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12th March, 2010
LEGAL NOTICE NO. 27
[L.N. 149/2010]
IN EXERCISE of the powers conferred by sections 27, 38, 46K and 66 of the Kenya Information and Communications Act, 1998, the Minister for Information and Communications, in consultation with the Communications Commission of Kenya, makes the following Regulations:—
THE KENYA INFORMATION AND COMMUNICATIONS (TARIFF) REGULATIONS, 2010
1. Citation.
These Regulations may be cited as the Kenya Information and Communications (Tariff) Regulations, 2010.
2. Interpretation.
In these Regulations, unless the context otherwise requires—
“information and communications technology service” means any transmission of information by wire, radio waves, optical media, postal or other means between or amongst points of user’s choice;
“just and reasonable tariffs” means tariffs that enable a licensee to maintain its financial integrity, attract capital, operate efficiently and fully compensate investors for risks borne;
“licensee” means a person licensed under the Act;
“promotion or special offer” means any information, whose content is controlled directly or indirectly by a licensee, that is expressed in any language and communicated through any medium with the intention of influencing the choice, opinion or behaviour of consumers;
“tariff” means any charge, price, levy and underlying terms and conditions imposed by a licensee for the services provided;
“regulated services” means a service offered or supplied by a licensee—
(a) in a market or market segment that is uncompetitive or
(b) subject to price controls by the Commission on the basis that the provider of the service has been found to be dominant in the relevant market and the Commission has judged that the price control is appropriate, pursuant to both the Kenya Information and Communications (Fair Competition and Equality of Treatment) Regulations, 2010 and regulation 4 of these Regulations.
“uncompetitive market” means market or market segment in which there is no competition in the provision of service or in which consumer choice of service provider or service is either absent, limited, impeded, obstructed or constrained.
3. Purpose and object.
(1) The purpose of these Regulations is to provide a framework for the determination of tariffs and tariff structures.
(2) Without prejudice to the generality of paragraph (1), these Regulations seek to–
(a) ensure licensees maintain financial integrity and attract capital;
(b) protect interests of investors, consumers and other stakeholders;
(c) provide market incentives for licensees to operate efficiently; and
(d) promote efficient and fair competition within the framework for a free market economy;
(e) ensure compliance with all competition laws.
(3) In the exercise of its powers, the Commission shall ensure that decisions made pursuant to the provisions of these Regulations are consistent with the objectives outlined in paragraph (2).
3A. Commission to declare regulated services.
(1) The Commission may declare services in specific markets to be regulated services.
(2) The Commission shall, prior to making a declaration under paragraph (1)—
(a) identify the relevant specific market;
(b) notify all affected licensees and issue a consultation, allowing sufficient time for stakeholder comments;
(c) demonstrate that there is a competition concern as specified in regulation 8A(2) of the Kenya Information and Communication (Fair Competition and Equality of Treatment) Regulations, 2010, or that a licensee who has been declared to be in a dominant market position has been found to have abused the dominant market position, and where there is a competition concern, the Commission shall, in satisfying itself, demonstrate pursuant to a report prepared by the Commission that—
(i) effective competition amongst existing licensees cannot develop;
(ii) there exists strong and non-transitory barriers to entry in the identified market segment;
(iii) there is no other competition law that is sufficient to deal with the competition concern;
(iv) in the case of a retail service, no wholesale remedies are available to address the competition concern in the identified market segment; and
(v) such other circumstances that the Commission may consider necessary from time to time;
(d) follow the guidelines contained in the Schedule to these Regulations to prepare the report mentioned in paragraph (2) (c);
(e) show that declaring the relevant service to be a regulated service would prevent a potential abuse; and
(f) show that the declaration would be consistent with the objectives of these Regulations.
4. Tariffs setting.
(1) A licensee shall set tariffs that are—
(a) just and reasonable;
(b) sufficiently clear and enable the end-user to determine the description of the service, the details relating to the nature of service and charges payable for the service; and
(c) (Deleted by LN 149/2010]
(2) A licensee shall provide accurate billing information on tariffs to enable customers to verify whether they are billed correctly.
(3) A licensee shall not apply tariffs that prevent market entry or distort competition.
(4) A licensee who contravenes this regulation commits an offence.
(5) The tariff of a licensee shall be non-discriminatory and shall guarantee equality of treatment.
(6) A tariff shall not be in breach of this regulation if it is shown that there are legitimate commercial reasons for the tariff, such as different costs of providing the service and different identifiable market segments that have different ability to pay and different levels of usage and customer preference.
