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<p class="MsoNormal" style="margin: 5pt 0in;"><o:p> hi,</o:p></p><p class="MsoNormal" style="margin: 5pt 0in;"><o:p>here are some issues raised during the OFC discussion, a full report will be uploaded once the site becomes fully operational....</o:p></p><p class="MsoNormal" style="margin: 5pt 0in;"><br><o:p></o:p></p><p class="MsoNormal" style="margin: 5pt 0in;"><o:p><br></o:p></p>
<p class="MsoNormal" style="margin: 5pt 0in;"><b style="">KICTANET facilitates OFC debate <o:p></o:p></b></p>
<pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><i style=""><span style="font-size: 12pt; font-family: "Times New Roman";">“The government is only facilitating, the owners of the Optic Fibre Cable (OFC) will be the private sector,” said Bitange Ndemo, Permanent Secretary, Ministry of Information and Communication.<o:p></o:p></span></i></tt></pre><pre><tt><i style=""><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></i></tt></pre><pre><tt><i style=""><span style="font-size: 12pt; font-family: "Times New Roman";">“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,” said Joseph Kihanya, a lawyer.<o:p></o:p></span></i></tt></pre><pre><tt><i style=""><span style="font-size: 12pt; font-family:
"Times New Roman";"><o:p> </o:p></span></i></tt></pre>
<p class="MsoNormal" style="margin: 5pt 0in;"><i style="">“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?” asked Alex Gakuru<o:p></o:p></i></p>
<pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">These are some of the comments that came out of the two week online discussion on the OFC facilitated by KICTANET.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">The online forum was calculated to encourage stakeholder input to the OFC debate, analyze the advantages and the concerns of the various sectors. There were contributions from government, private sector as well as academia.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New
Roman";">The discussions were divided into five themes; Why OFC?, existing business models for OFC provisioning, existing/appropriate regulatory models for OFC, best model (business and regulatory) for East African, projected impact on stakeholders, reconciling stakeholder </span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><span style=""> </span><o:p></o:p></span></tt></pre><pre><tt><b style=""><span style="font-size: 12pt; font-family: "Times New Roman";">Why OFC?<o:p></o:p></span></b></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">OFC has been described as the solution to high cost of international Bandwidth. According to Information and Communication minister, <st1:country-region w:st="on">Kenya</st1:country-region> will be in a position to
attract ICT business and compete with countries like <st1:country-region w:st="on"><st1:place w:st="on">India</st1:place></st1:country-region>, once the cable is in place.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Once the whole country is linked via a backbone, then rural areas can conduct business online locally and internationally. For instance, the coffee societies licensed to market their coffee can easily sell their coffee directly without coming to <st1:City w:st="on"><st1:place w:st="on">Nairobi</st1:place></st1:City> or other major towns.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New
Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">In the region, OFC will make easier and cheaper to communicate and share information. <st1:country-region w:st="on">Uganda</st1:country-region> and <st1:country-region w:st="on">Ethiopia</st1:country-region> have already laid their cable, expected to connect through <st1:place w:st="on"><st1:country-region w:st="on">Kenya</st1:country-region></st1:place> to the world. With the backbone, the banks and other regional businesses can use the same network for transactions.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New
Roman";"><o:p> </o:p></span></tt></pre><pre><tt><b style=""><span style="font-size: 12pt; font-family: "Times New Roman";">Existing Business Models<o:p></o:p></span></b></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Three models persisted throughout the discussion, namely, Open Access (EASSy), Private-led (Flag), and the Consortium models. <o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">There was lively discussion about separation of Cable ownership from Cable Management which fits 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.<span style=""> </span>In this case, the cable becomes an essential service or public good, from where operators can compete to offer (other) services at a Profit.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Flag- a Private Investment initiative has a variant model where the cable is –privately owned but promises to open access to the landing points - but aims to maximize returns on the investments made on the cable<span style=""> </span>infrastructure by reselling capacity at market rates.<span style="">
</span>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).<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">The consortium model was not heavily advocated for but there were suggestions that it can operate if commercial interest are let loose to play dynamically with the market forces.<span style=""> </span>The consortium model is where a group of operators get into a private, closed,<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Commercial agreement to build, own and operate a submarine cable with aim of maximizing their returns (profit) in the shortest time
