendment) Bill, 2023 seeks to introduce provisions on the ‘Presumption of Dominance’. It also sets out the criteria for determining how a telecommunication operator can be deemed to be a dominant player.
The Amendment Bill also seeks to review the dominance threshold set by the Competition Authority of Kenya from 25 percent to 50 percent. In addition, the Bill also calls for waiving of spectrum fees.
Kenya’s information, communications and technology sector has tremendously grown. This is evident from the fact that there has been in place the Kenya Information Communication Act (KICA) since 1998 with its numerous subsidiary regulations that govern the ICT sector. That notwithstanding, there have been various amendments since the Act was put in place, with the recent proposed amendment to the KICA Regulations vide the KICA (Amendment) Bill 2023.
The Kenya Information and Communications (Amendment) Bill 2023, proposes various substantive amendments. These amendments include; the increase in the threshold for dominance and waiving of spectrum fees.
The said amendments as shall be discussed below have an impact in the telecommunication industry. It is therefore prime to interrogate the need for the amendment of the KICA regulations, the specific amendments proposed as well as the impact of the said amendments on the telecommunications sector.
Need for Amendment and the specific amendments to the KICA Regulations
The proposed amendments seek to amend the Kenya Information and Communications Act so as to address any gaps as well as any emerging issues in the Act.
One of the key amendments proposed by the Bill is on the increase in dominance for players or entities within the telecommunication sector from twenty five percent to fifty percent of the total revenue of the telecommunications market.
In particular, clause 47 of the Bill seeks to amend section 84W of the Kenya Information and Communications Act by introducing the term ’presumption of dominance’ as well as a criterion to determine dominance in the market to be determined solely by the Communications Authority of Kenya. This is a total departure from the current position under section 84W of the Act where the Commission as it is referred to has been closely working with the Competition Authority of Kenya to determine the dominant player in the telecommunications sector.
The Bill proposes that the salient aspects of dominance that will be considered by the Communications Authority of Kenya for a telecommunication provider to be declared as dominant include:
Its market shares must be at least fifty percent of the total revenue of the entire telecommunications market and not twenty five percent as provided for in the Act.
It must enjoy significant market power.
Other criteria that the Communication Authority of Kenya will consider in determining dominance include as provided for under Regulation 7(2) of the Kenya Information and Communications (Fair Competition and Equality of Treatment) Regulations, 2010:
the degree of market concentration of the telecommunication operator
the degree to which their prices vary over time
the ability of the operator to maintain or erect barriers to entry to the market, access to superior technology
their ability to earn supernormal profits
their power to make independent rate setting decisions.
Their ability to materially raise prices without incurring a commensurate loss while serving other operators.
Additionally, Clause 47 of the Bill on the presumption of dominance seeks to do away with the obligations that were previously imposed on the dominant telecommunication player under the Act such as being required to file tariffs and rates with the Commission.
Another key amendment proposed by the Bill is the waiver of spectrum fees. Clause 48 of the Amendment Bill provides that the Communication Authority of Kenya pursuant to the recommendation of the Cabinet Secretary may waive spectrum fees so as to ensure the provision of universal service in unserved and underserved regions in Kenya. This proposal is different from what is the current position of the Act under section 25 A which provides that before the granting of a license an applicant shall pay the spectrum license fees in full.
Impact of the proposed amendments on telecommunication companies
The above amendments have the following impact on the telecommunications sector:
The increase in threshold dominance from twenty five percent to fifty percent of the market revenue of the entire telecommunications means that market concentration is a key factor. For telecommunication companies such as Safaricom who have for a long time and even currently viewed as dominant player in telecommunication sector, will have to provide access to the technical specifications of its telecommunications network which is interconnected with other telecommunication companies.
Under the proposed Bill, the dominant telecommunication operator will no longer be required to get their tariffs and rates approved by the Communications Authority of Kenya before they are used in the market. This could lead to abuse of power by the dominant telecommunication operator.
Telecommunications operators who wish to apply for spectrum licence will pay less as compared to what was previously provided for under the Act as the Bill proposes for waiver of spectrum license fee
Critique on the Proposed Bill
The Bill in providing that the Communications Authority of Kenya is the only Body to determine the dominant telecommunications operator shows that the Bill is in conflict with the Competition Authority Act. This is because the Bill leaves out the Competition Authority of Kenya which is a key regulator in matters competition in the market.
The fact that the Bill does not require the dominant telecommunication operator to file tariffs, rates and conditions upon approval by the Communications Authority of Kenya shows potential abuse of power by the dominant operator. This is because the dominant operator can arbitrarily adjust tariffs given that they do not require any approval from the Communications Authority of Kenya.