5. Filing of tariff rates.
(1) A licensee shall, on a quarterly basis, file the schedules of their tariff rates, including those of its agents and correspondents with the Commission.
(2) A licensee shall not charge its customers using tariff rates that have not been filed with the Commission under paragraph (1).
(3) A licensee shall ensure that all the tariff rates that have been filed with the Commission are available to the public for review and inspection and shall furnish its customers with the filed tariff rates, upon request.
(4) A licensee who contravenes this regulation commits an offence.
6. Tariff approval for regulated services.
(1) The Commission may from time to time publish in the Gazette a schedule of regulated services.
(2) A licensee shall charge regulated services using tariffs that have been file and approved by the Commission.
(3) Subject to regulation 7 all applications for approval of tariffs for regulated services shall be filed with the Commission and shall—
(a) conform to the form, manner and methodology prescribed by the Commission; and
(b) be accompanied by relevant documents, including all calculations, notes and any other information in support of the application.
(4) Where the Commission does not approve the tariffs proposed by a licensee for a regulated service and recommends that the licensee to makes the adjustments specified to the proposed tariffs, the licensee shall adjust the proposed tariff accordingly.
(5) (Deleted by L.N. 149/2010)
(6) A licensee shall not discontinue the provision of a regulated service without the prior written approval of the Commission.
(7) Where the Commission determines that a service no longer meets the conditions that describe a regulated service, the Commission shall through a gazette notice notify the public that the service is no longer a regulated service.
(8) (Deleted by L.N. 149/2010)
(9) A licensee who contravenes this Regulation commits an offence.
7. Increase of tariffs for regulated services.
(1) A licensee who wishes to increase the tariffs for a regulated service shall file an application for approval of the increase with the Commission in the prescribed manner, at least forty-five days before the proposed increase is intended to come into effect.
(2) The obligations that relate to the provision of a regulated service shall cease when the Commission determines that tariff regulation is no longer necessary in view of market developments.
8. Notice on review of tariffs for regulated services.
(1) The Commission shall, within seven days after receiving an application to increase the tariff of a regulated service under these Regulations, place a notice in the Gazette and in such other manner as it considers necessary.
(2) The notice under paragraph (1) shall—
(a) contain the name and particulars of the licensee or class of licensees providing the service to which the tariffs relates;
(b) state the new tariff and the reasons for the proposed review of the tariff; and
(c) specify the period, which shall not be less than thirty days, within which written objections or representations to the proposed new tariff may be made.
(3) The Commission shall in considering the application for tariff revision take into account any written representations or objections received under paragraph (2) (c).
9. Decision on tariff revision application.
(1) The Commission shall, within thirty days of notification under regulation 8 (1), approve or reject such application.
(2) The Commission may reject an application for the revision of a tariff if it is of the view that the proposed tariff is unjustifiable, unfair or unreasonable.
(3) A decision of the Commission rejecting a proposed tariff shall—
(a) be in writing;
(b) state the reasons for the rejection; and
(c) be made available to the provider.
(4) Where the Commission approves a new tariff, a licensee shall notify its customers of the new tariff through publication in two local daily newspapers with nation wide circulation or through any other method as the Commission may determine and shall in the notice provide for a grace period of not less than fourteen days before implementing the new tariff.
(5) A licensee who contravenes this Regulation commits an offence.
10. Investigation of tariffs.
(1) The Commission may on its own motion or pursuant to a complaint made under this regulation investigate any tariff set by a licensee where the tariff is anti-competitive.
(2) A complaint about a tariff brought under paragraph (1) shall—
(a) be in writing;
(b) specify the name and address of the complainant;
(c) state the interest of the complainant; and
(d) state the reasons why the tariff should be investigated.
(3) Where after investigations under regulation 10 (1), the Commission is of the view that the tariff is anticompetitive and should be adjusted, it may recommend to the licensee to make the necessary adjustments on the tariffs.
Provided that where the Commission intends to adjust the tariffs after investigation, the Commission shall notify the licensee and give the licensee twenty days to respond to the intended adjustment.
11. Promotions and special offers.
(1) The Commission may from time to time issue guidelines on promotions and special offers.
(2) A licensee shall apply for approval, at least four days before the date of the implementation of a promotion or special offer, and shall file all details of the promotion or special offer with the Commission for approval provided that if no objection is made by the Commission within four days the licensee shall proceed with the promotion or special offer.
