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Posts Tagged ‘regulation’

Building Owners Impeding Telecom Services Roll-out Due To Lack Of Laws

January 21, 2018 4 comments

strctured-cabling-system-1There is this new building in Nairobi that is now inviting new tenants to occupy it after being recently completed and opened with much fanfare. As usual, new tenants were expected to fit suitable furniture and fittings into their new premises. But there was one problem: The building; in all its glory, lacked suitable telecommunication raiser ducts and conduits and occupants could neither pull cable to create Local Area Networks nor could they easily connect any floor to the basement where a local ISP had placed its fiber optic switch. The building owners also asked the tenants to bear any costs related to the modification of the building to enable the setting up of telecommunication infrastructure.

I searched the Kenya building code of 2009 and the National Construction Authority Regulations of 2014 to see if any of them compel building designers to incorporate telecommunication ducts as part of a buildings services in a similar manner it specifies requirements for  plumbing, electrical cabling, ventilation and heating/cooling. Sadly both do not make it mandatory for designers to incorporate into their designs paths, risers, ducts, trays or any other cable containment mechanisms that will enable the easy pulling, organizing and routing of telecommunication cables to any part of the building.

For buildings that have incorporated telecommunication cabling space and paths in their design and construction, the MDF or telecommunication room is usually small, poorly ventilated, poorly supplied with power and mostly located on the basement of most buildings which can sometimes be a long distance to the top floor depending on the building height. Building owners are also charging telecommunication companies hosting charges to host their switches and other equipment in the MDF room. These charges vary from a low of KES 3,000 to a high of KES 25,000 a month with or without electric supply. In the same breath, utility companies providing water and electricity are not charged rent for their equipment and fixtures such as electricity meters by the building owners to avail their products and services to the same tenants. In fact, its the building owners who pay the utility companies for them to bring in services to them.

With nearly every office needing internet connectivity for normal operations just like they need electricity, water and drainage, why do building owners create barriers for telecommunication companies by not making their buildings  cable ready and if they do,  go ahead and levy monthly rent for the cabinet hosting the equipment? Some building owners have also gone ahead and signed exclusivity agreements with one provider to host their equipment and avail internet connectivity in the whole building, locking out competitors. I know of operators who have been denied building entry to avail services to potential customers because competition locked them out with an exclusivity agreement between them and the building owner.

Outside buildings, telecom operators also have to apply and pay for wayleaves and permits from county governments and the Kenya National Highways Authority (KeNHA) to trench, lay cable, and do back-filling. It takes an average of three weeks to obtain a permit from any of these bodies and at a significant cost too. Permits to cross major highways by way of micro-tunneling can take several months to obtain.

The above challenges exist because there is no clear legal framework in which the telecom operators can work in to avail their services which can now be considered as utility services similar to electricity and water supply. There is need to do the following so as to make it easier for the operators and consumers of their services:

  • Amend the Kenyan building regulations to ensure that all commercial an multi-dwelling residential units such as apartments have suitable and standardized telecommunication cable pathways and containment fixtures. MDF room location should also take into consideration the transmission distance limitations of some technologies such as electrical/copper based cable maximum transmit distances.
  • Make it illegal for building owners to sign exclusivity agreements with a single or a select number of providers and baring the rest from building entry. Every operator should be given equal and reasonable access to their potential customers in any building. The proposed Kenya infrastructure sharing act can incorporate a section that outlaws exclusivity agreements as they also effectively bar infrastructure sharing.
  • The Kenya wayleave act cap 292 should be amended and modernized to reflect the current realities. The act assumes that the government is the sole provider of utility services and does also not incorporate the provision of utilities by private enterprises.
  • All road designs where necessary and possible, should incorporate buried ducts and manholes along the entire stretch of the road and suitable micro-tunnel crossings to carry any operators fiber-optic and coaxial cables at a small monthly fee payable to the road owner (KeNHA or county government). This will avoid instances where each operator has to trench and bury their own cable. This is sometimes done on the same side and section of the road and often leads to accidental cutting of a competitors cable as an operator trenches to lay their own cable. In the last 3 months, I’ve heard of about 4 instances of this happening in Kenya. Other than this, frequent trenching of roads inconveniences other road users and pedestrians. This is especially true in cities and towns.
  • County governments should be compelled by law to not charge telecom operators for permits to lay cable, this can be done by amending the Kenya Information and Communication act section 85 and 86 to explicitly state that no fees should be levied by local authorities and also specify timelines within which permits should be granted. The overall economic effect of letting the operators lay cable without many barriers such as fees and delays in approvals far outweigh the financial gain from permit fees by the county governments.
  • Physical planning departments in both national and county governments should incorporate telecommunication infrastructure real estate current and future needs when designing cities and towns.
  • The Kenya Information and Communication act should specify harsher punishment to telecom infrastructure vandalism acts such as fiber optic cable cutting or destruction of a mobile/wireless base station. In the same breath, it should also compel operators to conduct awareness campaigns to citizens living near telecommunication infrastructure on the dangers of tampering with the infrastructure.

Recent research shows that access to telecommunication services such as the Internet and telephony has a great impact on the socioeconomic well being of citizens especially in developing countries such as Kenya. It is therefore important that operators get all the support from the government in their quest to roll out services to the citizens because in dong so, they help the government in meeting its socioeconomic objectives.

 

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Is Universal Access/Service a Government or Operator Obligation?

