6TH PH.D SEMINAR OF THE INTERNATIONAL
TELECOMMUNICATIONS SOCIETY
IMINDS OFFICES
VRIJE UNIVERSITEIT BRUSSEL,
PLEINLAAN 9, 2ND FLOOR
TITLE: REGIONALIZING REFORM OF TELECOMMUNICATION
SECTOR REGULATION IN THE EAST AFRICAN COMMUNITY
(EAC): LESSONS FROM THE EXPERIENCE OF THE EUROPEAN
UNION (EU)
SUBMITTED BY:
JOSEPH KARIUKI NYAGA (PHD CANDIDATE)
FACULTY OF LAW - KU LEUVEN
(Email: joseph.nyaga@law.kuleuven.be)
INTERDISCIPLINARY CENTRE FOR LAW & ICT (ICRI) IMINDS
SINT-MICHIELSSTRAAT 6, 3000 LEUVEN (BELGIUM)
PROMOTORS:
PROF. DR. PEGGY VALCKE AND PROF. DR. JOS DUMORTIER
1
TABLE OF CONTENT:
1. INTRODUCTION……………………………………………………………3
1.1.
1.2.
1.3.
Principal research question:……………….…………………………5
Hypothesis:……………………………..………………………………5
Policy relevance:……………………………………...………………..5
2. LEGAL AND INSTITUTIONAL FRAMEWORK OF THE EAC………6
2.1. ICT developments in the EAC……………………………………….9
3. ASSESSMENT OF THE EAC TELECOMMUNICATION POLICIES,
REGULATORY AND INSTITUTIONAL FRAMEWORKS…………..10
3.1.
3.2.
3.3.
3.4.
3.5.
Divergences in telecommunications policy frameworks……….11
Divergences in institutional arrangement………………………..13
Divergences in regulatory frameworks…………………………...14
Convergence of the ICT sector in the EAC……………………….15
Implication of the inconsistencies to regulation…………………17
4. THE EXPERIENCE OF THE EUROPEAN UNION (EU)………………18
4.1.
4.2.
4.3.
Motivation of the EU as a case study………………………………18
The EU’s electronic communications regulatory framework
(ECRF)………………………………………………………………….20
Lessons from the experience of the EU……………………………23
5. RECOMMENDATIONS…………………………………………………..27
5.1.
5.2.
Regionalizing EAC regulatory framework……………………….27
Harmonization of Regulatory Frameworks in EAC……………..28
6. CONCLUSION……………………………………………………………..32
2
ABSTRACT
In the East African community (EAC), there has been an increasing recognition that
significant welfare gains could be realized through deep forms of regional integration
which entail harmonization of legal, regulatory and institutional frameworks for the
telecommunication sector. Implementation of the EAC common market and rapid
technological progress especially in mobile wireless technology, have made greater
coordination and harmonization of telecommunications policy more attractive.
Moreover, the EAC consists of less wealthy nations and therefore an interest in
regionalization is essential as a means to pool regulatory resources. This paper assesses
the potential gains from regionalized telecommunications policy in the EAC. The paper
seeks to assist stakeholders in the EAC and Member States in designing an effective
regional regulatory process. To this end, the paper: (i) discusses how EAC regional
cooperation can overcome national limits in technical expertise, enhance the capacity of
Member States to commit to stable regulatory policy in the EAC and ultimately
facilitate infrastructure investment in the region; (ii) identifies trade-distorting
regulations that inhibit opportunities for regional telecommunication development and
so are good candidates for regional negotiations that reduce indirect market entry
barriers; (iii) discusses the EU’s ongoing reforms towards a single market for electronic
communication for a connected continent as a case study that the EAC can draw lessons
from and there after describes substantive elements of a harmonized regional
regulatory policy that can deliver performance benefits.
Keywords: Telecom reforms, legislation, regulation, regional, East African Community.
1. INTRODUCTION
The EAC has a common market in place since 2010, therefore, relevant market areas of
the telecommunications industry transcend national borders, and little regulation in this
sector has purely domestic effects. EAC Member States currently deal with
telecommunications policy as a domestic concern, each with its own distinct and
dissimilar policy and regulatory regimes. Establishment of EAC common market and
rapid technological progress, especially in mobile wireless technology, have made
greater coordination and harmonization of telecommunications policy more attractive.
Moreover, the EAC consist of less wealthy Member States and are therefore interested
in regionalization as a means to pool regulatory resources.
3
The case for regionalization of telecommunication reforms in the EAC is hence based on
three reasons:
First, as telecommunication liberalization has reduced the role of tariffs and quotas in
affecting the ability of a service provider to compete in regional markets, inefficiencies
in infrastructure industries are more likely to determine the regional competitiveness of
domestic industries. Specifically, inefficient domestic infrastructure can cause otherwise
efficient national firms to lose both domestic and regional market share to firms from
countries with better infrastructure.
Second, domestic infrastructure policies can create substantial indirect market entry
barriers. For example, a highly inefficient telecommunication sector can effectively
protect inefficient domestic service providers from competition from superior regional
service providers by increasing the advantage of close proximity between service
providers and consumers.
Third, both economic integration and technological progress have caused the natural
market areas of infrastructure industries to expand, frequently transcending national
borders. Telecommunications sector operate more efficiently if its networks are
organized according to the patterns of transactions, and liberalization. This has made
these patterns increasingly international. Moreover, adjacent networks frequently
minimize costs by sharing capacities to take advantage of differences in the timepatterns of usage of infrastructure services during the day and year. Thus, regulation in
these sectors rarely has purely domestic effects, and when it does, the reason often is
that Member States within the EAC region are taking advantage of opportunities for
integrating their networks.
Although infrastructure reform programs in the EAC differ among the Member States,
most are based on creating market institutions and some degree of competition. The
purpose of these reforms is to generate more powerful financial incentives for service
providers to improve the performance of the sector. The needed regional reforms
should have three common elements:
(1) Corporatizing and usually privatizing incumbent operators; (2) permitting and even
encouraging competition in the markets that are still protected monopolies; and (3)
creating a regional regulatory body that is independent from the incumbent operators.
Regionalization of at least some elements of reform is attractive because it contributes to
the efficiency goals of policy reform while sidestepping some of the political obstacles
to effective reform. Infrastructure reform, when implemented in each Member State
independently, can become bogged down in a quest for national advantage that
undermines development and continued regional integration for the EAC.
