Next Generation Networks (NGN) enable the delivery of multiple services independent of and over different access and core networks. This trend of separation of infrastructure and services is challenging existing regulatory models. To take advantage of the opportunities that NGN offer governments are supporting the development of dynamic and responsive regulatory frameworks, to enable incumbents and new entrants to offer new and innovative services. This paper is provides the regulatory responses to NGN in Kenya using the metrics of regulation and licensing, competition, technology neutrality, resource allocation, interconnection, public participation, universal access and infrastructure sharing.

1. Telecommunication Regulatory Reforms Driven by Next Generation Networks:
A Case Study of Kenya
Abstract challenge of changing their focus from
Next Generation Networks (NGN) enable traditional economic drivers such as
the delivery of multiple services agriculture to become knowledge-based
independent of and over different access and information economies. In facing this
core networks. This trend of separation of challenge the, availability and accessibility
infrastructure and services is challenging to ICT infrastructure is essential. National
existing regulatory models. competitiveness is a key factor in the
promotion of Next Generation Networks
To take advantage of the opportunities that (NGN). Consequently, governments are
NGN offer governments are supporting the increasingly supporting initiatives in
development of dynamic and responsive technology, product and service innovation
regulatory frameworks, to enable in a bid to becoming leaders in cutting edge
incumbents and new entrants to offer new technology.
and innovative services.
Changes in business models and the
This paper is provides the regulatory regulatory framework in the recent past have
responses to NGN in Kenya using the largely been influenced changes in
metrics of regulation and licensing, technology. These changes are driven by
competition, technology neutrality, resource the burgeoning consumer demand for a
allocation, interconnection, public ubiquitous networked society delivering
participation, universal access and efficient and convenient services. The
infrastructure sharing. telecommunication industry is characterised
1.1. Introduction by convergence in technologies, allowing
There is growing recognition of the social for the delivery of multiple services and
and economic benefits of information and applications accessible from any location.
communication technologies (ICT). Many Convergence has led to the growth of NGN
developing nations are faced with the which enables the provision of a full range
Telecommunication Regulatory Reforms Driven by Next Generation Networks: A Case Study of Kenya
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2. of services independent of and over different Figure 1: NGN architecture
access and core networks. It is expected that
this characteristic of NGN will enable future
networks to become more pervasive,
flexible, and transparent and offer a more
consistent user-experience.
There are various definitions for NGN. Source: GSM Association (2007)
NGN definitions vary among parties
depending on their interests and This paper is a study of regulatory
organizational objectives. Technically, interventions that encourage innovation,
NGN are defined as packet-based, investment and transition to NGN in Kenya.
broadband, quality of service (QoS)-enabled 1.1. Introduction
networks, in which service-related functions The Republic of Kenya is situated in East
are independent of the underlying transport- Africa, astride the equatorial latitude.
1
related technologies . These characteristics Kenya’s population is growing at about
enable unfettered access for users to 2.9% percent per annum and currently totals
networks and to competing service providers about 36 million, 80 percent of whom reside
and/or services of their choice. NGN support in the rural areas. A widely dispersed rural
generalized mobility that allows consistent and young population, in addition to the
and ubiquitous provision of services to recognition of the correlation of ICT and
2
users . economic development influence the
adaptation of communication technologies.
The Kenyan government’s ‘Vision 2030’
development strategy which aims at steering
the country to middle-income level has
1
ITU‐T’s Definition of NGN. Available at : elected ICT as one of the main drivers to
http://www.itu.int/ITU‐T/ngn/definition.html
[Accessed August 2009]
this economic growth and is central towards
achieving industrialization. The Kenyan
government has targeted the Business
Process Outsourcing (BPO) as the new but
Telecommunication Regulatory Reforms Driven by Next Generation Networks: A Case Study of Kenya
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3. promising sector for the country and instituted by the International Monetary
especially for its young people. Regulatory Fund (IMF) and the World Bank which
reform is expected to ultimately lead to the required the government’s adoption of a
achievement the ‘Vision 2030’ which aspires policy framework paper titled, "Economic
for a country firmly interconnected through Reforms 1996-1998”. Liberalization and
ICT providing business services via the restructuring of the telecommunications
Internet to companies and organizations in sector was a major component of the
the developed world. reforms that included the separation of
postal and telecommunications services;
Apart from the national strategy outlined in
selling a 30% stake in the incumbent
the Vision 2030, the government has
operator to a strategic investor and through
enacted the Kenya Communications
public flotation; joint ventures for cellular
(Amendment) Act, 2009. Though not
phone; and liberalization of pay-phones and
studied in this paper, the act is evidence of
Very Small Aperture Terminal (VSAT)
political support for the creation of a
services.
forward-looking and enabling environment
for the development of NGNs and provides A consequence of the reforms was the
for a coherent approach to regulating the publishing of the Telecommunications and
converged ICT sector Postal Sector Policy Guidelines in 1997
(revised in December 2001) that provided a
1.2. Regulatory Reform
roadmap for restructuring and liberalization
Telecommunication sector reform in Kenya of the sector. The policy provided for
has been driven by liberalization and orderly expansion and modernization of the
convergence of technologies resulting in the telecommunications infrastructure up to the
review of the regulatory framework through year 2015 through the inclusion of specific
introduction of additional licence categories targets for telephone penetration and
and technology neutrality, respectively. privatization
The telecommunication sector in Kenya now The sector policy paved way to the
driven by market forces was previously enactment of the Kenya Communications
driven by external pressures. These include Act of 1998 (KCA, 1998) which repealed the
structural adjustment program (SAP) Kenya Posts and Telecommunications Act
Telecommunication Regulatory Reforms Driven by Next Generation Networks: A Case Study of Kenya
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4. providing for the corporatization Kenya Post mandate from the KCA, 1998, the regulator
and Telecommunications Corporation licensed players in various market segments.