March 30, 2016 4 comments

ruralSecond to creating a level playing field for all ICT operators, one of the widely accepted objectives of regulation of the ICT sector in developing countries is to promote universal access of basic ICT services. In developed economies, the objective changes from universal access to universal service. The difference is that access promotes the notion that every person should have reasonable means of accessing basic ICT services (like a phone booth at the local shopping center) while universal service is about promoting and maintaining availability of a variety of ICT services to individuals and households. Both these terms are combined into what is known as universality.

It is clear that that universal access definition has been overtaken by events based on the recent developments especially in the wake of mobile communication boom in many developing countries. To a very large extent, its no longer about ensuring access but ensuring that a variety of services are delivered to the end user.

The need by governments to make universality a reality stems from increasing evidence that access to ICTs improves the overall socioeconomic well being of its citizens. However, with the wave of privatization of ICT services such as telecommunications, the operation of telecoms moved from social welfare minded government ministries to profit minded private entities. When privatization took place in the early 1990’s new entrants focused on providing services to profitable market segments based on geography, disposable income and population density (which improves economies of scale and scope). The result is that regions or populations that were not profitable were at the risk of being left our in the ICT revolution. To prevent this from happening, regulators were quick to include mandatory service obligations (MSOs) in the licenses issued to new entrants. These obligations mandated the operators to extend their networks (and in effect their services) to areas where the cost of providing the services and maintaining the networks was higher than the revenues realized from the same areas. This seemed to be the only practical solution to connect the ‘unprofitables’. Other solutions were available and open to use by the operators such as cross-product subsidies (which haven’t worked well due to the fact that on the other hand the regulator enforces cost-based pricing making cross-product subsidies difficult to implement). It is worth noting that the definition of Universal Service varies from country to country, in Finland for example, universal access includes the right for every individual to access 1Mbps of broadband internet in addition to other services.

In addition to the measures above, the regulator in Kenya also developed a Universal Service Fund (USF) framework which according to them on page 1 of the framework draft document was to “to complement private sector initiatives towards meeting universal access objectives”. The document title and the aim I have quoted above are conflicting to a keen eye.

If indeed the aim of the USF was to complement private sector, why is the same private sector being obligated by regulatory instruments to fund it?

The International Telecommunications Union (ITU) lists many way in which USF can be funded,  one of the more popular ways is by budgetary allocation from the government. Other ways are by use of Access Deficit Charges (ADCs) and the levying of  a percentage of monies collected by operators in their business operations towards the USF kitty. The ITU states that should a regulator go the revenue levy way, it must not place a unfair burden on the operator on how these levies can be collected. For example the regulator cannot say that it will levy a percentage for every call minute  or every MB of data used by subscribers, this would make accounting difficult and hence the approach of levying the total revenues of the operators which is easier and more transparent.

Several countries have implemented USFs that are beneficiaries of government budgetary allocations. Such countries include Chile and Peru. Incidentally the same countries are hailed as success stories of how universality has improved lives of its citizens. This is because the desire to offer universal service or access is a social obligation of the government and not private firms. Its in the governments interest to connect these otherwise unprofitable regions/people and it can easily do it from budget.

Chile’s approach has been an interesting case study of how, if done right, the USFs can work to meet government objectives. The regulator there took the concession path by having operators bid to provide services on a concession basis. The regulator would then pick the lowest bidder. The results were that most of the bids were 50% below the budgetary allocations meaning that the approach was financially efficient. Proper policies were put in place to define the penalties, rights and obligations of each winning concessionaire to ensure they delivered.

This is the approach the Kenyan regulator should take. Instead of levying operators a percentage of their hard earned revenues. The operators, through the ITU definition can claim that the regulator has placed an unfair burden on them from the perspective of them not being directly responsible for economic development of the citizens (whether through ICTs or other means). Universality is a social program and it therefore squarely falls on government arms. Profitability or lack thereof  from universality is a secondary consequence whose impact cannot be directly measured.

Proponents of operator-funded USFs argue that unseen benefits such as multiplier effect of connecting the unprofitable directly benefit the operators, if that is the case then this decision to connect these people should be a commercial decision by the operators and not a license requirement. An example of the multiplier effect is when for example I (being of better economic means and living in the city) can now use airtime (read revenues) to call my rural relatives who are now connected thanks to supposedly the implementation of universality. My act of calling them in addition to other people I normally call adds revenues to operators. The operator should therefore connect my rural relatives because I will call them and not because they will call me. This is a straightforward  commercial decision.

Obliging ICT operators to fund the USF is unfair because social economic benefits accrued from connecting the population are felt across several fronts such as improved health, education and increased commercial activities and not just by way of improved profits by operators if any. Universality’s key outcome is not purely an ICT one and making only ICT players fund it is tantamount to the unfair burden on the operators mentioned by ITU.

It is my opinion therefore that the current approach to universal service funding should be re-looked at and if possible a new method of funding it through direct government budget allocation be adopted.  This is already happening in providing roads, hospitals and schools.   The regulator needs to revisit this because of the following reasons:

  • The current market structure where one operator is making most of the revenues is unfair to this operator as they will be contributing the most to this fund. There are no clear guidelines on how these funds will be utilized leaving room for abuse.
  • Failure for the law to accommodate ICT industry players in the Universal Service Advisory Council meaning they have no say on monies they contributed. This technically makes it a tax.
  • Already, operators are extending their networks to seemingly unprofitable regions without the need for government to push them. Advancement in technology and convergence is making what universality defines as unprofitable now seemingly commercially viable because its now much cheaper to build and scale networks. USF objectives need to be reviewed or done away with altogether

Should the regulator be adamant about maintaining the USF due to various unreasonable and political ends, then operators have recourse at the international courts as Kenya is a signatory to the WTO  General Agreement on Trade in Services (GATS) especially the agreement on basic telecommunications