Kenya is a country in East Africa with a young, relatively well-educated population in excess of 31 million. The country has an aspiring telecommunications sector and the region’s largest manufacturing base, but depends primarily on tourism and agriculture for subsistence. With the oldest stock exchange in Africa, Kenya’s entrepreneurial tradition and talent has led to the relatively quick development of a host of telecommunications operators and service providers. At the same time the country has fallen behind Tanzania and Uganda in attracting foreign investment, as reflected in the continuing delays in privatizing its incumbent carrier, Telkom Kenya.
Together with Uganda, Kenya has been a regulatory leader in the region. The government created a telecommunications regulator in 1998 at the same time that the telecommunications and postal arms of the PTT ministry were spun off as separate operating entities. Since that time the Communications Commission of Kenya (CCK), has licensed numerous ISPs, permitted an Internet Exchange Point to operate, and authorized several gateway and public data operators as well as three mobile operators.[1] These initiatives helped generate the current multi-player industry (still dominated by Telkom Kenya), and resulted in a number of regulatory issues. For example, CCK voiced concerns about the unlawful termination of international calls by some of the new operators, estimating that such “piracy” reduced Telkom Kenya’s annual revenues by 178 million KES (about US$2.4 million). On the mobile side, the recipient of the third license has taken the government to court for allegedly undermining its ability to launch its service.
Despite these issues and contentions the CCK’s innovative policy momentum has persisted. In August 2005 the Commission announced a policy legalizing VoIP. [2] This followed a phase of uncertainty, during which the new entrants provided VoIP services without clear guidance, other than at the trunking level. With the release of VoIP guidelines, the telecommunications sector is poised for deregulation. Correspondingly, Telkom Kenya has launched its own VoIP service, using a calling card approach.
The new policy allows the following types of VoIP services:
- Individuals to use VoIP on a PC/IP-phone to PC/IP-phone basis without any licensing requirements,
- Registered telecenters and cyber cafes connected to licensed ISPs to commercially provide VoIP services to end users, filing quarterly data to CCK,
- Corporate users to utilize VoIP internally without any licensing requirements as long as they use licensed operator networks, meet equipment type approvals, install call logging, and do not provide service to third parties,
- Licensed national operators to use IP (“managed VoIP”) backbones/networks, as long as existing Quality of Service and emergency service requirements are maintained and user terminals are connected via VoIP gateways,
- Licensed network operators to “facilitate” PC/IP-phone to PSTN forms of VoIP, after receiving CCK approval of gateway specifications and other details and adhering to existing interconnection, Quality of Service and emergency service regulations.
The upshot is that even ISPs can offer VoIP connections to telephone users as long as the link between the ISP and the end subscriber is provided by a network operator, such as Telkom Kenya or a mobile operator.
At the same time, in issuing its VoIP guidelines, the CCK noted it would prohibit vertical integration between infrastructure and service licensees. This raised a number of issues, the first being whether the “integration” prohibition would apply solely to the activities of a single legal entity or also to two or more entities under common (or overlapping) ownership. Another question is whether the prohibition would apply to Telkom Kenya as well as the new entrants. The regulator has now implemented the provision and requires infrastructure providers, including gateway providers and public data network operators, to establish separate entities or subsidiaries to provide telecommunication services, including Internet services. [3]
Similarly, there are a number of dangling issues regarding number portability, interconnection, and termination of VoIP service via the PSTN. Based on the VoIP guidelines published in August 2005 and a subsequent ISP license review, CCK has required ISPs to enter into interconnection agreements with licensed network operators. However, this requirement is challenged by the fact that VoIP and PSTN work on different technical principles, packet and circuit switched technologies respectively. Another challenge is that the existing interconnection rates for mobile to fixed termination are in the region of 20 KES (currently about US$0.27) per minute. If applied to VoIP services these rates could be unsustainable. Whether directly negotiated agreements would result in termination charges considered reasonable by independent VoIP service providers also remains unclear.
Overall, the Commission did not go so far as to allow all forms of VoIP on an unrestricted, unlicensed basis. Still a relatively comprehensive and detailed policy was developed in a real-world environment of conflicting pressures and organizational changes. [4] It all happened in a relatively short period of time, following consultation with industry players. It has also raised a number of issues, which may have to be addressed before PSTN-related VoIP service provision by non-network operators occurs on a substantial basis. Alternatively, the Commission may need to issue clarifications to its VoIP policy guidelines in order to permit a full range of VoIP services to be deployed in Kenya, such as the establishment of an Internet-centric regime of interconnection and pricing.
Endnotes:
[1] This summary of Kenya’s telecommunications and VoIP situation is based on a review of related articles during 2004 and 2005 (through August) in the East African Standard and Daily Nation, as available on the APC Africa ICT Policy Monitor at http://africa.rights.apc.org/. Henry Njogore, Managing Director, UUNet, Kenya also provided background information (interview, 28 October 2004). For country and regional information, see Jeune Afrique, The Africa Report, May 2005.
[2] CCK Policy Guidelines on the Provision of Voice Over Internet Protocol (VoIP) Services in Kenya. See also, Commonwealth Telecommunications Organization, An Overview of VoIP Regulation in Africa: Policy Responses and Proposals (2004).
[3] Information provided by CCK.
[4] For example, in March 2005 the Minister for Information and Communication dissolved the Board of CCK, a move that created a good deal of controversy and concern about the possible negative implications on investment. A new Board was designated in its place, with its new Director General being the former Managing Director of Telkom Kenya, who was in turn replaced by the former DG of CCK. Pages to attach to:4 New Paradigms …4.4 VoIP and Regulation2Copyright Castalia Limited. All rights reserved. Castalia is not liable for any loss caused by reliance on this document. Castalia is a part of the worldwide Castalia Advisory Group.