KENYA: TMT TIDBITS: DELVING INTO TELECOMMUNICATIONS – UNDERSTANDING THE REGULATORY ENVIRONMENT
Our previous feature un-packed, at a high-level, the activities that are regulated in this space. This feature seeks to highlight the government entities / authorities you are likely to engage and interact with in the telecoms sector in Kenya.
So, who is the regulator?
You will recall that providing telecoms services and systems necessitates obtaining a licence before commencing provision of the services. The Communications Authority of Kenya (CA) (established under the Kenya Information and Communications Act, 1998 (KICA)) is the regulator tasked with ensuring that players in the telecoms sector comply with the law. The CA’s mandate extends to the issuance of licences and regulation of communication services.
The CA is one of the most organized and receptive regulatory authorities in the country. A quick stop at the authorities’ website (here) will provide an overview of the procedure and requirements as well as the types of licences available, the applicable costs (both application and annual fees) and the timelines for obtaining the licences. The website sets out model licences which act as a guide on the nature of the conditions of licence.
Establishing a good rapport with the regulator when dealing with them is recommended as they will guide you through the processes and explain issues that are ambiguous to you. In our experience, the CA is normally available and willing to provide any clarifications and comfort on unclear regulatory issues, both at the onset and in the course of operations.
That said, you bear the obligation of ensuring compliance with all regulations – the KICA does outline penalties for not doing so. It is advisable that proper guidance is obtained on the regulatory requirements and compliance processes under the different regulations.
Regulation and Policy
KICA provides for numerous regulations governing a licensee’s behaviour. The regulations impose cross cutting obligations relating to, among others, consumer protection, fair competition and equality of treatment, dispute resolution, tariffs, interconnection, numbering resources, importation and distribution of communication equipment, universal access, quality of service and registration of subscribers. Depending on the telecoms services and/or systems one is offering, the provisions of the regulations must be borne in mind to ensure compliance.
While the CA is positioned as the sector regulator, it falls under the Ministry of Information, Communication and Technology (Ministry). The Ministry issues the policy direction the government wishes to adopt with respect to the sector and consequently prepares the regulations that effect the policy for enactment by parliament.
The Information and Communications Technology Policy Guidelines, 2020 (Sector Policy) issued by the Ministry is currently applicable. Sector players are required to comply with the Sector Policy. Under KICA, the CA is mandated to have regard to policy guidelines issued by the Ministry. It is therefore crucial to understand the implications of this on your business as well.
Local equity participation
One of the main policy issues is the local equity participation requirement outlined in the Sector Policy. To aid in local investment in the ICT sector, it is a requirement for licensees to issue at least 30% of their shareholding to Kenyans, either corporate or individual. This requirement should be met within 3 years of being licensed, though you may seek an exemption or extension from the Ministry. The CA is vigorous in ensuring compliance with this requirement in conjunction with the CA.
The telecom regulatory sector is a complex regulatory environment that is constantly changing. Keeping up to speed with the various guidelines, policies and regulations is crucial to effectively ensuring compliance and your ability to do business in Kenya. You should also have a holistic understanding of the regulatory environment surrounding the telecommunications sector, be it taxation, data protection, national security, cybersecurity, among others.
The next feature on the ‘Delving into the Telecommunications’ series will be a podcast on the realities of day-to-day operations in the sector. Look out for this discussion!