Why CA is adamant to conduct another dominance report on telcos

By Steve Umidha

The Communications Authority of Kenya (CA) has steered clear of suggestions by Kenya Private Sector Alliance (Kepsa) to conduct another dominance study into competition in the telecommunications sector.

Reacting to proposals by the private sector lobby, the industry regulator confirmed there were no such plans – at least not at the moment.

It is a move that could rekindle the ever-lingering dispute between mobile operator Safaricom and rival operators over abuse of market dominance.

“As far as I am concerned there are no such plans for now. However, there have been a lot of positive developments and ongoing engagements with stakeholders since the last report was released and whose aim was to address concerns raised in the study,” commented a CA official at a recently held media forum.

The authority also said it would not take sides on the contentious issue.

CA was responding to queries from a submission made by Kepsa to the Senate Standing Committee on ICT in October 2021 when the lobby group had called for another dominance study to be conducted, five years since a similar market scrutiny was undertaken but has never been fully implemented.

“There have been shifts in the telecommunications market in the past few years and the landscape continues to change. Since the last study the landscape has changed and we now even have tower management companies,” argued Kepsa on the subtle issue at the time.

Kepsa officials had appeared before the committee to offer a private sector view on market dominance by telecommunications operators, legislative and policy issues following claims that the market leader Safaricom – had a competitive advantage over its rivals.

“A baseline of data needs to be established as well as the impact of the market shares, before looking at intervention measures to alter the market balance,” Kepsa recommended.

The last competition study was undertaken in 2016 and recommended a more comprehensive study to be undertaken by the regulator Communications Authority of Kenya (CA), which had been tasked to provide insights into who was dominant in the various sub-sectors.

CA picked audit firm Analysys Mason to undertake a telecommunication competition market study between May 2016 and May 2017 but its findings were first made public in 2018.

The report’s verdicts would later raise critical concerns such as interoperability among mobile operators, mobile voice, data and mobile money services with key issues being suggestions to split Safaricom’s M-Pesa as a standalone business entity following an open uproar by rival Airtel Kenya.

CA, tasked with the implementation role of the study was to among other things establish the levels and extent of competition in the various telecommunication sub-markets identified as well as ascertain players with significant market power.

The industry regulator was to also identify the market barriers, if any, that prevent or restrict entry, competition and the growth of the players in the era of changing technologies, after which it would proposal on the best ways by which the identified barriers and factors acting as a hindrance to growth can be considerably minimized or eliminated.

Interoperability for instance, was expected to solve difficulties associated with mobile money transactions, where consumers have previously complained of costly and highly tedious processes of sending money across networks with the procedure often tilted in Safaricom’s favour owing to huge transaction tariffs set by the operator.

Small players have long maintained that Competition Authority of Kenya (CAK) and CA should split up Safaricom and M-Pesa into separate stand-alone business units in order to compete favorably and open the market.

Rather than pocketing the proceeds from its innovation, Safaricom has argued that, it has ploughed back revenues to transform itself into the multi-billion firm it is today – with its MPESA unit today boasting of over 30 million active Kenyan customers using the platform every month having launched 15 years ago.

Kenya remains M-PESA’s most active market accounting for more than 30 million of the service’s 51 million customers across Kenya, Tanzania, the Democratic Republic of Congo, Mozambique, Lesotho, Ghana and Egypt.

In its recommendations, KEPSA suggested that a National Critical Infrastructure Policy be set up to enhance coordination and cooperation among industry players including competitors.