Why anonymous sources must be protected by all means

Story by JAINDI KISERO
Publication Date: 8/8/2007

WHY ARE ANONYMOUS news sources so important to a journalist and why do we fight to protect them?

This question is at the heart of the debate about the attempt by Parliament to force journalists to reveal sources who provide them with information on conditions of confidentiality.

As an old hand used to working with top corporate managers and senior Government officials, I have had to rely on a whole range of people, from permanent secretaries, Cabinet ministers, former university colleagues in high places in Government and even CEOs as rich sources of “inside information”.

I would not have survived as a journalist if there wasn’t a Cabinet minister friend, a board member of a parastatal, or a permanent secretary calling me once in a while for an inside tip about a scandal waiting to happen or a multi-million shilling procurement contract about to abort due to interference by this or the other powerful politician.

Indeed, a journalist cannot survive without the odd “off-the-record” or “background only” briefings which you only get when you promise confidentiality.

Sources who report misdeeds or irregular activities by their companies, ministries or parastatals face retaliation if they do so on record. They can be demoted, fired or even killed.

There is this other category of sources, whom, for lack of a better term, I will describe as “leakers”.

These will be public-spirited men or women with access to crucial information, and who will readily leak stuff to trusted journalists when it becomes obvious that public interest is about to be compromised by ill-conceived decisions.

The famous Mr Deep Throat who helped Bob Woodward unravel the Watergate conspiracy falls in this category. Mr David Mwanyekei, who blew the whistle on the Goldenberg scam, also belongs in this category.

Some of my best moments in this trade have been occasions when a Cabinet minister, permanent secretary or former university colleague allowed me a peek into a Cabinet paper marked “top secret”, on which I would report in advance before they are tabled before the cabinet.

Another rich source of leaked information is the disappointed contractor.

They will give you leaked minutes of a ministerial tender board meeting with details on how the board is about to irregularly award a multi-million shilling supply contract to a well-connected merchant.

There will be occasions when a disappointed contractor will have in his possession the score sheet of a tender evaluation committee, weeks in advance of the announcement of the tender award.

HOWEVER, THERE IS A FLIP-SIDE to everything. Confidential sources may mislead journalists. There have been occasions where reporters - in the race for the rare scoop - have been misled by sources.

But what most editors will do is to push their reporters to go beyond the quick hit and do their own digging to verify what they have been told by confidential sources.

Anonymous sources are especially critical when covering beats such as crime, the intelligence community, the armed forces and private companies which are not obliged to release information about their operations to the public.

What is my point? That if MPs thought that in introducing legislation to compel journalists to reveal their sources they were punishing journalists, they were dead wrong. The people they have undermined are the public.

For the debate about protection of news sources is not just about a reporter’s right to shield people he or she has promised confidentiality. To view the controversy as a battle between the media and the Government is to engage in over-simplification.

If news sources cannot be confident that they will be protected, they won’t come forward to offer information. Thus, the losers will not be the journalist looking for the rare scoop but members of the public who depend on the media to provide the arsenal to hold governments to account.

What the Media Bill seeks to do is to deny the public the information it needs to hold their leaders accountable.

Worse, we live in an environment where public life is infected by conspiracy-mongering. Today, when, as a journalist, you report critically about a parastatal, a Government department or a Cabinet minister, the first thing they will do will be to dismiss the criticism in all manner of conspiracy theories.

Instead of debating the substance of the criticism, they will myopically focus on the motive of the report.

The typical parastatal head, minister or politicians will not ask: Is this news report accurate or not? What are the implications of what has been reported?.

Rather, they will go: What are this reporter’s links to my rivals? Which political party does this newspaper support?

Almost every important issue descends into a farcical search for hidden agendas. Clearly, this is hardly the environment for legislating forced disclosure of confidential news sources. Ministers will go to court in mind-boggling numbers to demand disclosure of confidential sources. These people want to kill free speech.

DAILY NATION August 8, 2007 Why anonymous sources must be protected by all means

Government has a major problem spending the money available

[This fundamentally creates room for corruption in the haste to "spend" allocated funds before next budget is read. It robs citizens their right to essential services, development, and prosperity. I would have critiqued the government a little more harshly. I am writing a short comment on a effort the ICT Consumers Association of Kenya, if the government ever agreed to grant us a Registration Certificate, would significantly if not totally address this problem. All while we remain in an official recognition limbo, then focus shifts to whether Consumer Protection is National(s) threat]

[Daily Nation]
Story by JAINDI KISERO
Publication Date: 2007/06/06

THE ANNUAL RITUAL OF the national budget is with us again. Since it is the last budget in President Kibaki’s first term, it is an opportune time to reflect on some of the highlights of what has happened to budget-making in the last five years.

First, we need to dispel the myth that tax collection has improved so much that we no longer need money from donors.

