[kictanet] [Kictanet] Existing/Appropriate Regulatory Models for OFC (2days)

Sat Feb 3 04:53:32 EAT 2007

Alex,

I may have missed you post, but have you proposed an appropriate
Consumer/Business/Regulatory structure that you believe will work? It would
help to have an idea of what you are proposing as a structure.

Thank you

--
Joseph Mucheru
Executive Director
mucheru at wananchi.com

> From: Alex Gakuru <alex.gakuru at yahoo.com>
> Reply-To: Kenya ICT Action Network - KICTANet <kictanet at kictanet.or.ke>
> Date: Fri, 2 Feb 2007 00:36:43 -0800 (PST)
> To: <mucheru at wananchi.com>
> Cc: <ke-intenetusers at bdix.net>
> Subject: Re: [kictanet] [Kictanet] Existing/Appropriate Regulatory Models for
> OFC (2days)
> 
> Kenya has been profusely bleeding internet users.
> 
> In 2005, we had  1.5 million internet users but in Sept 2006, ITU revised the
> number to 1 million. CCK then urged some of us who raised this concern that
> they disputed the figure and urgently launched an Internet users study-census
> on 01 Nov 2006 at Mbagathi.  We  were all promised to be called back before
> end December 2006 for study findings. That never happened and January just
> end.
> 
> Two week ago at the World Bank RCIP meeting at the Jacaranda Hotel, the PS in
> his presentation stated the number of internet users to be 1.25 million.
> 
> Question, Going by the PS data, what could be causing internet  loss in Kenya?
> 
> Eight years after CCK was formed and section 23 and 47 of the communications
> act introduced, The Regulator is yet to show 1 practical initiative they have
> ever implemented to protect consumers. Consumer protection, it would appear,
> is petulant and the law is broken without a blink while the Regulator embarks
> on situation containment-management, and life goes on.
>    
> Is it time for Civil society to divorce itself from over engagement on
> commercial arrangement discussions between government and business and
> re-dedicate itself to serving the voiceless?
> 
> Will all this fibre talk  translate to real consumer cost savings or are they
> just the usual public marketing of the wonderful world to come, but as usual
> just in the future to keep hope high?
>  
> In the meantime we continue talk on fibre while a third of our internet users
> are lost.
> 
> Alex Gakuru
> 
> 
> Rebecca Wanjiku <rebeccawanjiku at yahoo.com> wrote: the question of regulation
> is tricky but as Kihanya points out, it is going to take a lot of
> consultations and concessions between government and other stakeholders if the
> OFC is to work and serve the intended purposes,
>    
>   True, other countries have deregulated but what do you do in a country like
> say, Kenya where the anti monopolies commissioner is not in the fore front of
> addressing  issues, am sure many people on the streets may not know the
> existence of that office.
>    
>   In the article by Roland Alden that Walu has recommended, he argues that
> many African govts have been resistant to change and adds that what is needed
> is regulation liberalization. Maybe that’s what is needed.
>    
>   But how do we start talking of deregulation when we can’t agree about the
> Act that will govern some of these issues.
>    
>   I may not be well versed with the law but am sure with the technological
> development, there will arise disputes that were not envisaged in our current
> laws, how do we deal with that within the judicial system, we need an ACT
>   Roland further contends that in some cases, regulators may have ordered a
> party to fulfill its part of the bargain, but when it failed, the judicial
> system "rarely provided any meaningful" compensation to the aggrieved party.
>    
>   Regulation, deregulation, appropriate law, and am sure all these issues must
> be discussed at one point....
>    
> r
> 
> joseph kihanya <kihanyajn at yahoo.com> wrote:  The regulatory framework I am
> afraid has to have its background against what is and has become current over
> the last 15 years or so globally.
> It can be viewed both at the national level and at the international arena.
> It is important to note that regulation in telecommunications is a public
> policy matter for any country. Governments must design and implement
> regulation based on the needs of a particular country and its peculiar
> historical or other circumstances, of course  tending towards best practices.
> 
> Telecommunications regulation in the transition from a monopolistic and
> largely anti- market based approaches to supply of services, to a market based
> approach in a liberalized era, mandated most governments and hence societies
> to seek regulatory oversight. This was against an anticipated reduction of
> oversight given that market forces/ competition was to guide, in the long
> term, the development of this industry as in others. Consensus appears to be
> that in the short term-as a guide/ facilitator to liberalization, regulatory
> bodies were and are required.
> It is indeed even anticipated that it is in this transitional stage that the
> regulators will be so busy â€“ for the obvious reasons that the new players
> may gain dominance very quickly and attain the monopolistic tendencies of the
