Over the next quarter, we will delve into the telecommunications sector in Kenya, providing practical tips on navigating the legal issues associated with doing business in the telecommunications (Telecoms) sector. This is the first in a quarterly series of topics which will hopefully help you address the question “what should I consider when investing in” the technology, media and telecoms sectors.
So, what is Telecoms under the law?
To determine whether the activities involved are regulated, one has to make reference to the Kenya Information and Communication Act (KICA), its regulations, and any guidelines issued by the regulators. The KICA approaches the sector from a services and systems perspective, and has a very involved (and, let’s be honest, a bit longwinded) definition of telecoms services and telecoms systems.
Telecoms systems: this is basically infrastructure which uses technology to convey data at a distance. It includes cables, copper, satellite and microwave systems. Depending on the infrastructure one wishes to set up and offer, network facilities provider, submarine cable landing rights, international gateway systems and services licenses may be required. Supplying, installing and maintaining telecommunications infrastructure is also regulated.
Telecoms services: Once the infrastructure is in place, then other telecoms industry players may lease the facilities to provide either communication-based services such as voice, data and internet; or content-based services such as news, entertainment, education, and culture on a subscription basis. The former necessitates an application service provider licence, while the latter calls for a content service provider licence.
Simply put, if you intend to offer any service that involves conveyance of speech, images, data, signals or music, or to set up infrastructure that enables the provision of such services, then you are engaged in telecommunications.
That said, there are ancillary activities that are regulated, such as importation, sale and distribution of communications equipment. Personnel that carry out the installation and maintenance of the infrastructure have to be appropriately licensed.
Understanding your business
Where the proposed activities are in line with traditional, well known, telecoms services such as voice and internet or telecoms systems like sub marine cables and fiber optic cables, then it is easier to assess the regulatory and licensing framework applicable.
However, where one is dealing with a novel service/ product, careful analysis has to be made to assess whether the regulations are applicable. A simple, single element of the service/product may make it subject to the KICA. Not to tout our profession, but it is advisable to obtain the services of an attorney before launching the service/product for such an assessment.
There are economic implications where a business is regulated. Some licences are expensive to obtain and maintain due to the operating fees levied by the regulators. This should be a key consideration when making the call whether to engage, as non-compliance with such payment obligations attracts sanctions.
Understand the market
Due to the regulatory and commercial realties of the sector, market players at times elect to set up their own telecoms infrastructure to offer telecoms services. This is observed in the larger, older telecoms companies. Most however elect to adopt a single aspect and run with it.
It is prudent for companies to understand the market realities of the intended sub-sector. For instance, there are three (3) submarine cable licensees currently, as opposed to four hundred and seven (407) application service providers and six hundred and thirty one (631) content service providers. There are admittedly competition regulations under the KICA and the Competition Act that are intended to police behaviour between market players, but it is prudent to understand your possible position in the market.
Plenty of opportunities
All said, Kenya has a population of over fifty million people, which is one of the most tech savvy and open populations in Africa. There is a myriad of opportunities to invest in the telecoms sector, particularly taking advantage of emerging technologies.
Just remember, assess your service/product to determine whether and how it is regulated as a telecoms system or telecoms service.
The next feature on the ‘Delving into the Telecommunications’ series will highlight the sector-specific Telecoms regulations and regulators. Please keep an eye out!