(3) A licensee shall ensure that all Promotions and special offers—
(a) provide of information on the duration and date of the promotion or special offer, where the same is time-bound;
Provided that no promotion or special offer shall run for more than ninety days and be repeated before three months have elapsed.
(b) state clearly the threshold to be applied, where the duration of the promotion or special offer is not time-bound, but subject to attainment of a specific target;
(c) provide the terms and conditions and the details of the manner of participation;
(d) provide clear information to its customers on the terms and conditions of the promotion or special offer, through publication in two local daily newspapers with nationwide circulation and where applicable, in electronic media, sign language or any other method that the Commission may determine;
(e) indicate and publish, where the special offer or promotion requires the customer to pay a charge, the applicable rate;
(f) has obtained necessary approval from the Betting Control and Licensing Board, where the special offer or promotion involves games of chance, and inform its consumers accordingly;
(g) provide details on the minimum number and nature of any prizes, where applicable, state if prizes are to be awarded in installments or are to be shared among recipients;
(h) state whether or not any restrictions based on, among others, age or the need to obtain permission to enter from an adult or employer, to participation apply;
(i) provide the name and business address of the licensee in the case of direct promotions or, particulars of third parties in the case of indirect promotions;
(j) promoters do not overstate the consumers’ chances of winning prizes; and
(k) a not discriminatory or anti-competitive.
(4) Prior to the launch of a promotion or a special offer a licensee shall submit a statement of compliance with paragraph (3) to the Commission.
(5) The Commission may discontinue a promotion or special offer that does not comply with this regulation and state the reasons for doing so.
12. Offence and penalty.
Any person who commits an offence under these Regulations for which no penalty is provided shall on conviction be liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding three years or both.
13. Transitional provisions.
(1) Subject to paragraph (2) a licensee who provides a regulated service shall, within thirty days of these Regulations coming into force or the commencement of the offer of a regulated service to the public, file the tariff applicable to the regulated service with the Commission for approval.
(2) A licensee who provides regulated services at the commencement of these Regulations shall continue to provide the regulated services at the rate and subject to the terms and conditions in effect ate that date.
(3) A licensee who provides non-regulated services shall, within thirty days of the commencement of these Regulations, file schedules of their tariff rates, including the terms and conditions of their agents and correspondents with the Commission.
SCHEDULE
(r. 3A (2) (d))
GUIDELINES
Guidelines to Address Regulation 3A (2) (c) (i)—
When considering whether competition cannot develop with existing players under Regulation 3A(c)(i) of these Regulations, the Commission shall consider the following factors—
(a) Current market shares and their evolution over time;
(b) Price trends and pricing behaviour for the services under analysis;
(c) Control of an infrastructure non easily duplicated;
(d) Barriers to expansion;
(e) Product or service diversification; or
(f) such other factors as the Commission may consider from time to time.
Guidelines to Address Regulation 3A (2)(c) (ii) –
The Commission shall consider all the factors indicated below in order to assess the existence of high and non-transitory barriers to entry under Regulation 3A(c) (ii) of the Regulations:
(a) Existence of sunk costs;
(b) Scale and scope economies;
(c) Control of an infrastructure not easily duplicated;
(d) Technological advantages;
(e) Easy or privileged access to capital or financial resources;
(f) Barriers to development of distribution and sales network;
(g) Switching costs and product diversification;
(h) Vertical integration;
(i) Requirement for an administrative authorization or licence in order to operate in the market and conditions for obtaining such an authorization;
(j) Limits and conditions attached to the use of spectrum;
(k) Effects of general regulation over new entrants.
Guidelines to Address Regulation 3A (2) (c) (iii)—
The commission shall consider all the factors indicated below in order to assess the insufficiency of competition law to address the competition concern identified in sub regulations 4 (c), condition 3A
(2) (c) of these Regulations.
(a) Degree of generalization of non-competitive behaviour associated to the competition concern;
(b) Degree of difficulty to address the competition concern;
(c) Expected damaged created by non-competitive behaviour associated to the competition concern;
(d) Need of regulatory intervention to ensure the accomplishment of the objectives stated in Regulation 3(2).
Guidelines to address Regulation 3A(2)(c) (iv)
When considering a retail service, the Commission shall consider whether the identified competition concern can be addressed with—
(a) existing remedies imposed in related wholesale markets; or
(b) alternative wholesale remedies.
The analysis of the alternative measures shall consider the costs and benefits associated with each option and the impact for the different undertakings, following a Regulatory Impact Assessment (RIA).
Dated the 23rd March, 2010.
SAMUEL POGHISIO,
Minister for Information and Communications.
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