> historical operators.
> Why is regulation in telecommunications important?
> 1. It authorizes new operators.
> 2. It removes barriers to entry.
> 3.  It mandates interconnection between players.
> 4. It oversees the penetration of services in areas that commercial
> imperatives would not allow or pursue.
> The objectives of transparent telecommunications regulation are mainly the
> following;
> Oversee competitive markets by;
> ï‚§ Promoting efficient supply of services.
> ï‚§ Ensuring good QOS
> ï‚§ Promote advances services
> ï‚§ Enable the maintenance of efficient pricing.
> ï‚§ Prevent abuse of significant market powers.
> ï‚§ Protect consumer rights/privacy rights.
> ï‚§ Facilitate interconnection thereby efficient use of telecommunication
> services.
> ï‚§ Oversee the optimal use of the finite radio frequency spectrum.
>> From the foregoing, it is clear that, in the short term at least, most
>> countries, Kenya included have an interest to regulate telecommunications
>> services provision.
> The question therefore only remains as to whether the OFC is within the ambit
> of what may be regulated in the  industry.
> Deregulation is a theme that is in play in most jurisdictions that have
> achieved above optimal competitive markets. The case of the UK under the
> Communications Act 2003 and the role of OFCOM are in point.
> Given that there is no direct call for deregulation even under the National
> ICT policy 2006, it would appear that the strategies suggested at 3.3.1 in
> relation to information technology infrastructure would entail a fair amount
> of regulation. This is especially given the fact that despite encouragement of
> the laying of the infrastructure, only so few options will be available,
> Indeed, in the OFC case, perhaps 2 will be a lucky option for many for the
> next 5-10 years or more.
> Do we then need a regulatory framework?
> 
> My answer is yes and perhaps for tempering, a hesitant qualifier.
> 
> Competition laws are likely to be the most fundamental â€œregulatory
> frameworkâ€ for the OFC as indeed for any other services.
> It is particular to note that  even in the UK the Office of Fair Trading and
> OFCOM share equivalent powers in relation to fostering competition. The CCK
> will have to; in the very short to medium term translate from the
> â€œlicenserâ€- facilitator of entry- primarily- to a serious competition
> oversight body with sound, quick and efficient determinations. If I am not
> wrong the only recorded competition determination relates to the cyber-cafÃ©
> association- common pricing attempt- I stand to be corrected. Interconnection
> determinations have been one- Kencell vs TKL ?
> This will be countered and perhaps also enhanced by an independent competition
> body- the workings of the anti-monopolies commissioner under the Restrictive
> Trade Practices Act (Chapter 504 Laws of Kenya), are highly opaque.
> Other countries, such as Australia have also undergone a transformation from
> maintaining industry specific competition principles and statutes for the
> telecommunication sector to an all inclusive co- competition  oversight regime
> in the interim and a sustainable sole competition / regulatory framework for
> all industries.
> As such therefore, regulation for the OFC may be through the competition
> framework under the CA 1998 or the KICT BILL 2006.
> Complete lack of regulation may therefore not be an option at all.
> Whatever business model is adopted, the Key question is whether as a country
> in acute need of the OFC, we would facilitate its provisioning of services
> within the country without any regard to any oversight of any sort for
> whatever purpose.
> At the international level.
> The WTO and the ITU also anticipate regulatory oversight in telecommunications
> too and Kenya, being party to these organizations would be hard pressed to
> provision services without oversight (if that were possible), especially since
> the OFC will be extra-territorial.
> I would suggest that a reading of this Reference paper at the WTO would
> elaborate on this aspect. See
> www.wto.org/english/tratop_e/serv_e/telecom_e/tel23_e.htm
> 
> 
> The best regulatory models would for me therefore be within the competition
> framework.
> 
> It would be difficult to try and regulate any/the OFC, singularly, as it would
> also perhaps border on the unconstitutional, there being a bar againts
> discrimination under our Constitution.
> 
> Sector specific competition regulation under the CA1998 may work in the
> meantime but in the long run a clear policy that has a generic definition of
> what significant market power is, would serve the industry best.
> 
> Kihanya
> 
> 
> ----- Original Message ----
> From: John Walubengo
> To: kihanyajn at yahoo.com
> Sent: Wednesday, January 31, 2007 5:45:10 PM
> Subject: Re: [Kictanet] Day 8 of 10 : - Projected Impact of OFC on the
> Stakeholders
> 
> 
> Cool! u r on e-record- we expect something Regulatory from
> you on or before Day 10.
> 
> thanx,
> walu. 
> --- joseph kihanya  wrote:
> 
>> Thanks Walu for the discussion moderation.
>> 
>> I am doing something on the regulatory framework and will
>> post by day 10.
>> 
>> On operators I would expect that there woulda be a