There is a big difference between “budget support” and “project support”. The latter refers to specific donor-financed projects such as roads or hospitals, while the former is discretionary money the Government can use to fund its recurrent budget.

It is also true that dependence on donor money for the budget has diminished in the last five years. But to state that Kenya has reached a stage where it can function without money from international finance institutions is to perpetuate a popular myth.

I have just been looking at the latest instalment of the Public Expenditure Review produced by the Ministry of Planning and National Development.

The current instalment is for the year 2006, and it shows clearly that international lending institutions and bilateral donors still fund 50 per cent of our development budget.

When these ministers tell you that they have not “factored” donor money into the budget, it is a blatant lie.

How has the Government fared in terms of allocating more money to capital development vis a vis consumption?

There has been a great deal of progress. In my view, one of the most significant achievements by the Kibaki administration in this regard has been to put more money into the development budget.

In absolute terms, development expenditure increased from Sh35.5 billion in 2002/ 2003 to Sh45.6 billion in 2005/2006. This is an important departure from past practice in which successive budgets devoted very little money to capital development. We had reached a point where the development budget had completely become a donor affair.

The flip side of these positive developments, however, is that we still have major problems spending the money that has already been allocated for projects in the budget.

The evidence is aptly illustrated in the new Public Expenditure Review that I allude to above. According to this document, the pace at which resources devoted to capital expenditure are utilised is still painfully slow.

The report adds that where the money is spent, it does not come through until the end of the financial year. What is the point of allocating too much money to a project only to return the funds to the Treasury unspent?

CLEARLY, THE PROBLEM HERE IS weak budget execution. No other sector illustrates this problem better than the roads sector. Consider the following:

The gross development budget for roads has increased from Sh17.7 billion in the financial year 2005/2006 to Sh32.7 billion in the financial year 2006/2007 -- an increase of more than 85 per cent within one financial year.

However, the ministry has been unable to spend all the allocated funds. Granted, the number of projects that are up and running are more than there has ever been in recent history.

But you still can’t defend a situation where a ministry is not able to absorb billions in allocated funds especially in the context of a national roads maintenance crisis.

In future, one of the things we will need to look at afresh is the role of the Kenya Roads Board (KRB). Which roads should be funded by KRB and which ones should not?

We may also need to rethink the policy of allocating 24 per cent of the total roads funds among the so-called district roads committees.

Since the number of districts change depending on the tenant at State House, we are soon going to end up with a situation where the funds from KRB are spread too thin to make any impact.

Another area where we have not made much progress is in containing the growth of the wage bill. As a percentage of the total recurrent expenditure ,the wage bill increased from 38.6 per cent in 2002/2003 to 41.3 per cent in 2004/2005, before declining to 36.4 per cent in 2005/2006.

Is it, really, sustainable to spend more than 36 per cent of your total recurrent revenue on paying salaries? Were the Government a private company, the wage burden would have pushed it to insolvency.

Yet we still hear politicians and the Electoral Commission of Kenya talking about increasing the number of constituencies before the end of year!

The political sector, especially Parliament -- a net consumer of taxes -- is already gobbling too much of our money. More constituencies will only mean more tax-free six-digit salaries and more fuel-guzzling monsters on our roads, for which we pay taxes.

Do we need more constituencies? Maybe. But the truth is that we can’t afford them. The Public Expenditure Review should be a must read for all those running for president in December.

[Daily Nation]
Government has a major problem spending the money available

Vodafone to be Sued for VoIP Blocking?

[PC World]

http://www.pcworld.com/article/id,131425/article.html

Mobile operator Vodafone faces legal action over its efforts to cripple VoIP on mobile phones.
Peter Judge, Techworld
Tuesday, May 01, 2007

Mobile operator Vodafone could face legal action over its efforts to cripple VOIP on mobile phones.

"We believe Vodafone's stance is not lawful, and we are considering our position," said James Tagg chief executive of Truphone. Vodafone is failing to meet interconnection obligations, and blocking competing websites, he said, as well as disabling Internet telephony on handsets.

Vodafone is refusing to connect calls to Truphone's range of mobile numbers, Tagg says, in breach of telecoms regulation. Truphone has a range of numbers (beginning 07624 000) with which it can function as an actual mobile operator -- so that Truphone numbers appear in a phone's call log, and can receive SMS messages. Unfortunately, Vodafone customers will simply find that calls to those numbers are blocked, whether they are made over WiFi or the Vodafone network, says Tagg.

The operator is also blocking VOIP websites including Skype, to users of its mobile Internet service, says Tag -- a move which would be against E.U. competition regulations, he says: "European telecoms legislation, gives operators an obligation to interconnect, and to offer unfettered access to services."

Vodafone-provided N95s include SIP and Internet telephony, but the Internet telephony is locked so it can't be used, a move which could be illegal, even on subsidized handsets, says Tagg, even though it doesn't prevent users from downloading other VOIP applications which include their own telephony features.

