SIM card switch-off law lacks teeth to bite operators

By Jevans Nyabiage

Nairobi, Kenya: If Telkom Kenya has guts to block mobile phone users that have not registered their SIM cards, the operator will lose about a third of its subscribers.

The operator, which is reeling from an industry worst loss of Sh18 billion in 2011, had registered 2,106,250 or 63.7 per cent of its subscribers at the close of business on Friday.

According to Communications Commission of Kenya (CCK), Telkom Kenya has a total of 3,306,347 subscribers.

The firm, which is 51 per cent-owned by France Telecom, is not alone. Essar Telecom Kenya trading as YuMobile and Airtel Kenya — two operators that share ancestry of their principal shareholders — would each lose up to a million subscribers, if they implemented the directive to switch of unregistered lines.

More than five million mobile phone users in Kenya are yet to register their lines. By close of business on Friday, 25,536,831 lines had been registered. Latest data put Kenya’s total SIM numbers at 30,839,582.

In business terms, these are numbers that operators won’t let go easily — having fought hard to acquire them since 2010 when Airtel initiated a vicious price war to dent the market share of Safaricom.

Safaricom is expected to lose about 2.4 million users, nearly half of all the lines to be blocked by all operators in the industry.

At the operator level, the figure represents 12 per cent of its subscriber base, which CCK, the industry regulator, puts at 19.6 million as at December 28, 2012. These are the figures giving operators sleepless nights and which they can only reluctantly part with.

False promise

However, last Friday, operators breathed somewhat easy, if only temporarily as the State failed to gazette regulations backing the directive to deactivate unregistered SIM cards.

This flies in the face of Information PS Dr Bitange Ndemo’s earlier promise on Wednesday that the regulations were awaiting publishing in the official Kenya Gazette by the Attorney- General.

“The law is currently at the AG’s office and will be gazetted on Friday,” Bitange told a news conference in Nairobi, last Wednesday.

“All mobile SIM card holders are required to register by that date (January 4) to avoid breaking the law,” Ndemo said, urging mobile operators to deactivate all unregistered SIM cards as the legal implications are severe.

The regulations are contained in the Miscellaneous Amendment Act on the Kenya Information and Communications Act. The Act requires all mobile operators to keep updated records of their customers, part of the State efforts to curb the rise of crime associated with using mobile phones, but the finer details of the process and penalty for non-compliance were to be contained in the yet to be gazetted regulations.

The Government wants to use the exercise to cut incidents of crime and terrorism perpetrated through the mobile handset. According to CCK, SIM card registration will help reduce mobile phone-related crimes, which include hate messages, kidnappings, fraud in mobile money and many others.

In the wake of spiraling crime perpetuated through the mobile handsets, the President, in July 2009, directed CCK to facilitate the registration of all SIM cards in use in Kenya. Subsequently, in 2010, CCK developed guidelines on SIM card registration.

Although well meaning, critics punched holes into the directive. The mobile operators have in the past defied such a similar directive citing lack of legal backing to switch off their customers.

But an amendment to the Kenya Information and Communications Act, 1998 now gives the move legal backing. This has stirred anxiety among operators that the switch-off could occasion them massive revenues losses.

Business rivalry

The exercise that started in 2009 has had many false starts, in what analysts point to underlying business rivalry in the fight for mobile phone subscribers for the lag.

Last Wednesday, when it emerged that no subscriber had been switched off, Ndemo and the regulator, threatened that subscribers risked a three-year jail term or be fined Sh300,000.

Ndemo said mobile operators who do not switch off unregistered lines will also pay a Sh300, 000 fine per SIM card.

“We are looking forward to the March elections and we must do everything we can to ensure the process goes on smoothly,” Ndemo said.

“We should be able to arrest those who are criminals among ourselves or who are bent on spreading hate messages,” he explained.

The directive required that all phone numbers had to be registered by December 31, 2012. On Friday when Business Beat queried why the exercise took off to a slow start, Mr Francis Wangusi, CCK director general, said the disconnection of unregistered SIM card was progressing well despite the initial hitches.

Some operators said though slow, the process had started, and in the end all will be put off air.

Safaricom said that it had blocked about 800,000 unregistered SIM cards, which is 33 per cent of the lines the operator is supposed to put off air.

“We are refining the switch off process and it will continue into the weekend and those affected by the blocking will be unable to make calls or utilise any of our services until their SIM cards are registered,” Safaricom Chief Executive Officer Bob Collymore, said.

“Safaricom being the largest mobile operator has invested heavily in awareness campaigns and has so far registered over 85 per cent of its subscriber base.”

Orange sent a two-paragraph statement saying they had switched off over 100,000 lines. “Orange has so far switched off 100,000 unregistered SIM cards; this is an ongoing process that we are determined to see to its conclusive end,” said Mickael Ghossein, Telkom Kenya chief executive.

Airtel Kenya and YuMobile didn’t respond to our inquiries, but CCK data showed that Airtel had switched off 70,830 unregistered lines while YuMobile had suspended 290,000 by Friday, an indication that some the operators were playing a wait-and-see.

Hide and seek

However, a senior manager at the CCK said some of the operators have been making difficult — often hiding their up-to-date data from the regulator.

Sources from two of mobile operators who didn’t want to be named to avoid reprisal from their employers corroborated the official’s sentiments, saying most of the numbers released by the operators on Friday are SIM cards that have remained dormant or inactive for long and not the unregistered lines.