Firms see gains in counterfeit phones switch off

By Macharia Kamau

In three months, close to three million mobile subscribers with counterfeit handsets could be plugged off unless they acquire genuine handsets.

The switch off will be a costly affair for consumers who will have to acquire new handsets, a significant number of whom are said to have bought the fake phones without knowledge. Other than the consumers, mobile phone operators could also lose revenues especially in the short term, if their subscribers are plugged off.

There are an estimated 2.4 million subscribers using counterfeit phones and with the average revenue per user standing at Sh456 per month. This means that the telcos stand to lose up to Sh1 billion every month. This is a likely scenario as users acquire alternative handsets in the months following the September 30 the switch off date.

Sh1 billion is a substantial amount given the reduced earnings from the voice market in the recent past and the extent to which operators are going to reduce operating costs.

Counterfeit handsets are believed to be used by criminals to perpetuate heinous crimes like kidnap and even hate speech because they are hard to trace.

The Communications Commission of Kenya acknowledged there will be costs to all industry stakeholders but noted that consumers being disconnected and telcos losing marginal revenues was an insignificant price to pay for the benefits that would accruing from the exercise.

“There will be a cost to the network operators, equipment manufacturers and consumers – the latter will have to replace their handsets within three months,” said Francis Wangusi acting director-general CCK.

“But what we get in return from undertaking this exercise, the cost might be an insignificant factor. This will also be only a short term cost as consumers will eventually acquire genuine phones.”

“Counterfeits are a menace and they are a threat to our networks that we use not only for voice and data but also undertake sensitive transactions like money transfer and that is why we need to secure them.” Safaricom Chief Executive Officer Bob Collymore however said the industry would not suffer major revenue loss, and if anything, operators would make savings by getting counterfeits off their networks.  He explained that users of fake phones encounter myriad problems and end up clogging data centres as they seek help from customer care officials. “It is a good thing that we are switching them off and this will not eat into our revenues. What will happen is that we will take off a lot of costs off our business.

“A large number of calls going into our call centres are from users of counterfeits. The phones do not store data settings and in turn the users have to call customer care lines to get the settings every now and then. The customer care officials are slowed down because they cannot tell what phones these are and take longer to serve one customer clogging up networks,” Collymore told Tech.Insight.

“People will not make fewer calls, they will continue to make calls and text messages but using phones that are on safer standards.”

The body charged with fighting counterfeiting in the country said there has been a reduction in the number of counterfeit handsets in the recent months. The agency is however dissatisfied with how cases and evidence to courts have been handled in the past.

Court acquittals

Stephen Mollowah executive director Anti-Counterfeit Authority said little coordination between different government agencies has frustrated efforts to fight counterfeits in the country, with perpetrators getting off the hook.  “Recently a court acquitted two counterfeit dealers and we have been ordered to release the over 15,000 phones we had confiscated.

“There has been resistance among mobile operators to register all their customers... and this is just because of profits... I cannot think of any other reason,” he said.

“Since we started the campaign against Al Shabaab in Somalia last year, there have been many attacks and all have one common thing linking them. They have been using counterfeit phones that cannot be recognised by the networks and have SIM cards that are not registered and this way they are able to get away. Why do we have to put profits first?”

The operators however said in the absence of a legal framework, they could have previously not done much and are now committed to the September 30 date.