4
The EU’s ongoing reform of electronic communication regulation for a single market for
a connected continent provides a solid background lessons for the ongoing research on
the future regulatory models for the EAC. This paper therefore assesses the potential
gains from regionalized telecommunications policy in the EAC. The paper seeks to
assist stakeholders in the EAC and Member States in designing an effective regional
regulatory process. To this end, the paper: (i) discusses how EAC regional cooperation
can overcome national limits in technical expertise, enhance the capacity of Member
States to commit to stable regulatory policy in the EAC and ultimately facilitate
infrastructure investment in the region; (ii) identifies trade-distorting regulations that
inhibit opportunities for regional telecommunication development and so are good
candidates for regional negotiations that reduce indirect market entry barriers; (iii)
discusses the EU’s ongoing regulatory reforms towards a single market for electronic
communication for a connected continent as a case study that the EAC can draw lessons
from and there after describes substantive elements of a harmonized regional
regulatory policy that can deliver performance benefits.
1.1.
Principal research question:
What is the most suitable regional response to regulation of telecommunication sector
in the East African Community (EAC) and what lessons can the EAC draw from the
experience of the European Union’s (EU) ongoing reform towards a single market for
Information Society?
1.2.
Hypothesis:
With the EAC’s common market in place since 2010, a corresponding common or
regionalized legislative and regulatory framework at the EAC level for
telecommunication sector would be a suitable vehicle to achieve regulatory
harmonization and minimize the distortions that arise from divergences in the Member
States distinct and dissimilar regulatory policies.
1.3.
Policy relevance:
The critical assessment of regional telecommunication regulation aims to provide
background for current discussions about the future of regulatory policy model in the
EAC. In particular, it provides a discussion of the EU experience in its ongoing
regulatory reform towards a single market for a connected continent. This experience
provides ideas and insights that could inform policy makers in their discussions about
the EAC approach.
5
1.4.
Methodology/approach:
This paper is prepared through desktop research. This included searches through
academic and third-party databases, regulators and government websites, and ITU and
OECD websites. The paper provides an assessment of the current legislative and
regulatory framework in each of the EAC Member States in order to demonstrate the
visible divergences there in. These include Member State national laws, regulations,
bills and policy documents relating to telecommunication sector. A discussion of the
experience of the EU’s ongoing reform towards a single EU market for Information
Society is presented as an example of a similar integrated region that the EAC can draw
lessons from.
2. LEGAL AND INSTITUTIONAL FRAMEWORK OF THE EAC
The East African Community (EAC)1 is the regional intergovernmental organisation of
the Republics of Kenya, Uganda, the United Republic of Tanzania, Republic of Burundi
and Republic of Rwanda (Member States) with its headquarters in Arusha, Tanzania.
The principal source of EAC law is the Treaty for the Establishment of the East African
Community (the “Treaty”).2 The Treaty was signed on 30th November 1999 and entered
into force on 7th July 2000 following its ratification by the Original three Partner States –
Kenya, Uganda and Tanzania. The Republic of Rwanda and the Republic of Burundi
acceded to the EAC Treaty on 18th June 2007 and became full Members of the
Community with effect from 1st July 2007.
According to the Treaty, the main objective of the EAC is to widen and deepen the
integration process. Article 5(2)3 of the Treaty establishes the objectives to be the
formation and subsequent evolution of a Customs Union, a Common Market, a
Monetary Union and finally a Political Federation, under the overarching aim of
equitable development and economic growth amongst the Member countries.
http://www.eac.int/
The Treaty entered in force on 7th of July 2000, and was amended on 14th December 2006 and 20thAugust 2007. The
full text is to be found at http://www.eac.int/treaty/
3 Article 5(2): In pursuance of the provisions of paragraph 1 of this Article, the Partner States undertake to establish
among themselves and in accordance with the provisions of this Treaty, a Customs Union, a Common Market,
subsequently a Monetary Union and ultimately a Political Federation in order to strengthen and regulate the
industrial, commercial, infrastructural, cultural, social, political and other relations of the Partner States to the end
that there shall be accelerated, harmonious and balanced development and sustained expansion of economic
activities, the benefit of which shall be equitably shared.
1
2
6
The entry point of the integration process is the Customs Union. It has been
progressively implemented since 2004; in January 2010 the EAC became a full-fledged
Customs Union. One critical aspect of the implementation has been the establishment of
an interconnected ICT solution for a regional customs system.4
The EAC Common Market Protocol5 entered into force in July 2010, providing for the
following freedoms and rights to be progressively implemented: free movement of
goods, persons, labour, services and capital; as well as a right of establishment and
residency. The Community has since then commenced negotiations for the
establishment of the East African Monetary Union. The negotiations for the East African
Monetary Union, which commenced in 2011, and fast tracking the process towards East
African Federation all underscore the serious determination of the East African
leadership and citizens to construct a powerful and sustainable East African economic
and political bloc. The ultimate objective, to establish an East African Political
Federation, is targeted for 2016.6
The structure of the EAC promotes decision-making through consensus. Each State has
the authority to veto details of regulations formed under the Treaty. Once consensus is
reached and regulations passed, they are binding on all Partner States. Each State may
still, however, achieve regulatory goals through its own individual domestic policies.
The Treaty obliges the Partner States to plan and direct their policies and resources with
a view to creating conditions favourable to regional economic development7 and
through their appropriate national institutions to take necessary steps to harmonize all
their national laws appertaining to the Community.8
Harmonization is one of the key concepts espoused by EAC. With particular respect to
the integration of laws, Article 1269 of the Treaty and Article 4710 of the Common
Market Protocol both call for the harmonization of national legal frameworks. 11
Except for Kenya, EAC countries are using the UNCTAD ASYCUDA system for custom automation.
Article 47 provides that Partner states undertake to approximate their national laws and to harmonize their policies
and systems, for purposes of implementing the Protocol.
http://www.eac.int/advisory-opinions/cat_view/68-eac-common-market.html
6 The timelines were provided by the 13th Ordinary Summit of Heads of State in 2011.
7 Article 8(1)
8 Article 126(2)b
9 Article 126:
Scope of Co-operation
1. In order to promote the achievement of the objectives of the Community as set out in Article 5 of this
Treaty, the Partner States shall take steps to harmonize their legal training and certification; and shall encourage the
standardization of the judgments of courts within the Community.
4
5
7
It should be emphasized that two different law systems are applied among the
participating countries: Kenya, The United Republic of Tanzania, and Uganda follow a
common law system, while Burundi and Rwanda both subscribe to a predominantly
civil law system.12 This has led to somewhat divergent legislative practices and
procedures between the groups of countries, and may have contributed to slowing
down the process of harmonization efforts in the region.
The EAC has institutional frameworks at the Community level that includes the
following:
1. Summit which consists of the Assembly of Heads of State and Government whose
function is to provide overall strategy and political direction.
2. The Council consisting of the Ministers responsible for regional co-operation of each
Partner State whose function is to Coordinate and formulate policies.
3. The East African Court of Justice tasked to ensure adherence to law in the
interpretation and application of and compliance with the EAC Treaty. The Court has
jurisdiction over the interpretation and application of the Treaty and may have other
original, appellate, human rights or other jurisdiction upon conclusion of a protocol to
realize such extended jurisdiction.