"Customers can download VOIP applications if they choose to do so or can use VOIP services via a laptop and data card," said a prepared Vodafone statement, and other VOIP providers bear this out: "Our service works on Vodafone and Orange," said Gerry O'Prey, chief executive of WiFiMobile, a VOIP company specializing in connecting dual mode phones to business PBXs.

While operators have argued that they have a right to determine the software on subsidized handsets, Tagg claims that the equipment provided by the operator is independent of the contract. Users expecting integrated Internet telephony on an N95 would have grounds under consumer law for sending it back, but Vodafone's duties go beyond that, he says.

In more than half the world, operator subsidy is illegal, said Tagg. So, for instance, Vodafone has promised not to disable Internet telephony on N95s it sells in Australia. Where subsidy is legal, it is restricted, he says: "The operator has a monopoly on the line into your pocket," so it is not allowed to lock down services and create walled gardens. "There is lots and lots of case law that has been fought out on the PC," he said referring to Microsoft's desktop monopoly.

While VOIP services can be downloaded to a crippled N95, they won't be "properly integrated", says Tagg. Using an alternative SIP stack could mean shorter battery life, compared with the Nokia SIP stack: "They've spent two years and millions of pounds ensuring it's integrated into the phone, and optimized for battery life," he said. Integration also allows features like calling a VOIP number back from the phone's call log -- which some analysts reckon is how fifty percent of calls are made.

The complaints go beyond those made last month, that Vodafone and Orange have disabled Internet phone features on the top-end Nokia N95 handsets, making it difficult for users to make cheap calls at Wi-Fi hotspots.

Vodafone has not yet given a response to Truphone's claims that it is blocking interconnection to Truphone numbers. Instead, the operator sent us a statement it made last week (and we referred to it here), on the Nokia N95 issue, arguing that it has disabled Internet telephony for the consumer's protection.

"Vodafone believes that VOIP-over-mobile is not yet a mature service proposition as it does not have guaranteed quality of service, and would fall short of the customer experience demanded of any service we launch," the statement says. "To ensure a solid end-to-end customer experience, this service would require in-depth testing, billing integration and customer service support which is currently not available."

"There is also a misleading perception that VOIP services are "free." This is not the case when it comes to using VOIP over mobile where customers will need to use data connectivity to establish a service. By doing this, there is a risk that customers could incur unnecessary charges when competitive mobile tariffs are likely to be a more cost-effective choice."

[http://www.theregister.co.uk/2007/04/18/n95_crippled/]

Orange and Vodafone cripple Nokia's flagship

Nokia N95 handsets supplied by Orange and Vodafone, in the UK, have
had their VoIP capability removed in what looks like a desperate move
by the network operators to defend their voice revenue.

Each operator has their own variant of the software pre-installed on a
phone handset to allow them to pre-load branding or particular
applications they want to promote. But Orange and Vodafone have both
taken this one step further with the N95 and actually removed the VoIP
capability built in to the handset.

What this means is that nicely integrated applications such as
Truphone won't work at all, even though the client appears to install
OK the menus and configuration needed to make VoIP calls just aren't
there.

Truphone have put together a nice comparison video, showing what's
missing. Stand-alone VoIP applications, such as Fring, still work as
they don't require integration, though because of that they don't
offer such a compelling user experience.

In some ways this is entirely unsurprising: the network operator is
subsidising the handset, and so limits the handset to their voice
network. Customers have got used to subsidised handsets being locked
to one network, so this could be seen as a simple extension of that
policy, and there is nothing to stop a customer buying an unlocked
(and unsubsidised) handset.

It is, as James Tagg from Truphone puts it "a removal of customer
choice", and it's hard not to see a parallel with the way network
operators tried to limit WAP browsing to their own walled gardens -
back when the industry thought WAP was going to make money.

Vodafone is saying nothing beyond confirming that the functionality
has been removed.

Orange told us that this was not a policy decision and that future
handsets might, or might not, have VoIP enabled.

Neither company attempted to justify their decision, beyond some
bleating about keeping things simple for customers, so we are left to
conclude that this is just a protectionist measure.

The problem here is that Nokia advertise the N95 as being
VoIP-capable, but the version being sold by Vodafone and Orange isn't,
so some customer confusion is only to be expected. Trading Standards
tell us that anyone who bought an N95 from Orange or Vodafone, on the
understanding that it is VoIP-capable, should talk to Consumer Direct
about possible recourse, and keep us updated of course. (r)

------------------------------

[The Register] <http://www.theregister.co.uk/2007/05/01/orange_bank/>
Orange becomes more like bank: launches overdraft facility
Pay ￡1 to get ￡2.50 into debt
By Bill Ray

Published Tuesday 1st May 2007

Mobile phone customers signing up to Orange's new Speakeasy pre-pay
tariff can get themselves ￡2.50 worth of overdraft facility to keep
them connected when their credit runs out, though they'll have to pay
￡1 to sign up for it.

