DRAFT PRESS STATEMENT ON THE KENYA INFORMATION & COMMUNICATIONS REGULATIONS 2010

On 19th March 2010 the Minister of Information and Communications gazetted five (5) new regulations to aid in the regulation of the communications sector by the Communications Commission of Kenya "CCK". The regulations are as follows:

  1. Kenya Information & Communications ( Dispute Resolution) Regulations, 2010
  2. Kenya Information & Communications ( Tariff) Regulations, 2010
  3. Kenya Information & Communications ( Compliance Monitoring, Inspections and Enforcement) Regulations, 2010
  4. Kenya Information & Communications ( Fair Competition & Equality Of Treatment) Regulations, 2010
  5. Kenya Information & Communications ( Interconnection & Provision Of Fixed Links, Access & Facilities ) Regulations, 2010

From the outset, we must point out that Safaricom is not opposed to the introduction of regulations to enhance competition in Kenya. In fact, we welcome it. However, we are very concerned about the introduction of competition regulations designed to manage a single entity, which is what appears to have been the result, after months of negotiations between industry stakeholders and the Government.  

It is unfortunate that The Fair Competition & Equality of Treatment Regulations in particular are deliberately targeted at the market leader and the rules themselves have material deviations from international best practice on competition management. This particular regulation seeks to punish the mere existence of a dominant player without compelling the CCK to undertake a market evaluation of whether the dominant player has in fact acted in an anti-competitive manner within its market segment. This will result in the CCK punishing operators who are more successful and innovative than their competitors. Global best practice on competition management provides that the regulatory focus should be regulating the act of abusing a dominant position as opposed condemning the mere existence of a state of dominance. 

With four vibrant mobile service providers all competing to win increased market share it is self-evident that the telecommunications market is the most competitive industry in the country. Subscriber numbers are growing, tariffs are falling across the board and the range of services available to the consumer is increasing by the day. This position is supported by the CCK itself in its recently-published quarterly review of 30th March 2010, where the CCK indicates that subscriber numbers had grown by 11.9% from 2008/2009 and on-net tariffs had dropped by 11% in the last quarter alone. It therefore goes against the grain of overarching Government economic policy to now seek to introduce retail price controls for telecommunication services. 

The assertions by our competitors that the CCK should apply the new regulations to "equalise" the market is akin to asking the CCK to become a player in the market as opposed to a neutral referee. Safaricom is successful because it has invested heavily in seeking to understand and cater to the needs of its customers through innovative technology and product diversity and not because it engages in any form of anti-competitive conduct. 

For the Government to now seek to curtail Safaricom's growth through price controls in order to allow our competitors to increase their market share is tantamount to side-stepping the function of market forces and unfairly condemning good management and innovation which could lead to the ultimate deterioration of the sector and by extension, the Kenyan economy. 

Safaricom is on record both publicly and directly to the CCK that we are not opposed to the creation of a more competitive environment and indeed we are actively participating in the network cost study that will most likely see cost-based review of interconnect fees and further, we contributed significantly to the consultation paper on the introduction of a fair and affordable Mobile Number Portability System.  

It is our view that the Government has a responsibility to ensure that its laws have equal application and are designed to facilitate growth of the economy by increasing investor confidence in the objectivity of our legal processes. We therefore call upon the Government to urgently review these regulations in the interest of maintaining a fair and transparent competitive environment.  

Michael Joseph

Chief Executive Officer

Safaricom Limited

On 19th March 2010 the Minister of Information and Communications gazetted five (5) new regulations to aid in the regulation of the communications sector by the Communications Commission of Kenya "CCK". The regulations are as follows:

  1. Kenya Information & Communications ( Dispute Resolution) Regulations, 2010
  2. Kenya Information & Communications ( Tariff) Regulations, 2010
  3. Kenya Information & Communications ( Compliance Monitoring, Inspections and Enforcement) Regulations, 2010
  4. Kenya Information & Communications ( Fair Competition & Equality Of Treatment) Regulations, 2010
  5. Kenya Information & Communications ( Interconnection & Provision Of Fixed Links, Access & Facilities ) Regulations, 2010

From the outset, we must point out that Safaricom is not opposed to the introduction of regulations to enhance competition in Kenya. In fact, we welcome it. However, we are very concerned about the introduction of competition regulations designed to manage a single entity, which is what appears to have been the result, after months of negotiations between industry stakeholders and the Government.  

It is unfortunate that The Fair Competition & Equality of Treatment Regulations in particular are deliberately targeted at the market leader and the rules themselves have material deviations from international best practice on competition management. This particular regulation seeks to punish the mere existence of a dominant player without compelling the CCK to undertake a market evaluation of whether the dominant player has in fact acted in an anti-competitive manner within its market segment. This will result in the CCK punishing operators who are more successful and innovative than their competitors. Global best practice on competition management provides that the regulatory focus should be regulating the act of abusing a dominant position as opposed condemning the mere existence of a state of dominance. 

With four vibrant mobile service providers all competing to win increased market share it is self-evident that the telecommunications market is the most competitive industry in the country. Subscriber numbers are growing, tariffs are falling across the board and the range of services available to the consumer is increasing by the day. This position is supported by the CCK itself in its recently-published quarterly review of 30th March 2010, where the CCK indicates that subscriber numbers had grown by 11.9% from 2008/2009 and on-net tariffs had dropped by 11% in the last quarter alone. It therefore goes against the grain of overarching Government economic policy to now seek to introduce retail price controls for telecommunication services. 

The assertions by our competitors that the CCK should apply the new regulations to "equalise" the market is akin to asking the CCK to become a player in the market as opposed to a neutral referee. Safaricom is successful because it has invested heavily in seeking to understand and cater to the needs of its customers through innovative technology and product diversity and not because it engages in any form of anti-competitive conduct. 

For the Government to now seek to curtail Safaricom's growth through price controls in order to allow our competitors to increase their market share is tantamount to side-stepping the function of market forces and unfairly condemning good management and innovation which could lead to the ultimate deterioration of the sector and by extension, the Kenyan economy. 

Safaricom is on record both publicly and directly to the CCK that we are not opposed to the creation of a more competitive environment and indeed we are actively participating in the network cost study that will most likely see cost-based review of interconnect fees and further, we contributed significantly to the consultation paper on the introduction of a fair and affordable Mobile Number Portability System.  

It is our view that the Government has a responsibility to ensure that its laws have equal application and are designed to facilitate growth of the economy by increasing investor confidence in the objectivity of our legal processes. We therefore call upon the Government to urgently review these regulations in the interest of maintaining a fair and transparent competitive environment.  

Michael Joseph

Chief Executive Officer

Safaricom Limited

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