4. The East African Legislative Assembly tasked with the Community legislative
powers, any legislative decision by the assembly which is gazetted by Summit will
supersede and take precedence over any other related national law.
2. For purposes of paragraph 1 of this Article, the Partner States shall through their appropriate national
institutions take all necessary steps to:
(a) establish a common syllabus for the training of lawyers and a common standard to be attained in
examinations in order to qualify and to be licensed to practice as an advocate in their respective
superior courts;
(b) harmonize all their national laws appertaining to the Community; and
(c) Revive the publication of the East African Law Reports or publish similar law reports and such law journals as
will promote the exchange of legal and judicial knowledge and enhance the approximation and harmonization of
legal learning and the standardization of judgments of courts within the Community.
3. For purposes of paragraph 1 of this Article, the Partner States may take such other additional steps as the Council
may determine.
10 Article 47: Approximation and Harmonization of Policies, Laws and Systems
1. The Partner States undertake to approximate their national laws and to harmonize their policies and systems, for
purposes of implementing this Protocol.
2. The Council shall issue directives for purposes of implementing this Article.
11 The Sub-Committee on the Approximation of Laws in the EAC Context
12 Membership of the EAC is shifting Rwanda and Burundi towards a common law approach.
8
5. The Secretariat headed by an appointed Secretary General.13
The EAC’s aspiration and goal is to use regional integration to promote peace, stimulate
economic growth, achieve solidarity for its peoples, and strengthen its international
profile/stature. The EAC is using regional integration as a vehicle for promoting peace,
in order to enhance the prospects for positive economic results. In short, the EAC is
focussed on making the East Africa’s economies more mutually interdependent among
its constituent Member States. To this end, the EAC’s aims and objectives include the
following:
-
establishing a Customs Union, a Common Market,
-
subsequently a Monetary Union and ultimately a Political Federation in order to
strengthen and regulate the industrial, commercial, infrastructural, cultural,
social, and political and other relations of the Partner States.
-
Accelerated, harmonious and balanced development and sustained expansion of
economic activities, the benefit of which is equitably shared.14
Against this background, creation of an enabling legal and regulatory environment has
been identified as a critical factor for the effective implementation of e-government and
e-commerce strategies at national and regional levels. To achieve operational efficiency
of such strategies, strong back up support is needed in terms of legislation and
regulation.
In view of the foregoing, policies and regulatory frameworks of most sectors have been
aligned to this objective. Those that have harmonised policies and regulatory
frameworks include fisheries, transport, higher education and finance. They have
regulatory frameworks and institutions at the EAC level unlike the telecommunication
sector.15
2.1.
ICT developments in the EAC
There are two key areas that have been particularly important for the economic and
regulatory environments; they include the improved fibre-optic links between the
region and the rest of the world and the expansion of mobile telephony and related
Article 9 of the Treaty establishing the East African Community( hereinafter the EAC Treaty)
See Part 1 of the Treaty establishing the European Union and Chapter 2 of the treaty establishing the EAC
15 For instance, Lake Victoria Fisheries Organization, East African Community Civil Aviation Safety and Security
Oversight Agency (CASSOA), The Inter-University Council for East Africa (IUCEA) and The East African
Development Bank.
13
14
9
services, notably mobile money.16 In July 2009, the first under-sea fibre optic cable
network, SEACOM,17 reached Kenya, the United Republic of Tanzania and Uganda. It
was soon thereafter connected with Rwanda.18 This marked the beginning of an era of
radically faster and cheaper Internet use in the EAC.
In 2010, the second submarine fibre optic cable system, EASSy became operational
along the East and South African coasts to service voice, data, video and Internet needs
of the region.19 It links South Africa with Sudan, with landing points in Mozambique,
Madagascar, the Comoros, the United Republic of Tanzania, Kenya, Somalia, and the
Republic of Djibouti. This made it more economical to connect the eastern and southern
coast of Africa with high-speed global telecommunications network. Average mobile
penetration in the EAC had reached 40 subscriptions per 100 inhabitants in 2010, with
the highest level noted in Kenya (61) and the lowest in Burundi (14)20
3. ASSESSMENT
OF
THE EAC TELECOMMUNICATION
POLICIES,
REGULATORY
AND
INSTITUTIONAL
FRAMEWORKS
One of the corner stones of the EAC’s integration process has been to create a single
market, where the trade is free across the EAC and based on the theory of comparative
advantages. Harmonization of national telecommunications regulatory frameworks in
the EAC Member States to reflect the common EAC framework should be linked to this
free trade thought. The harmonization of regulatory frameworks can be seen as a main
mechanism to eliminate unfair differences in regulatory regimes, because its purpose is
to reduce the differences in law and politics of the Member States jurisdictions. The
following sub-sections discuss the current status quo with regard to telecommunication
policies, legislative and regulatory settings in order to demonstrate the divergences
existing thereof.
See UNCTAD Report, Mobile Money for Business Development in the East African Community:
A Comparative Study of Existing Platforms and Regulations, June 2012 (UNCTAD/DTL/STICT/2012/2,
available at http://unctad.org/en/PublicationsLibrary/dtlstict2012d2_en.pdf
17 http://www.seacom.mu/
18 Daily Nation newspaper on the web, 23rd July 2009. The cable covers some 17,000 kilometres.
19 http://www.eassy.org/index-2.html. The cable covers some 10,000 kilometres.
20 Source: UNCTAD, based on ITU World Telecommunication/ICT Indicators, 2011
16
10
3.1.
Divergences in telecommunications policy frameworks
The EAC Member States have in the past discussed plans for regional ICT policy
harmonisation. However, the process of telecommunications policy harmonisation has
been retarded due to a sentiment among Member states that a harmonised
telecommunications policy framework would have favoured Kenya, the leading
country in the region. Since telecommunications markets in the EAC were amongst the
earliest in Africa to open to competition, and since the EAC markets have been
historically integrated, the EAC Member States are still in the process of determining if
and how a single regulation policy can be applied uniformly.21
Despite attempts by the EAC Member States to harmonise ICT policy and regulatory
frameworks, there is still a high degree of heterogeneity among the Member States
national ICT Policy and regulatory frameworks in terms of advancement in the
harmonisation process. Some of the challenges facing the process of ICT policy and
regulatory harmonisation include the following:

existence of multiple national ICT policy and programme initiatives, some of
which are often in competition with each other;

very little ownership of EAC regional ICT policy and regulatory initiatives from
the Member States governments;

National organisations’ and institutions’ lack of institutional mechanisms to
ensure compliance with model policies and frameworks as well as to monitor
and evaluate the implementation. EAC Member States are sovereign states with
no obligations to adopt and adjust national ICT policy and regulatory
frameworks to the policy guidelines issued by EAC regional bodies; and

Different stages of economic, political and social development make it difficult
for Member States to have common priorities and therefore to adopt common
models or frameworks.22
Although resources have been put into establishing and supporting structures for the
EAC regional integration of markets and harmonisation of ICT policies, there has been
limited success in implementing harmonisation frameworks to date.