The overdraft facility, branded "Reserve Tank", is part of the new
tariff which also includes three "Magic Numbers" that are only charged
at 15p an hour, and a flat 15p a minute rate for calling anyone else.

Pre-pay systems already put the mobile phone operators in danger of
becoming banks. It's OK in principle for a company to take pre-payment
for one product - phone calls or books, for example. But mobile phone
credit is used for all sorts of things including buying ringtones and
games, downloading music, and entering dodgy TV quizzes.

This makes the mobile phone companies look suspiciously like banks -
they store your money for you and allow convenient access to buy
things. The only thing they don't do is pay interest.

If the mobile networks became banks they'd have to sign up to the
banking code of practice and open their accounts to a lot more
scrutiny. The UK's financial services regulator has been very cautious
about imposing more regulation on such a dynamic industry. But if
companies are offering overdrafts, this will draw attention to the
fact that they are operating as banks in all but name.

Perhaps if they were banks they could start paying interest. (r)
_____________________________________

[wikipedia] <http://en.wikipedia.org/wiki/Nokia_N95>

The Nokia N95 is a smartphone/multimedia computer produced by Nokia.
It was unveiled in September 2006 and was released in mid-March 2007.
It is based on S60 3rd Edition Feature Pack 1 software on the Symbian
OS (v9.2) and is particularly significant for being Nokia's first
HSDPA handset. It is part of the company's Nseries.

On March 22, 2007 Nokia announced that the N95 started shipping in key
European, Asian and Middle Eastern markets. The N95 was released in
Australia, during the third week of April 2007, and will be available
with most carriers.[1].

Nokia N95 handsets supplied by Orange and Vodafone in the UK have had
the VoIP facility removed from the phone to the annoyance of many
users. Vodafone's explanation for removing the facility was that "it
doesn't believe it's a mature technology".

Privatisation the only way to keep Telkom afloat

[Daily Nation]

Story by JAINDI KISERO
Publication Date: 3/28/2007

Finally, the Government has made the first step towards selling Telkom Kenya to a strategic equity partner.

Last week, it circulated “a preliminary information memorandum” in which it invited potential investors to put in indicative bids for a 26 per cent stake in the State-owned company.

I don’t understand why this significant development was not announced formally. I only came across the information from contacts in South Africa.

Potential investors have been asked to respond by writing a brief note to the Government confirming interest in buying Telkom.

The memorandum also contains indicative pre-qualification criteria for the tender. For instance, the Government will only look in your direction if you have an annual ICT turnover of $200 million.

YOU MUST ALSO DEMONSTRATE good financial standing, capacity to invest, and a clear vision for a future Telkom Kenya.

In this initial stages, the Government is merely teasing the market by collecting the feedback it will need when designing the actual transaction.

According to the plan, an additional 34 per cent shares of the company will be sold once the strategic investor comes in.

Where is interest most likely to come from? It is too early to predict. Suffice to note, however, that these days, the biggest players in privatisation deals in the telecommunications sector, or infrastructure in general, have tended to be South Africans, Chinese or companies from the Middle East.

For inexplicable reasons, the big European Telcoms have tended to give the region a wide berth when it comes to such transactions.

Privatisation is a very painful thing. Indeed, many Kenyans will be sent to the streets to pave the way for this transaction. The plan is to bring down Telkom’s 17,000-strong workforce to 3,200 ahead of the transaction.

In an economy that has been losing formal jobs faster than it is creating, where automatic graduate employment by the Government was discontinued several years ago, the privatisation transaction is coming at a high social cost indeed for the country.

Yet the case for privatising Telkom remains strong. If we choose to protect jobs at the expense of restructuring, then the company itself will not survive in future, let alone keeping the jobs.

Despite the fact that Kenya has experienced phenomenal growth in the telecommunications sector, and that mobile companies have become the most profitable companies in the country, Telkom is in dire financial straits.

While the number of mobile lines have been increasing exponentially, fixed line connections have fallen from a peak of 320,000 in 2002 to under 280,000 currently.

Between 2003 and 2006, turnover has declined by an annual rate of 10.5 per cent. In 2003, the corporation returned a net loss of $27 million with the figure growing to $36 million in 2005.

The point is this. If we postpone painful decisions now merely because we want to protect jobs, we will be left with a wobbly company that will sooner or later find it hard to survive competitive pressure from the more leaner and nimbler players.

Predictably, there will be voices who will oppose the deal on the grounds that we should not sell what Harold Macmillan once described as the “family silver” to foreigners.

I fail to understand why we tend to be obsessed with “owning” and controlling parastatals while ignoring the fact that at the end of the day, it is the quality and the prices of the services which these utilities offer that matters to the ordinary Kenyan.