possible.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">The question of short term investors has been a bone of contention with arguments that in the end, consumers suffer once investors get their profits and pull out.<span style=""> </span>The short-term interests of investors must be balanced against the long-term social benefits that would accrue from an affordable bandwidth provisions. Discussants asked for the regulator should flex their muscle once the OFC is laid-out. <o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">The major financing option was by way Initial Public Offer (IPO) other financing models
(Equity, Debt, etc) were not thoroughly discussed.<o:p></o:p></span></tt></pre><pre><tt><b style=""><span style="font-size: 12pt; font-family: "Times New Roman";"> <o:p></o:p></span></b></tt></pre><pre><tt><b style=""><span style="font-size: 12pt; font-family: "Times New Roman";">Existing/appropriate regulatory models<o:p></o:p></span></b></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">The overriding argument was that the government should relax its oversight role to allow business to operate with some elasticity. In this relaxed role, the government would maintain the role of regulator e.g. the way governments of other fledging economies such as <st1:country-region w:st="on">South Africa</st1:country-region>, <st1:country-region w:st="on">Singapore</st1:country-region> and <st1:place
w:st="on"><st1:country-region w:st="on">Malaysia</st1:country-region></st1:place> maintain a subtle oversight role.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">However, the role of government as the regulatory authority was underscored as the balance between investor interests and the consumers. <o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><b style=""><span style="font-size: 12pt; font-family: "Times New Roman";">Why is regulation in telecommunications important?<o:p></o:p></span></b></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New
Roman";">It authorizes new operators, removes barriers to entry, mandates interconnection between players, and oversees the penetration of services in areas that commercial imperatives would not allow or pursue because of minimal profits.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Transparent telecommunications will regulate mainly by promoting efficient supply of services, providing an enabling environment for the maintenance of efficient pricing, <o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Protect consumer rights/privacy rights and facilitate interconnection thereby efficient use of communication services.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New
Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Deregulation was discussed as a theme that is in play in most countries that have achieved above optimal competitive markets. The case of the <st1:place w:st="on"><st1:country-region w:st="on">UK</st1:country-region></st1:place> under the Communications Act 2003 was given as an example.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Though there is no direct call for deregulation in the draft ICT bill CCK was suggested as a proper authority that could maintaining industry specific competition principles and statutes for the telecommunication sector.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New
Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">Regulation for the OFC may be through the competition framework under the CA (1998) or the ICT bill (2006). Complete lack of regulation may therefore not be an option given the circumstances.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">The WTO and the ITU also anticipate regulatory oversight given the various international documents that <st1:country-region w:st="on"><st1:place w:st="on">Kenya</st1:place></st1:country-region> is signatory to.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><b style=""><span style="font-size: 12pt; font-family: "Times New
Roman";">Projected impact of OFC<o:p></o:p></span></b></tt></pre><pre><tt><b style=""><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></b></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">It was unanimous the OFC will boost connectivity and lower the cost of bandwidth. With faster internet, it will be easier to carry voice, data and images via internet protocol.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">The issue of local content raised great concern with arguments that <st1:country-region w:st="on"><st1:place w:st="on">Kenya</st1:place></st1:country-region> imports 99 % of the content. The implication will mean that people will have to develop content that suits them instead of copying what is
already available elsewhere.<o:p></o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";"><o:p> </o:p></span></tt></pre><pre><tt><span style="font-size: 12pt; font-family: "Times New Roman";">With local content, the internet industry will employ more people to keep updating the content as well as offer services and goods via the internet.<o:p></o:p></span></tt></pre>
<p class="MsoNormal" style="margin: 5pt 0in;">It was felt
that regardless of the OFC that will be adopted, benefits might not be
maximized due to prevailing market structures. Roland Alden (2006) argues that
our current market (regulatory) structures have not adapted to the realities of
a converged market and therefore continue to constrain the potential benefits
that OFC may bring about. </p>
<p class="MsoNormal" style="margin: 5pt 0in;">In his
extensive writing on telecommunications, Roland contends that networks require
capital investment, customers who can support that investment, and a clear
regulatory environment that is not disruptive or counterproductive. In <st1:country-region w:st="on"><st1:place w:st="on">Kenya</st1:place></st1:country-region>, all
three inputs have been in short supply.</p>
<pre><tt><b style=""><span style="font-size: 12pt; font-family: "Times New Roman";"><span style=""> </span></span></b></tt><b style=""><o:p></o:p></b></pre></div><br>
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