IT news Africa (2010). East African States discuss ICT policy harmonization, available from
http://www.itnewsafrica.com/?p=795.
22 Waema, T. M. (2005). In Etta, F.E. and Elder, L. (eds.), A Brief History of the Development of ICT Policy in Kenya.
At the Crossroads: ICT Policy Making in East Africa, (pp. 25-43). Nairobi, Kenya: East African Educational Publishers
Ltd.
21
11
Therefore, each of the Member States has its own distinct and dissimilar National ICT
policy. Perhaps the point of convergence stops only at the fact that today all the five
Member States have approved National ICT Policies in place. The following table gives
an overview of the National ICT policy at the Member States level as the basis for the
current regulatory frameworks.
Table of initial classification of ICT policies:
EAC Member National ICT National ICT National ICT Autonomous
State
Policy
Development
Development
Regulatory
Plan
Agency
Agency
BURUNDI
-1996:
Beginning of
process
for
restructuring
the Telecoms
sector,
publication of
sectoral policy.
-Law
governing ICT
sector
was
promulgated
Sept 1997.
- Separation of
Posts
and
Telecoms 1997.
KENYA
National ICT
Policy exists
since 2005 and
has
been
reviewed on a
number
of
occasions
e-Strategies
being prepared
A Directorate
of ICT was
created in 2006.
2002-2004
It is charged
(National
with
the
Strategy
for implementation
development of of ICT plans
ICT
Action and strategies
Plan).
- A Regulatory
Authority:
ARCT
(Telecoms
Regulatory
and
Control
Agency), was
set up late
Sept 1997.
Implementation
of
plans,
programmes
and projects is
being studied.
The
Regulatory
Agency is not
independent.
It is under the
control of the
Government,
although
Burundi
liberalised its
international
Gateway
Plan exists with Kenya
a
special Authority
Bureau in the
Office of the
President, and
a Ministry in
charge
of
implementing
the
National
Policy.
12
ICT CCK
UGANDA
National ICT
Policy exists
since 2006 and
was approved
by
the
Government
and
Parliament.
There is an
Implementation
Plan with two
components:
infrastructure
and
RWANDA
National ICT
Policy exists
since 2000 and
was approved
by
the
Government
and
Parliament.
Plan exists and RITA
is known as the
NICI
PLAN,
with
various
projects
and
programmes.
TANZANIA
It exists since Plan exists, but Non existent
2005 and was not very well
approved by developed
the
Government
and
Parliament
3.2.
National
Authority
Uganda.
(NITA-U).
IT UCC
-
e-Gov.
RURA
TCRA
Divergences in institutional arrangement
As shown in the above table, EAC Member States have various regulatory agencies and
regulatory institutions. They fall under the various ministries responsible for ICTs
and/or Telecommunications. For instance, in the case of Uganda, it is the Ministry of
ICT; in the case of Kenya, it is the Ministry of Information and Communications; while
in Tanzania, it is the Ministry of Infrastructure Development (with a Deputy Minister in
charge of all communications matters and sectors), in Burundi, the jurisdiction lies with
the Burundian Ministry of Defence. In nearly all the cases, there is also a strong ICT
Unit within the Ministry of Finance, sometimes referred also to as the Government
Computer Centre/Services, for historical reasons. In the case of Kenya, there is also the
e-Government Directorate within the Office of the President. For its part, in Uganda,
there is also a newly established National Information Technology Authority (NITA),
and Rwanda’s RITA. In Kenya, there have also been proposals to have ICT Units,
headed by a senior officer preferably at Director Level (like in Rwanda) in some, if not
13
all Ministries and public agencies. In Tanzania, there exists the office of National ICT
Coordinator. From the foregoing, it is evident that the ICT responsibilities are
distributed across different arms of the government, with little, if any, coordination,
with negative consequences including lack of clarity. Further ARCT of Burundi is not
an independent regulatory authority as it is placed under the jurisdiction of the
Burundian Ministry of Defence. All deliverance of licences are studied by the technical
personnel of the ARCT , then by its board of administration, followed by the approval
of the Ministry of transports and communications and last of all by the national
Ministry of Defence.
3.3.
Divergences in regulatory frameworks
Apart from the policies, regulation is equally non-uniform. Save for the fact that all the
Member States now have functional regulators, there is little beyond that which is
uniform. The focus for individual regulators also seems to differ, in the absence of a
concerted effort to harmonize the regulatory frameworks. The following are examples
of the divergences:
Licensing: Tanzania pioneered the converged licensing, supporting triple-play, i.e.
telecommunication, IT and broadcasting.23] In Uganda, the emphasis is on infrastructure
licensing [24], the objective is to open infrastructure to full competition. Kenya, on the
other hand, is in the process of shifting its licensing regime to a unified licensing
framework and market structure.[25] However, the focus has been at the service level,
with some of the segments being: international gateway, mobile communication, data
operator’s license, ISP, etc.[26] Rwanda’s regulator issues individual and standard
telecommunication while Burundi issues only one type of licence, the commercial
services licence which corresponds to a basic telecommunication licence. The award
criteria for licences and the ultimate responsibilities differ in each of EAC Member
States. There are also different local equity ownership requirements for license-holders,
ranging from zero local equity ownership in Uganda to a 35% requirement in Tanzania.
Further, relevant ministries and regulators have different levels of responsibility for
licensing regulation.
Key
Legal
and
Regulatory
Findings:
Available
at:
http://www.eac.int/infrastructure/index.php?option=com_docman&Itemid=146
[24] As opposed to “service licensing,” An applicant can be granted both or either license.
[25] See ‘Implementation of a Unified Licensing Framework and New Market Structure’ published by the CCK in May
2008
[26] See footnote 23 above.
[23]
14
Regulation of tariffs: various national tariffs regulatory frameworks have various
competing issues. Some Member States’ regulatory frameworks lean towards selfregulation while others provide for strict regulation by the national regulators in the
five Member States. Tanzania, Uganda and Rwanda to some extent seem to lean toward
self-regulation whereas Kenya and Burundi take the opposite approach of strict
regulation.
From the foregoing therefore, it is evident that just as there are discrepancies in policies,
so are they regulation. Currently, there does not seem to be any major effort to
harmonize the respective regulatory frameworks. Perhaps the two areas where there is
most uniformity are firstly with interconnection and sharing of facilities where most
national legislations refer to the principle of non-discrimination. Secondly, the fact that
Member States have provisions for universal service access.
3.4.