To the majority of citizens, the mere fact that the Government owns 100 per cent of of a parastatal matters little. In fact, our own experience has shown that state ownership of these parastatals only serves the interests of the political elite and their cronies, providing them with the means of rewarding political loyalty and allowing them to appoint their relatives to boards of these organisations.

Privatisation is not popular in Africa because it removes parastatals from the control of the ruling elite.

We all know how they make money from these institutions. There is, for example, the award of lucrative contracts at inflated prices to well connected merchants. And there is also the transfer of assets belonging to paratatals (especially land and residential property) to individuals.

IN SOME CASES, MINISTERS AND managing directors have committed parastatals into massive investment into big capital projects of doubtful economic viability such as sports complexes, staff housing schemes, complete with nursery schools, games facilities and swimming pools.

Ostensibly, this is to assist workers but, in reality, it is to create kickback opportunities for well-connected contractors.

Left in the hands of ministers and politically-appointed directors and CEOs, Telkom Kenya will not be able to raise money to finance new investment or buy new equipment.

If privatisation and restructuring is implemented well, the large and sick parastatals we see today can be broken up into several small successful enterprises operating in a competitive environment and providing wananchi with competitively priced services.

Mr Kisero is the managing editor of The EastAfrican.

Privatisation the only way to keep Telkom afloat

Telephone call charges to come down

Written By:Osir Kennedy , Posted: Thu, Apr 05, 2007

Telkom Kenya is set to reduce its tariffs for their various services by the end of this month.

Telkom Chief Sales and Marketing officer Bernard Rubia says that in response to complains over high costs despite the launch of wireless broadband, the company would review its tariffs to cater for its diverse clientele.

Rubia made the remarks when Telkom-Kenya launched a high-speed Internet broadband access service to be offered at Innscor outlets in the country.

He said the company also intends to launch the use of fibre optic technology in its services to further increase accessibility to internet services by a large percentage of the rural population

Telephone call charges to come down

Forward-looking ICT policy published

**Updated post**

A special issue of the Kenya Gazette notice number 2431, of The Kenya Communications Act (No.2 of 1998), dated 31 March 2006 set outs the ICT legislative policy environment for the Kenya Information and Communications Bill- 2006, now with the Attorney General pending publishing, discussion and passage in Parliament, and Presidential accent

The published "Information and Communications Technology Sector Policy Guidelines aim to, inter alia, create a new-look Communications Commission of Kenya -a converged Regulator for the entire ICT sector, including broadcasting under a new regulation framework in the converging and competitive environment, and also to manage a universal service fund established to finance ICTs in rural areas and under-served segments.

The Fund will be financed by the operators providing services in the various market segments.

Investors, operators and service providers are expected to participate in the provision of universal service/access; develop a sector with efficiency, credibility, commercial integrity and good corporate governance; provide quality and sustainable service with pluralism of choice to consumers; and keep abreast with and participate in ICTs both regionally internationally.

With the increasing and competing demands for spectrum; market principles will be applied to promote effective use of the radio frequency spectrum, however the Government will ensure that spectrum fees does not become a burden to operators.

Regulations being developed will ensure that telecommunications and networks are robust, resilient, and have adequate security, redundancy and backup arrangements on critical components of the national infrastructure.

Consumers are now legally empowered to demand universally available, affordable, quality services from service providers and to review government consumer-protection policies along
technological changes and consumer trends.

Unlike in the Kenya Communications Act, still in force, where the term "consumer" is mentioned just once, seemingly in passing, in sections 23 and 47, "consumer" and "user" are now mentioned 8 and 18 times respectively in the published policy.

On privacy, for example, fundamental human rights relating to telemedicine and use of IT in health delivery, the government will provide IT facilities in all public health facilities; IT training
to medical staff; set standards and norms for IT in the healthcare system; and legislation governing telemedicine and health information; and establishment of national resource centres
for IT in healthcare.

Diverse stakeholder interests groups are frustrated with the slow enactment process, some even suggesting to demonstrate to the Attorney General offices to demand publishing of this inclusive, non-contentious draft law concluded in June 2005 at Mombasa.

Alex Gakuru

Focus on Internet Users

[Kenya Broadcasting Corporation]
CCK to keep track of internet users

Written By:Stanley Wabomba , Posted: Wed, Mar 28, 2007

Internet service providers are required to submit duly completed information return forms to the Communications Commission of Kenya- CCK after every three months.

CCK director general John Waweru says it is mandatory for the providers to submit the forms detailing how many new Internet users have joined and those who have left their networks.

The information is essential to maintain an up-to-date ICT database in the country.

Speaking at an Internet market study workshop in Nairobi, Waweru said lack of up-to-date information has created a scenario where Western experts estimate the facts. They often end up with gross under-estimation and mis-representation of facts.

