Kenya (Finally) Embraces Tech-Neutral Regulation (Sort of)

The last few weeks have seen some amazing moves in the direction of opening the Kenyan telecom market to Internet-based voice services (known as "voice over Internet protocol" or "VoIP"). Credit goes to the relatively-enlightened and by-all-reports relatively-uncorrupt Communications Commission of Kenya, as well as to the ISPs and others who have been pushing tirelessly for reform. The CCK's new licensing policy is designed as a first liberalizing step toward the following remarkable objective: "...the Commission intends to adopt a unified and absolute technology neutral licensing framework that permits any form of communications infrastructure to be used to provide any type of communications service that is technically capable of providing." That, in a nutshell, is exactly what we've been fighting for in Africa since the late 90s. It's a thrill to read it in a government policy statement. It's a real testament to Kenya's democratic transformation, and to the hard work and dedication of the CCK staff over the past few years to pursue a rational, transparent, open, and people-centric, regulatory regime for communications.

The most dramatic element of the CCK's immediate changes in policy is the decision to stop granting licenses by auction, a practice which raised the amount of money paid by the winning bidder to government coffers, but correspondingly reduced the funds available to it to invest in actual infrastructure. Operators were forced to borrow more at higher rates of interest, leading to delays in construction and higher passed-through prices for consumers. The CCK has now made most licence categories open on a first-come-first-served basis. One stubbornly lingering exception is fixed-line domestic and international voice, which will as a practical matter be confined to Telkom Kenya for the foreseeable future.

Another immediate and happy consequence of the new licensing policy is that mobile operators will be permitted to operate their own international gateways and to deploy VoIP technologies. One mobile operator estimates that these changes will result in a 90% drop in the cost of international calls via mobile phone. There are still plenty of obstacles in this path, however. Kenya's corrupt political elite is clearly terrified at the potential loss of bribe income from Telkom Kenya's monopoly cash cow. Less-pristine government agencies like the Ministry of Information and Communication will doubtless erect whatever regulatory brakes they have at their disposal. Indeed, that Ministry was recently behind the cancellation of a prospective second National Telecom Operator licence as well as an awarded third mobile license, a decision that has been enjoined, for now, by the Kenyan courts. The Ministry has also backed off of a common-sense plan to deregulate VSAT (small satellite dish) Internet links. Not surprisingly, there appears to be a real struggle for administrative power between the quasi-independent CCK and the still-politicized Ministry.

Nevertheless, the CCK continues to assemble the regulatory elements of a freer market in communications services. Mobile number portability is scheduled to begin in July 2005. Wisely, the plan is to use KENIC (the non-profit that has done an outstanding job running Kenya's .ke top-level domain) as the neutral operator of the number portability database.