Convergence of the ICT sector in the EAC
EAC’s ICT industry, as a whole, is undergoing a potentially disruptive phase of
development. This is because there have been extensive technological changes in its
structure in recent years. These changes are the driving force behind the emergence of
convergence. Generally, the term convergence has been used to describe almost any
trend representing the ever closer contact between the telecommunications, IT and
broadcasting industry. The term is most commonly expressed as:
· The ability of different network platforms to carry essentially similar kinds of services,
or
· The coming together of consumer devices such as the telephone, television and
personal computer. [27]
It occurs when multiple products come together to form one product with the
advantages of all of them – e.g. your computer as purveyor of voice as well as text and
graphics; cell phones that provide text and graphics as well as voice. This is otherwise
referred to as technological convergence. [28] Convergence has seen major changes in the
market structure including the following:
The European Commission’s Green Paper on the convergence of the telecommunications, media and information
technology sectors and the implications for regulation, COM (97) 623, Brussels, December 1997.
[28]European Commission, Green Paper on the Convergence of the Telecommunications, Media and Information
Technology Sectors, and the Implications for Regulation. Towards an Information Society Approach. COM (97) 623,
Brussels:
European
Commission,
1997,
(www
document)
URL
http://www.ictregulationtoolkit.org/en/Publication.1500.html]
[27]
15
 Entrance of new market services providers especially in the mobile market
providing services in most Member States:
 New services can now be transmitted over various networks. For instance,
telecommunication companies are doing content provision. As a result,
traditional telecommunication companies are directly competing with
broadcasting companies and the newly emerging IT providers. Telkom Kenya is
currently providing new services such as internet hosting, mobile services, VoIP
and other multimedia services. [29] Others are Uganda Telecom, [30] Tanzania
Telecommunication Company Limited [31] and Rwanda Tel. [32] Some IT
companies such as Swift Global Kenya Limited, [33] UUNet Kenya, [34] Access
Kenya, [35] Africa Online Uganda Limited, [36] and Africa Online Tanzania [37] etc.
are not only providing internet services but are also providing
telecommunication services. New promising applications have emerged such as
mobile-banking. For instance, there is M-PESA system by the Kenyan mobile
operator Safaricom. [38] Towards the end of 2013, M-PESA had around 17.5
million subscribers. [39] Zap Mobile Banking was launched in February 2009 by
Zain. [40]
 Regional mergers and acquisitions in the ICT sector in the EAC: For instance,
South African’s MTN recently acquired a 60% stake of UUNet; it was therefore
re-branded from UUNet to MTN Business Kenya. Access Kenya and Kenya Data
Networks have absorbed much of UUNet’s corporate business since 2008.41
Uganda’s InfoMail (IMUL) merged with the country’s second ISP, Starcom, to
form Infocom. [42] Libya’s Lap Green Networks acquired Rwanda's Rwandatel. It
See: http://www.telkom.co.ke/index.php?option=com_content&view=article&id=60&Itemid=95
See: http://www.utl.co.ug/
[31] See: http://www.ttcl.co.tz/
[32] See: http://www.rwandatel.rw/
[33] http://www.swiftglobal.co.ke/#
[34] http://www.ics.uunet.co.ke/index.php?option=com_frontpage&Itemid=1
[35] http://www.accesskenya.com/inner.asp?cat=prods
[36] http://www.africaonline.com/countries/ug/
[37] http://www.africaonline.com/countries/tz/
[38] See http://www.safaricom.co.ke/
[39] See http://wirelessfederation.com/news/15801-m-pesa-still-not-profitable-despite-high-growthrate-safaricomceo/ for a recent update on M-PESA figures.
[40] See: http://www.ke.zain.com/opco/#?lang=en
41
See
report
available
at:
http://www.standardmedia.co.ke/InsidePage.php?id=2000025563&cid=4&ttl=Mergers,%20acquisitions%20drive%2
0mega%20deals
[42] See: An African Pioneer Comes of Age: Evolution of Information and Communication Technologies (ICTs) in
Uganda
[29]
[30]
16
also owns a majority stake in Uganda Telecom (UTL). [43] Convergence Wireless
Networks (Convergence Wireless) acquired a 35% stake in WIA Company
Limited (WIA), of Tanzania in 16 November 2009. [44]
 Expansion of the ICT industry to the EAC regional level: Most service providers
are currently providing services in the EAC regionally as opposed to individual
Member States. This is due to the mergers, acquisitions and continuous
expansion of new services to other sectors.
3.5.
Implication of the inconsistencies to regulation
 Inconsistencies in regulation resulting from traditional separation
As the European Commission Green paper on convergence (1997) [45] identified, some
converging services are facing a regulatory vacuum. Others tend to fall under the
jurisdiction of two or more agencies, which leads to jurisdictional conflicts once they
start issuing their own rules. New services such as mobile-banking by the M-PESA,[46]
or Zap Mobile Banking,[47] have in the past caused major controversy with the bank
fraternity.[48] The banking industry’s concern has been that the mobile-banking
operators are enjoying privileges similar to those extended to banking institutions
despite not being covered by the same regulatory regime. Debate has been rife on who
should regulate the mobile-banking operators, whether it should be the central banks
and therefore regulated under the Banking Acts or the Communication Acts.
Fundamentally, the mobile operations are guided by the Communications
Commissions. Others include broadcasting over the internet. It is not clear if it should
be regulated as broadcasting or not regulated at all because they are computer based.
Inconsistencies also arise when pre-convergence classifications, such as cable and
See: http://www.cellular-news.com/story/26685.php
http://us-cdn.creamermedia.co.za/assets/articles/attachments/24554_convergence_partners__wia_invests_in_tanzania_-_16_nov_09.pdf
[45] European Commission (1997).Green paper on the convergence of the telecommunications, media and information
technology sectors, and the implications for regulation towards an information society approach Brussels: European
Commission. Accessed April 7, 2003: http://europa.eu.int/scadplus/leg/en/lvb/124165.htm.
[46] See http://www.safaricom.co.ke/
[47] See: http://www.ke.zain.com/opco/#?lang=en
[48] This according to a report by the Bankers Association in The East African (Nairobi) 12 October 2008 posted to the
web 13 October 2008
[43]
[44]
17
common carrier regulation, lead to similar services with differing regulatory
treatments.[49]
 Regulatory arbitrage
As stated above, new services sometimes face more than one regulatory regime in the
various Member States. Not only are there multiple regulatory bodies, but also
conflicting regulations and licensing authorities. As a result, the regional market players
have tended to select the regulatory frameworks in the various Member States that
advance their interest the most (otherwise referred to as forum shopping). This trend
has been made even easier with the establishment of the EAC Common Market
 Uncertainty
Due to rapidly changing technology, regulators tend to issue rules for the problems
faced today, these causes problems when new technologies become available. Because
of this continuous innovation, regulators need to find regulatory frameworks that allow
them to better cope with uncertainty.