The Internet market study established that Internet service providers in the country exploit consumers by inflating the cost by more than double what they are supposed to charge.

Although there are 51 licensed Internet providers, Internet service is only available in 20 out of the over 70 districts.

Nairobi and the Coast have 90 percent of the country's Internet users, which prompted CCK to urge providers to expand coverage to rural areas and narrow the information technology gap.

----------------------------------

[East African Standard]
CCK urges more Internet access
By James Ratemo and Edith Fortunate
Published 29 March, 2007

The Government has promised to expand Internet infrastructure.

Communications Commission of Kenya Director General, Mr John Waweru, says low uptake of the Internet poses the risk of Kenya lagging behind in reaping the benefits from the fast evolving digital economy.

Waweru was speaking in Nairobi when he received a CCK-commissioned study that found there are more than 2.7 million Internet users in the country. This figure is in contrast to an earlier International Telecommunications Union’s estimate of only 1.5 million.

Nairobi Province has the highest concentration, taking over 80 per cent of the Internet users followed by Coast at a paltry 9.4 per cent.

A local ICT and management consultancy firm in Nairobi, Netcom Information Systems, Conducted the study — Internet Market Study — from last October.

There are more than 50 Internet service providers (ISPs), 20 public data network operators, six Internet back-bone and gateway operators and over 20 local loop operators.

Only about 20 per cent of the users are spread in the small towns, the study says.

Releasing the report, Netcom Director, Prof Timothy Mwololo, said the cost of bandwidth and leased-line tariffs had remained high despite liberalisation of the sub-sector.

The study recommends licensing of more ISPs to provide Internet access and switching services.

---------------------------

[Business Daily Africa]

Middlemen hike internet costs, study shows
By Okuttah Mark Published 29 March, 2007

A study on the penetration of Internet services in Kenya has recommended that the communications authority slash the number of intermediate operators in online services.

The study commissioned by the Communications Commission of Kenya (CCK) last year found Internet access has remained elusive to most Kenyans, primarily because of high charges

Timothy Waema, the lead consultant with Netcom Information Systems Limited, which conducted the study for CCK, said multiple layers of middlemen increase the price of the bandwidth, which is eventually felt at the end user level. “The cost of two megabits per second (Mbps) of bandwidth at the international level goes for $2,000, but when it reaches the Internet service provider level (in Kenya) and the cost is $5,700 this is later passed to consumers” he said.

According to the study, the hierarchy of Internet provision services starts with global Internet providers, then on to international backbone and gateway operators (IBGOs) then to the country ISPs, and lastly to consumers.

Prices will increase down the chain, but the study found the final charges can be minimised by cutting out the IBGOs. The extra players could also be hurting the quality of the data transmission as well.

The study also showed that Internet users have grown in Kenya over the past give years to reach 2.7 million.

Door opens for new non-profit telecom firms

[Business Daily Africa]
By Okuttah Mark
28 March, 2007

Licence-free band spectrum, courtesy of the airwaves’ regulator, could allow non-profit organisations to own and operate telecom companies.

The Communication Commission of Kenya’s offer of the ISM Band 2.4 and 5.8 spectrum to registered community groups is on a first-come-first-served basis, and already organisations from Mukurweini, Khwisero, Limuru and Rangwe have expressed interest. Countries like Tanzania, Namibia, Bangladesh and India have used the concept of free frequencies in efforts to bridge the ‘digital divide’ with the West.

Alex Gakuru, of the ICT Consumers Association of Kenya (ICAK) , hailed the move by the CCK. He said it will enable those in far flung areas to manage their information systems without waiting for operators who might not see a good business case for moving into those areas.

“Telecommunication companies have failed consumers on liberalisation promises of cheaper, better and widespread services,” said Mr Gakuru. In 1999, placing a one minute call through Telkom Kenya network was just Sh1, while now after sector liberalisation it stands at seven shillings, he said.

Through his association, Mr Gakuru is advocating for the cause of community owned telecoms. He said now most customers have little input into the products and services being offered by the telecommunication companies.

As demand for ICT services rise so does price. Consumers are bombarded with products and services that don’t fit their communication needs. For example, the wireless data transfer service known as General Packet Radio Service (GPRS), which failed to take off despite promising speeds of up to 115Kbits per second.
“In the current situation ICTs cause more poverty than prosperity. It is cheaper to board a matatu, take a 10megabits file than attempt to upload via email at 32 kilobits per second,” he said.

To Mr Gakuru, the best way to protect consumers is to allow them to own their own telecom companies.

In Khwisero, the constituents have placed communications at the top of their needs and through the Constituency Development Fund (CDF), they have put a proposal to spare between Sh3 million-Sh5 million for connecting the area with fibre and deploying wireless networks.

The community intends to use Wifi enabled mobile phones to access both voice and data communication.

In Rangwe, there are plans by the constituents to connect the area with fibre over electric cables.

