By Macharia Kamau

Telecommunication firms face hefty fines in coming months for failure to adhere to the terms of their licences, including quality of services.

The Communications Commission of Kenya (CCK) is amending the Kenya Information and Communication Act and in its proposals, the regulator wants the fines to telcos to be based on their revenues. It has also proposed to backdate this to the number of years that the telcos have committed the offences as opposed to starting on a clean slate.

This is in comparison to the current regime where fines are at a fixed Sh500,000 for players that go against the terms of their licences. CCK thinks the penalty is too lenient for players that whose turnover run into tens of billions of shillings per year and may not be adequate to keep the telcos on their toes especially where quality of service is concerned.

The regulator wants operators to pay one per cent of their revenues as fines whenever they are found guilty of an offence. The amendment bill, which is still in its draft stages, also wants these backdated to the years that the offence has been committed.

The amendment proposes that telcos pay a fine “of Sh100,000 or one per cent of the annual gross turnover of the offending licensee for every calendar quarter… in which the offence is continuing, whichever is higher”.

Among the areas that telcos have been gross offenders include offering of substandard services. An annual survey by CCK on quality of service among the four mobile service providers has found the quality wanting and it has threatened to penalise them.

While the telcos have voiced their concerns about the manner in which the regulator undertook the survey, they also concede that there are certain instances where their services have not been the best.

sake of millions

“We have tweaked what is in the act currently to reflect the annual gross turnover of the offending licensee. At the moment the penalties are not proportionate to the offence of the damage… the amendments are aimed at keeping the operators within the scope of their licences.” The operators are likely to try to water down the amendments during the consultative stages but telecoms analyst Peter Wanyonyi notes that CCK should stand its ground on this one, especially for the sake of millions of customers that suffer when operators do not adhere to the terms of their licences.

“I think the flat-fine approach has not worked. The telecom operators in the country generally make such large profits that a flat fine achieves little, if anything,” he said.

“Tying the penalty to the operator’s turnover is appropriate because it introduces proportionality to the sanction: the higher the number of customers an operator has, the large the number of them affected when the operator defaults on a given performance indicator, and so the larger should the sanction be.”

He added that CCK should also go ahead and sanction operators that are not inline with the terms of their licences to make the industry compliant.

“CCK has not exactly gone out of its way to sanction operators who fail to meet their contractual KPIs. The result has been the very poor customer experiences seen with both voice and data services across the country, with poor quality services being very common especially outside Nairobi,” said Wanyonyi.

“Indeed, some operators are pretty much focused more on Value Added Services - VAS - at the considerable expense of the more core services like voice calls and internet connections of good quality.”

eight parameters

“The biggest impact will undoubtedly be felt by the market leaders, but if CCK wants to force operators to up their game, this is one sure way to do it.”

Other areas that CCK could investigate and go ahead to fine regulator should they find them not acting inline with the law include continued offering services to unregistered subscribers and allowing counterfeit mobile handsets on their networks.

While CCK has not yet sanctioned any of the operators, it has been planning to do so based on its annual quality of service report. The survey is now in its fourth year and has found operators to be falling below the prescribed thresholds.

The regulator measures quality based on eight parameters that include the rate of dropped and failed calls, clarity of connection, strength of the signal and call completion rates.

In Africa, Rwanda and Nigeria are among the countries that have sanctioned operators offering substandard services. In 2011, Rwanda revoked the licence of one of the operators and fined another one $5,000 per day for a month for substandard services. Last year Nigeria fined four operators a combined $7.4 million for substandard inferior quality of service.