4. THE EXPERIENCE OF THE EUROPEAN UNION (EU)
4.1. Motivation of the EU as a case study
The EU’s converged legislative framework is often considered a best practice model.
The ITU considers the EU’s Electronic communication regulatory framework (the
ECRF) to be the ‘paradigm legislation aimed at addressing convergence and its
challenges’.50 Commentators have called for the application of the EU model in
Australia51 and the US.52 The EU’s the ECRF came into force in July 2003 and forms the
basis for all national telecommunications laws in EU member states. Since 2003, further
changes have been made to the EU’s regulatory framework. In 2009, a
telecommunications reform package was passed that makes a number of changes to the
Garcia-Murillo, M. & MacInnes, I. (2001). FCC organizational structure and regulatory convergence.
Telecommunications Policy, 25:6, 431452
50 ITU/InfoDev, ICT Regulation Toolkit, Module 6 ‘Legal and Institutional Framework’, Chapter 4 ‘Impact of
Convergence’, section 4.5 ‘Case Studies of Converged Legislation’.
51 See Niloufer Selvadurai, ‘The Creation of the Australian Communications and Media Authority and the next
necessary step forward’, 26 Adelaide Law Review (2005) 271 and ‘Regulating for the future - accommodating the effects
of convergence’, 13 Trade Practices Law Journal 20.
52 See Frieden, Rob, ‘Adjusting the Horizontal and Vertical in Telecommunications Regulation: A Comparison of the
Traditional and a New Layered Approach’, 55(2) Federal Communications Law Journal (2003) 208.
[49]
18
ECRF.53 It establishes a new regulatory agency, the Body of European Regulators for
Electronic Communications (BEREC), to ensure a consistent and coordinated approach
to regulation. The EU has therefore considerable experience with the opportunities and
drawbacks of particular regulatory scenarios.
The EU framework for the ICT sector is built on concepts and principles such as:
technology neutrality, the shift from vertical to horizontal regulation, the expansion of
the definition of telecommunications networks and services to cover all ECNS and
graduated regulation (as a possible answer to differentiated regulatory needs).
Further, it focuses on regulatory
principles
such as transparency, flexibility,
regional harmonisation, proportionality and legal certainty.54 EAC should consider a
focus on these concepts and principles in its regional reforms.
The focus is on these regulatory concepts and/ or principles since these are generally
recognised as the basic regulatory concepts and principles underpinning
reforms of ICT regulatory frameworks worldwide.55 They are therefore accepted as
effective and can work in any context irrespective of the geopolitical, social or
cultural borders. The essence is to contextualize these basic regulatory concepts and
principles into the local cultural, social-economic, and political conditions of the EAC.
These make them concise, workable, and effective and fit for the EAC circumstances.
Further motivation for the EU as a case study is that the Institutional frameworks of
both the EU and the EAC are similar at first sight just like their powers under the
respective treaties establishing them. The EU's institutional framework includes the
EU Parliament, the Council, the Commission and the Court of justice and Court
of First Instance.56 The EAC's Summit is comparable to the EU's European Council,
because both are their respective Union’s supreme organ. Like the European Council,
whose presidency is rotated every six months among its constituent member countries,
the EAC's Summit is rotated annually among the Partner States. Key institutions of the
EAC and the EU that share similar names are the Commission, the Court of Justice, and
the Parliament.
‘Agreement on EU Telecoms Reform paces way for stronger consumer rights, an open internet, a single European
telecoms market and high-speed internet connections for all citizens’, press release, 5 November 2009,
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/09/491.
54
Current
legislation
available
at:
http:/Iec.europa.eu/information_society/policy
Iecomm/1ibrary/legislation/index_en.htm
55 Ilse Marthe van der Haar 2008: The principle of Network Technology Neutrality within the framework of EC
Network regulation, Part 1, Chapter 2
56 Article 7 of the Treaty establishing the European Union (hereinafter the TFEU).
53
19
Another area of similarities is with regard to their goals. Although they arrived at their
respective goals from different experiences, the aspirations are similar. Both
Communities, for example, hope to use regional integration to promote peace, stimulate
economic growth, achieve solidarity for their peoples, and strengthen their international
profile/ stature. These are provided for in Article 2 of the TFEU and chapter 2 of the
EAC Treaty.
The principle of direct applicability of community law is similar in both the EU and the
EAC. The treaties for both Communities provide for direct applicability of community
law.57 The EC Treaty, Article 249 provides that 'a regulation shall have general
application. It shall be binding in its entirety and directly applicable in all Member
States.' An almost identical provision is contained in Article 8 of the EAC treaty. Both
Communities' Regulations are also subject to direct effect and immediate applicability.
They are incapable of being conditional. As provided for under Article 249 of the EC
Treaty, Communities' Decisions "are binding in their entirety on the party to whom they
are addressed”. Both Communities' directives could be directly effective insofar as the
provisions define rights which individuals are able to assert against the State."58
Member states of the EAC have enacted legislation giving 'the force of law' to 'the
provisions of any Act of the Community ... from the date of the publication of the Act
in the Gazette'.59 The EAC Treaty provides for the principle of supremacy of the laws of
the community.60 This ensures that conflicts between community law and national law
are resolved in favour of the former. This defines the place of community law in
national legal systems.
This principle of direct applicability allows both Communities' laws to become part of
national legal systems without intervening national measures which aim at
transforming the community law into a national one i.e. both Communities' laws do
not need measures such as parliamentary resolution, an act of parliament, or an
executive act such as cabinet approval.
See EC Treaty, Article 249, and EAC Treaty, Article 8
See Grad v Finanzamt Traunstein, (Case 9/70) [1970] ECR 825
59 See for instance Kenya: Treaty for the Establishment of East African Community Act 2000, Article 8(1); Uganda:
East African Community Act 2002; and Tanzania: Treaty for the Establishment of East African Community Act 2001.
60 See EAC Treaty, Article 8{4).
57
58
20
4.2.
The EU’s electronic communications regulatory framework
(ECRF)
As mentioned above, the EU’s the ECRF came into force in July 2003 and forms the
basis for all national telecommunications laws in EU member states. It sets overarching
rules for the regulation of electronic communications services and networks, which
member states are required to transpose into domestic law. The UK, Finland and the
other Nordic states were the first to implement changes transposing the 2003 EU
regulatory framework to domestic legislation. The European Commission (EC) has
reported that all EU nations have transposed the ECRF into domestic law.
While the ECRF applies to electronic communications services and networks, it does not
apply to the content that travels over those services and networks. Content is regulated
at the national level, with broad guidance at the EU level in the form of the AudioVisual Media Services Directive (AVMS Directive). However, as the EC and
commentators have noted, there are elements of the ECRF that do impact on content.