Although ICTs future is still bright, only companies who have user centric models will survive, points Gakuru.

Door opens for new non-profit telecom firms

Hefty missed opportunity as State fails to seal deal

[The Daily Nation]
Story by JAINDI KISERO
Publication Date: 3/21/2007

Just the other day, a group of Arab investors led by V-Tel Communications of Dubai came here and offered to pay the Government a whopping Sh12 billion($169million) for a licence to operate both a fixed line and mobile telecommunications services.

V-Tel Communications partnered with Palestine’s PalTel as a technical partner.

To prove their seriousness, the Arab investors had gone to the extent of sending to the Government bank statements showing that they, indeed, had the money for the licence fee.

But as it turned out, the Government refused to accept the money, citing a disagreement between the Arabs and their local partners, and arguing that it risked exposing itself to endless litigation.

Basically, the deal collapsed because we have a law, which stipulates that any foreign investor putting his money in the telecommunications sector must sell 30 per cent of the shareholding of the business to locals.

The deal fell through because V-Tel’s local partners could not raise their share of the equity.

KENYA, THEREFORE, MISSED WHAT would have been the single largest foreign direct investment (FDI) in decades.

With the Arab investors out of the way, we offered the same licence to Indian investors at the price the Arabs had agreed to pay. Led by the Reliance group — one of India’s largest conglomerates — the Indians immediately went into negotiations with the Government for the lucrative licence.

After six weeks of negotiations, the Government last week announced that the deal with the Indians had flopped.

A story in the current issue of The EastAfrican says, the Indians — unlike the Arab investors — started making too many fresh demands and privileges on the Kenya government. The story narrates how the Indians had made it clear to the Government that they were not prepared to cough up Sh12 billion without commitment on several privileges, including zero import duties on telecommunications equipment, zero Value-Added Tax and sharing infrastructure with the existing mobile firms. If you want details on the excessive privileges the Indians demanded, grab a copy of the current issue of The EastAfrican.

Suffice to say negotiations flopped. The Government now says that it will put the market on the block again and invite fresh bids.

What is the way forward? In my view, this is the best opportunity for the Government to scrap the 30 per cent-local-shareholding rule. If you re-tender without repealing this rule, the next tender will also fail.

All that this rule does is to make it possible for the political elite to armtwist foreign investors to give them shares free of charge.

Whether it is Kenya, Tanzania, Uganda or any other African country auctioning a telecommunications licence, the local investors who will partner with the foreign investor will be politically-well-connected types: cronies of the President, a stalwart of the ruling party or a prominent businessman with tight connections with the ruling elite.

I am not against affirmative action in the allocation of shares to locals in new telecommunications companies. Indeed, no country has ever developed without having nurtured its own local and strong domestic capitalist class.

But what we are dealing with here is a parasitic class that insists on being given shares without having to pay for them. Whenever they are unable to raise the money either to pay for performance bonds or to subscribe for the equity, the locals will be the first to go to court to block the rolling out the investment.

Econet Wireless has been in the High Court of Kenya for years because of protracted legal disputes with its local partners.

At the end of the day, it is the ordinary consumer of telecommunications services that has suffered. Were it not for the machinations of these locals, Kenya would by now be having multiple providers of telephone services working side by side and competing in terms of both quality of services and prices.

We have to make up our minds whether what we want from these telecommunications companies is ownership of these firms by locals per se, or efficient services and low consumer prices for the ordinary user.

Fortunately for the Ministry of Information and Communications, scrapping the 30 per cent local shareholding rule should not be that difficult. Because the rule is part of subsidiary legislation, a mere notice in the official gazette by Information minister Mutahi Kagwe will do.

THE INFORMATION AND communications sector in Kenya is on a roller coaster, growing very rapidly. Total subscriber numbers for mobile phones hit a new peak of 7.1 million in October last year. Today, we are talking about a penetration rate of around 20 per cent.

Even the sick state-owned Telkom Kenya has been very active lately, cleaning its balance sheet, retrenching staff, while aggressively rolling out a CDMA fixed-wireless network in several towns.

Should we slow down the momentum merely to protect the interests of well-connected locals who won’t allow projects to roll out unless they are allowed to own shares in up-coming firms?

The Daily Nation Story by JAINDI KISERO

Regulator at Protecting Consumers

[The Daily Nation]
CCK acts to lower cost of mobile phone calls
Story by KABURU MUGAMBI
Publication Date: 2/23/2007

Mobile phone users may soon find it cheaper to call across networks after a ruling by the market regulator yesterday.

The commission directed that mobile telephone calls across networks should not exceed Sh30 a minute with effect from July 1, 2007.

Yesterday’s ruling appeared to back Celtel in its dispute with Safaricom over pricing of calls.