>> reciprocation in price and QOS issues.
>> I would expect that there would be publicly accessible
>> interconnection agreements under the non-discriminatory
>> technology-neutral Open Access principles .
>> I would also expect that there would have to bea busines
>> realignment to conform with new entrants at the local
>> lvel who the operators would indeed agree not to want to
>> "take over" asa soon asa a ROI looks good.
>> 
>> 
>> On the regulator, the paradigm shift in allowing
>> competition and enforcing it would be key.Competition
>> alone despite all that is siad about it is not known to
>> benefit consumers largely where duopolies or  oligopolies
>> exits. product and price shadowing takes centre stage and
>> one is not sure that the alternatives are not
>> exhorbitant.
>> 
>> The regulator must also enforce QOS.
>> 
>> The consumer must be ready for a vibrant market and take
>> up alternatives that make the best "cents".He /She must
>> be able to walk out..and perhaps to an
>> ombudsman(regulator) where QOS is not as per SLA or
>> other "promises.Whining loudly may help(See South
>> Africans vs Telkom SA in the Daily News recently)
>> 
>> Kihanya
>> 
>> 
>> 
>> ----- Original Message ----
>> From: John Walubengo
>> To: kihanyajn at yahoo.com
>> Sent: Wednesday, January 31, 2007 10:11:24 AM
>> Subject: [Kictanet] Day 8 of 10 : - Projected Impact of
>> OFC on the Stakeholders
>> 
>> 
>> I must thank all for your valuable views shared over the
>> last two  days regarding the previous theme :- what are
>> the
>> Best Models for Provisioning submarine OFC.
>> 
>> Three models seem to have persisted throughout the
>> discussion, namely, Open Access (EASsy), Private-led
>> (Flag), and our famous Consortium models. Where Mucheru
>> mentions separation of Cable ownership from Cable
>> Management fits in squarely with the Open Access
>> thinking,
>> whereby, the investors in the cable (Govt, Public,
>> Private
>> Companies) appoint an independent management Agent (at a
>> fee) to Operate the Cable on their behalf on a
>> cost-recovery, open access basis. i.e Open to current and
>> future Operators wishing to connect to the landing points
>> or invest further in the cable on equal basis). The
>> cable
>> becomes an essential service or public good, from where
>> Operators can compete to offer (other) Services at a
>> Profit.
>>  
>> Flag- a Private Investment initiative came in with a
>> variant model where the cable is â€“privately owned but
>> promises to open access to the Landing points - but aims
>> to maximise returns on the investments made on the cable
>> infrastructure by reselling capacity at market rates.
>> They
>> also aim to play only at the Infrastructure level, rather
>> than at all levels, namely Infrastructure (cable) and
>> Services (Network and Application), opting to leave that
>> to ISPs and ASP(Application Service Providers)
>> 
>> Nobody really pushed the Consortium model, but probably
>> Badru did hint strongly for such a model when he
>> mentioned
>> that Commercial interest should be let loose to play
>> dynamically with the market forces. The Consortium model
>> is where a group of Operators get into a private, closed,
>> commercial agreement aiming to build, own and operate  a
>> submarine cable with aim of maximising their returns
>> (profit) in the shortest time possible â€“social
>> connotation
>> notwithstanding.
>> 
>> And this is where the Consumer has suffered. The
>> short-terms interests of investors must be balanced
>> against
>> the long-term social benefits that would accrue from a
>> affordable bandwidth provisions. Alex and LK seem to be
>> voice of the consumer here, urging the Regulator to flex
>> their muscle â€“ probably now and more in future when the
>> OFC
>> is laid-out. 
>> 
>> In all this, the various financing options were not so
>> pronounced as noted by Michael J. Apart from IPO
>> recommendation from Kai and Bill, the financing models
>> (Equity, Debt, etc) has not quite come through and I hope
>> someone could make comment on that within the remaining
>> three days as we discuss our next theme:- What is  the
>> likely impact of the above models on the existing
>> stakeholders (Operators, Regulator and Consumers)? That
>> is, what do we see as the roles of the above stakeholders
>> in the new dispensation of the Optical Submarine Cable.
>> The
>> efloor is again open and we have two days on this one.
>> 
>> walu.
>> Nb: a Face2Face meeting will follow up after this online
>> discussion where all these issues will be streamlined.
>> ~~~~~000~~~~~~
>> Theme Reminder:
>> 1) Why OFC (1day)
>> 2) Existing Business Models for OFC provisioning (2days)
>> 3) Existing/Appropriate Regulatory Models for OFC (2days)
>> 4) Best Model (Business+Regulatory) for E. Africans
>> (2days)
>> 
>> 5) Projected Impact on Stakeholders (2days)
>> 
> 
>> 6) Reconciling Stakeholder interests/Conclusions (1day)
>> 
> 
>> 
>> 
>> 
>> 
>>  
>> 
>> 
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> 
> Rebecca Wanjiku,
> journalist,
> p.o box 33515, 
> Nairobi.00600
> Kenya.
> 
> Tel. 254 720 318 925
> 
> blog:http://beckyit.blogspot.com/
> 
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