ECRF comprises the following five directives, which apply to all communications
infrastructures and associated services:
The Framework Directive—applies to all electronic communications networks and
services, including fixed-line telephony, mobile and broadband communications,
and cable and satellite television. It establishes the structural and procedural
elements of the EU regulatory framework. These include requirements for the
establishment and remit of national regulatory authorities (NRAs) and processes for
NRAs to define relevant national competition markets and analyse whether there are
any operators with significant market power (SMP) in that market. It also sets out
rules for granting resources such as numbering.
The Authorisation Directive—harmonises and simplifies authorisation rules and
conditions throughout the EU, replacing individual licences with a general
authorisation scheme.
The Access Directive—applies to all forms of communications networks carrying publicly
available communications services and covers the relations between electronic
communications providers on a wholesale basis. It establishes rights and obligations
for operators and undertakings seeking interconnection and/or access to their
networks. Overall, it means that member states must ensure there are no restrictions
preventing negotiations from taking place between operators about the technical and
commercial arrangements for access and interconnection.
21
The Universal Service Directive—concerns the relationship between electronic
communications providers and end-users. It requires the provision of directory
enquiry services and directories, public payphones and access for users with
disabilities. The directive also contains provisions on universal service obligations,
such as quality of service, as well as for regulatory control of undertakings with
significant retail market power, and a number of users’ interests and rights. NRAs
may impose a number of obligations on operators with SMP—these can include
imposing ‘must carry’ obligations on the transmission of specified radio and
television broadcast channels and services, where the relevant network serves as the
primary means of access to the services for a large number of users.
The Privacy and Electronic Communications Directive—concerns the processing of personal
data relating to the delivery of communications services.
The need to respond to convergence was a significant driver for the enactment of the
ECRF. The ECRF also responded to an urgent concern within the EU to harmonise
licence/authorisations conditions; these varied across the EU from onerous (for
example, France, Belgium) to light (Sweden, Denmark, Finland).61 As the EC has stated,
the ECRF aimed ‘to provide a coherent, reliable and flexible approach to the regulation
of electronic communication networks and services in fast moving markets’ and ‘to
provide a lighter regulatory touch where markets have become more competitive yet
ensure that a minimum of services are available to all users at an affordable price and
that the basic rights of consumers continue to be protected.’62
Since 2003, further changes have been made to the EU’s regulatory framework. In 2009,
a telecommunications reform package was passed that makes a number of changes to
the ECRF.63 It establishes a new regulatory agency, the Body of European Regulators for
Electronic Communications (BEREC), to ensure a consistent and coordinated approach
to regulation.64 While the enactment of the ECRF in 2003 represented significant change,
changes are continuing, and the framework continues to evolve. There are currently
ongoing discussions on the EC regulatory proposal to complete the telecoms single
Humphreys and Simpson, Globalization, Convergence and European Telecommunications Regulation, p. 99.
‘New
Regulatory
Framework’,
European
Commission
website
at
http://ec.europa.eu/information_society/topics/telecoms/regulatory/new_rf/text_en.htm
63 ‘Agreement on EU Telecoms Reform paces way for stronger consumer rights, an open internet, a single European
telecoms market and high-speed internet connections for all citizens’, press release, 5 November 2009,
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/09/491.
64 Detailed overview available at: Laurent Garzaniti: Telecommunications, Broadcasting and the Internet
EU Competition Law and Regulation
61
62
22
market and deliver a Connected Continent.65 The overarching aim is to build a
connected, competitive continent. The proposal includes the following:
 Simplification and reduction of regulation for companies
 More coordination of spectrum allocation – so that we see more wireless
broadband, more 4G, and the emergence of pan-EU mobile companies with
integrated networks
 Standardised wholesale products: encourages more competition between more
companies
 Protection of Open internet: guarantees for net neutrality, innovation and
consumer rights.
 Pushing roaming premiums out of the market: a carrot and stick approach to say
goodbye to roaming premiums by 2016 or earlier.
 Consumer protection: plain language contracts, with more comparable
information, and greater rights to switch provider or contract.
4.3.
Lessons from the experience of the EU
The lessons learned from the EU include inter alia that the regulatory framework
represents a bold and innovative response to the challenges of convergence and
harmonization. The following is a summary of general lessons drawn from the
assessment of the ECRF:
1. Ensure technological neutrality of all laws, and envisage introducing a
mandatory legislative "neutrality test".
The experience is that the ICT sector evolves too quickly for legislators to catch up.
Laws that are drafted with particular technologies in mind may therefore present a
legal hurdle for new technologies.
2. Adopt converged legal rules.
Due to the increasing convergence of the ICT sector, it is no longer appropriate to
maintain separate laws for the distinct traditional sector. Such separation undermines
the core value of the predictability of the legal rules.
3. Envisage maximum harmonization when drafting new regulatory framework
that impact the information society.
65
Overview available at: http://europa.eu/rapid/press-release_MEMO-13-779_en.htm
23
While the use of uniform and clear criteria for determining the applicable law is
recommended, a certain level of complexity will remain, due to the inherently
borderless nature of the information society. Maximum harmonization can significantly
help to reduce the importance of the question which national law applies.
4. Amend the current EAC legal instruments on jurisdiction and applicable law to
include criteria that are suitable for today's complex information society
services.
These legal instruments currently mainly rely on geographical criteria (such as the place
of delivery or the country where the damage occurs), which are unsuitable for
information society services for which the geographical location is irrelevant or difficult
to determine.
With regard to the ongoing reform on course to a single market for electronic
communication to achieve a connected continent proposal:
The proposal complements the existing legislation that would make a reality of two key
EU Treaty principles: the freedom to provide and to consumer (digital) services
wherever one is in the EU. The proposal does this by pushing the telecoms sector fully
into the internet age and removing bottlenecks and barriers so Europe’s 28 national
telecoms markets become a single market (building on 2009 ECRF, and more than 26
years of work to create that single market).66
The following table is a summary of the main elements of the EC proposal that consist
essential lessons for the EAC of how the EU intends to provide solutions to the
persisting problems:
Problem
Solution
Operators wanting to go cross-border One-stop shop: operators operating in
face red tape (both hurdles and burdens) more than one Member State will benefit
from a single EU authorization requiring
only
one
notification,
thereby
establishing one reference regulator
(NRA)
for
authorization
issues
(including withdrawal/suspension of
Proposal available at: http://ec.europa.eu/digital-agenda/en/connected-continent-single-telecom-market-growthjobs
66
24
the authorization)
Inconsistent obligations for operators
operating in more than one Member
State
 One-stop shop for authorization
will provide consistency for
companies
 Commission will have the power
to require national regulators to
withdraw
draft
regulatory
proposals which are incompatible
with EU law (thus prevent
regulatory inconsistency)
 Decisions of national regulators
must promote investment and
consider
all
competitive
constraints (including from OTTs)
– which will be crucial for
establishing a level playing field
with OTTs
 The criteria that the Commission
and national regulators apply for
selecting markets that should or
should not be regulated are
strengthened by the inclusion of
the well-established “3 criteria”
test in EU law. This prevents overregulation of competitive markets.