(KPTC), which served both as an operator The policy guidelines granted TKL a five-
and regulator (ITU, 2001). The KCA, 1998, year exclusivity period (legal monopoly)
split of KPTC into three entities the Postal from 1999 to 2004 in the provision of the
Corporation of Kenya (PCK), Telkom international internet gateway, international
Kenya Limited (TKL) and the voice and data networks and services,
Communications Commission of Kenya national voice and data networks and
(CCK) performing the regulatory functions services, local voice and data networks and
of the telecommunications, radio services in Nairobi province. The
communications and postal sector. Further, Government’s intention in granting of the
the act provided for the formation of the legal monopoly was to give adequate time
National Communications Secretariat (NCS) for the company to recouping the investment
charged with policy formulation and the on the network and reengineering the
Appeals Tribunal for communication dispute organization without the ‘risk’ of
resolution. competition.
The mandate of the CCK as provided by the In fulfilling the regulatory agenda of
KCA, 1998 is to license and regulate determining the level and terms of entry in
telecommunications, postal and radio different market segments and adopting
communications services in the Republic of processes for the award of licenses to
Kenya. The regulator’s functions include: service providers, the new market structure
Issuance of licenses for all was reviewed in 2002. The new structure
telecommunications and postal services; outlined the liberalization framework in
Price regulation; Establishment of various market segments, the licensing
interconnection principles; Type approval of requirements and procedures with a view to
equipment; Development of numbering hastening investment, promoting penetration
plans; consumer protection and Management of service and enhancing fair competition.
of the radio frequency spectrum.
However the rapid pace of technological
Guided by the market structure contained in development that resulted in the blurring of
the policy guidelines, 2001 and deriving its distinction between various licensing
Telecommunication Regulatory Reforms Driven by Next Generation Networks: A Case Study of Kenya
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5. categories demanded that the regulator emerging technological opportunities,
adopted a progressive approach of increase competition and develop the sector.
restructuring of the market (CCK, 2005c).
The ULF has heightened activity in the
Kenya like India, redefined the kind of
internet sector. Operators and service
licences required by different players with
providers are claiming their stake in niche
the intention to migrate existing licensees to
markets by taking advantage of the
a Unified Licensing Framework (ULF) by
opportunities that the framework present by
1st July 2008.
positioning themselves to distribute
The ULF permits any form of bandwidth within and across the country’s
communications infrastructure to be used to boundaries through the building of in-
provide any type of communications service. country and cross-border fibre networks.
The framework also provides the regulator This move by operators to increase coverage
an opportunity to progressively structure the and enlarge their customer base has lead to
market by redefining the kind of licences an initiative to harmonize regulatory
required by different players, providing frameworks in East African countries
equal licensing opportunities to all players through the East Africa Regulatory Post and
under a first-come-first-serviced basis, Telecommunications Organization
facilitating direct interconnectivity between (EARPTO).
network operators and limiting
The ULF has encouraged service providers
anticompetitive practices arising from
to diversify service offerings, Wananchi
vertical integration and cross-subsidization.
Group, a local ISP has launched cable-based
There are three broad licence categories in
triple play services offering a combination
the ULF: Network Facilities Provider (NFP),
of television, broadband and telephony
Applications Service Provider (ASP) and
services brand named Zuku. Wananchi
Contents Services Provider (CSP).
Group aims at increasing the availability and
This licence categorization differs from that reducing the costs of connecting to the
of India where licences are classified on the internet as well as pushing up customer
basis of regulatory authorization required. numbers.
The main objective of the ULF is to harness
Telecommunication Regulatory Reforms Driven by Next Generation Networks: A Case Study of Kenya
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6. The new environment has also encouraged 2006 identifies the promotion of (PPP) as a
the Government on the basis of the national strategy for the development of
vision to use ICT for economic telecommunications infrastructure. PPP are
transformation to support the deployment an attractive model in countries, such as
national and international fibre optic Kenya, that are building up a technology
networks to complement investment efforts sector from a low base. Countries are
by private sector. These networks viewing the availability of broadband
implemented through public private networks as significant national
partnerships (PPP) include Fibre Optic infrastructure and are setting specific goals
National Network (FONN) and The East through enactment of appropriate policies
African Marine Systems (TEAMS). and regulation, as well as committing
significant public funds towards the
Figure 2: Fibre Optic National Network
development of these networks.
Figure 3: The East African Marine System
The government’s intention is to ensure
diversity in the provision of affordable,
reliable and high capacity international 1.3. Conclusion
connectivity based on the open access Many countries including Kenya are
principle. The availability of cheaper viewing the availability of networks with
international broadband access through these broadband capabilities as significant
fibre projects is expected to create new national infrastructure and are setting
business ecosystem and subsequently socio- specific goals through enactment of
economic growth. The national ICT policy, appropriate policies and regulation, as well
Telecommunication Regulatory Reforms Driven by Next Generation Networks: A Case Study of Kenya
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7. as committing significant public funds ions/closed_consultations/WLAN_se
towards the development of these networks rvices.pdf [Accessed March 2010]
Political support and the establishment of a 5. CCK (2005c) Public Consultation on
flexible and responsive regulatory Intention to Merge Licence. [online]
framework are critical to encourage Available at:
investment in NGN infrastructure. http://www.cck.go.ke/links/consultat
ions/closed_consultations/Merge_lic
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