Safaricom charges its subscribers up to Sh50 a minute for calling the Celtel network, and Sh45 a minute for calls to Telkom, while calls within its network are as low as Sh8 a minute.

Last month, Celtel wrote a letter to the Commission accusing Safaricom of using price strategy to lock in its subscribers.

The letter from CCK said: “This is an unfair trade practice, because by penalising subscribers who chose to make calls across networks, Safaricom has made it economically disadvantageous to be a customer on other networks and in this way has restricted and distorted competition.” Celtel said that because it has not adopted a pricing strategy that locks in its subscribers, from time to time, its customers move to Safaricom.

“This is meant to ensure that subscribers are able to communicate across networks without being hindered,” CCK (Communications Commission of Kenya) director-general John Waweru told reporters at his Nairobi office. Currently, Celtel charges its subscribers a flat calling rate for calls within its network, as well as to Safaricom and Telkom Kenya.

Celtel’s corporate and regulatory affairs director Clare Ruto, who was present during the announcement, said she was delighted by outcome. “I am very happy because the ruling came out as we expected and it is in line with what is done worldwide,” Ms Ruto said.

Safaricom chief corporate affairs officer Joseph Ogutu, who also attended the Press briefing, said Safaricom was studying the ruling, and he had no immediate response.

Further, CCK has reduced to Sh6.28 a minute from Sh8.12 a minute the fee Safaricom and Celtel charge each other for calls across their networks, commonly known as interconnection rate. As a result of the new interconnection rates, the operators are required to enter into new interconnection agreements, and submit them to the commission by March 15.

“However, all operators are at liberty to negotiate lower interconnection rates subject to the capped in the determination by CCK,” Mr Waweru said.

Although she could not be drawn into whether the new pricing guidelines would mean immediate reduction in tariffs, Ms Ruto said Celtel has been lowering its prices, but was unable to push for interconnection rates reduction. Mr Waweru asked telecommunications operators to ensure that their tariffs are published and communicated on regular basis “in a concise, simple and easily understood manner by consumers.”

CCK also modified Telkom’s licence for basic retail narrow band services and its services will have a new price cap beginning July 2007. Mr Waweru said CCK would monitor the evolution of all telecommunications service prices through competition to guard the interest of consumers.

Competition between Safaricom and Celtel has intensified of late.

Recently, Celtel launched its One Network that gives subscribers one tariff for East Africa. Safaricom responded swiftly, signing a partnership with MTN in Uganda and Vodacom in Tanzania that would allow its subscribers to enjoy a similar advantage.

CCK acts to lower cost of mobile phone calls

[The Standard]
Communication regulator caps mobile tariffs at Sh30
By Tom Mogusu
Friday February 23, 2007

Mobile phone users will now pay a maximum of Sh30 on calls regardless of the tariff they are in.

Industry regulator, Communications Commission of Kenya (CCK), on Thursday ordered Safaricom and Celtel to adjust their call charges to a maximum of Sh30 from next month.

The regulator also slashed the cost of connecting calls between mobile and fixed line operators by 57 per cent to Sh1.74 from Sh4.

The CCK orders were contained in new guidelines, released on Thursday, that should open the way for a decline in the costs of telecommunication.

CCK also announced that by next month, interconnection rates between mobile networks would drop by 23 per cent to Sh6.28 from the current Sh8.12.

Guidelines expected to end a price war

CCK Director-General Mr John Waweru said the new rates are aimed at slashing the huge costs incurred when making calls across the networks.

The cost of making calls between mobile phone networks will also drop to less than Sh30 by July 1, the regulator said.

"Coupled with the lower termination rates being unveiled today, it is the Commission’s conviction that this will cultivate traffic growth, long-term revenue flows for operators and delivery of the benefits of competition to consumers and the economy at large," said Waweru.

"We believe that this new pricing system will stimulate competition and facilitate the delivery of quality and affordable services. We do not expect this to have any negative financial effect on the companies because the market’s potential is yet to be fully exploited. You just have to wait and see what I am saying ," he said.

The guidelines are expected to end a price war between Celtel and Safaricom.

Thorough analysis of the market

Mr Waweru said the new guidelines were effected after a thorough analysis of the market, which took 12 months to conclude.

The study was undertaken by Analysis Consulting Limited of the UK. It was aimed at establishing acceptable wholesale and retail costs and prices of telecommunication services to help CCK determine the best way the industry could grow.

Safaricom’s Chief Corporate Affairs Officer, Mr Joseph Ogutu, told The Standard that the firm was satisfied with CCK’s decision.

"We are satisfied so far but it takes time before we can come up with acceptable rates across the board," Ogutu said.

He said the company was aware that there would be pressure to lower the costs of telecommunications among mobile firms and defended his company against allegations that Safaricom had abused its position as the market leader.

"Our tariffs have always been at the same level even though the cost of doing business has been rising each year."

Communication regulator caps mobile tariffs at Sh30