 Full harmonization of consumer
protection rules will remove the
need for customizing services for
every
territory,
and
give
consumers extra certainty
Inconsistent fixed wholesale access for Standardized fixed access products
service providers operating in more than (Virtual Unbundled Local Access, bit
stream access and Ethernet leased lines)
one Member State
and Assured Quality Services for
European electronic communications
providers) will facilitate market entry
25
and provision of cross-border services
Uncoordinated
spectrum
access
conditions for mobile operators make it
more difficult to plan long-term
investments, operate cross-border and
eventually gain scale. Today vital
wireless broadband spectrum is released
at different moments in the EU, subject
to different timing considerations and
under different conditions
 Common regulatory principles for
spectrum
authorization
procedures
for
wireless
broadband to support economies
of scale
 Common best practice criteria for
defining the availability and
conditions of spectrum for
wireless broadband
 Harmonization of timing and
duration of spectrum assignments
for wireless broadband
 Commission's power to organize
peer review among Member
States and to review national
assignment procedures
No EU-wide consumer rules (hurts and
 Full harmonization of consumer
protection (not only minimums or
confuses both consumer and operator)
options as in current Universal
Service Directive)
 End misleading advertising of
Internet speeds (you will get what
you pay for).
 New
rights
to
transparent
information & easy contract
switching (both telecoms + net)
Roaming is an anomaly in a Single Strong incentives for operators to
provide roaming at domestic price levels
Market
by no later than 2016 throughout the EU.
Charges for incoming roaming calls will
end in July 2014.
26
5. RECOMMENDATIONS
This section demonstrates the potential gains from regionalized regulatory frameworks
in the EAC as inspired by the EU. To this end, the section:
I.
II.
discusses how EAC’s regional cooperation can overcome national limits in
technical expertise, enhance the capacity of nations credibly to commit to stable
regulatory policy, and ultimately facilitate infrastructure investment in the
region;
Describes substantive elements of a harmonized regional regulatory policy that
can deliver immediate performance benefits.
5.1.
Regionalizing EAC regulatory framework
Regionalized reform is attractive because it contributes to the efficiency goals of policy
reform while sidestepping some of the political obstacles to effective reform.
Infrastructure reform, when implemented in each Member State independently, can
become bogged down in a quest for national advantage that undermines development
for everyone. A useful analogy is the process of setting tariffs. When each Member State
independently sets each tariff separately, the outcome is likely to be tariffs that are
higher than the tariffs that would be negotiated bilaterally as part of a comprehensive
trade agreement. The reason is that debating tariffs one product at a time maximizes the
effect of the tendency for organized interests with a direct stake in a policy to be unduly
influential. Another example is termination charges for international calls, in which
many Member States set exorbitant rates for the purposes of implicitly taxing foreigners
to pay for part of the domestic network. Of course, if all Member States follow the
policy, the primary effect is to suppress regional communications, along with
opportunities for further economic integration that require inexpensive
communications.
Regionalization of legislative and regulatory policy has important political benefits.
Within a single Member State, infrastructure reform, especially when debated one issue
at a time, is often blocked by well-organized interest groups. But if reform becomes part
of a broader EAC regional policy that covers a range of issues, all stakeholders will
likely participate—making it more difficult for a single group to block it. Political
interference is more difficult and costly when regulatory policy is part of a regional
agreement, or when the regulatory body is a multinational agency.
27
Some Member States like Burundi that lack formal institutions and technical expertise
have still another reason to regionalize regulatory reform. A pragmatic response to
limited national regulatory capacity is to increase policy and regulatory coordination
and cooperation—and ultimately to create regional (multinational) regulatory
authorities. These bodies also can be a means for disseminating information and
expertise from other Member State that are further along the reform path to those that
are just beginning their reform process.
Moreover, regional regulatory cooperation and the eventual creation of a regional
regulatory authority are more feasible in the EAC since the Community has already
made substantial progress on regional economic integration including the establishment
of the common market.
Obtaining consensus from all governments in the EAC for a regional regulator is not
easy, due to different attitudes, approaches and commitments to reform, as well as
concerns about national sovereignty. Effective international regulatory policy requires
considerable cooperation and trust between Member States, which can be built through
an assembly of regulators from the Member State. Consensus for a regional regulatory
body could increase as Member States reform, and the gains from regional policy
coordination and trade become more apparent.
5.2.
Harmonization of Regulatory Frameworks in EAC
5.2.1. Spectrum of Harmonization Models
Regional harmonization is not a binary variable. It entails a wide range of policy
options that lie between complete national autonomy and full integration (as
demonstrated in the figure below). At one extreme, the Member States surrender their
sovereignty on regulatory and other policy decisions to a regional regulatory authority
(RRA). At the other extreme, the national regulatory authorities (NRAs) retain full
jurisdiction over all areas of regulatory policy and decision-making, with the RRA’s role
limited to disseminating information, issuing non-binding guidelines, and acting as a
source of centralized technical expertise.
28
Source: Deloitte Touche Tohmatsu (2003).
Centralized Harmonization
Under full, centralized harmonization, the RRA has the statutory authority to make
policy determinations that are binding on the Member States. Moreover the RRA has
the legal power and framework to enforce those decisions and to impose penalties in
the event of non-compliance by the member states. Thus, the RRA would have the
authority to:
 Regulate end-user prices and impose quality of service obligations on all licensed
telecommunications operators in the Community, with penalties attached for
non-compliance
 Regulate the terms and conditions of interconnection and access to bottleneck
telecommunications facilities, and intervene to resolve interconnection disputes
 Manage and allocate all aspects of the frequency spectrum in the EAC territory
 Issue licenses for all telecommunications services throughout the Community.
 Pre-empt local and national rules regarding rights of way
 Collect and disburse funds to support universal service and other social goals in
the telecommunications sector
 Represent the community in international organizations
Under central harmonization the NRAs would have no independent policy-making
authority. Instead, their role would be limited to providing an input into the
consultative process of the RRA, supply data on national market conditions, and advice
on implementation issues.
29
The centralized harmonization model treats the entire EAC region as a single economic
space and as such it offers the greatest opportunity to exploit regional economies of
scale in the telecommunications industry. It also holds the promise of lowering the cost
of doing business in the region by reducing the administrative barriers and regulatory
costs of entry (e.g. by facilitating access to the necessary licenses and permits through
“one-stop shopping”). The creation of supra-national regulatory authority raises, on the
other hand, proper concerns about accountability and the need for checks and balances
on the powers of such authority.
Separated Jurisdiction
Under separated jurisdiction, the RRA is charged with regulating telecommunications
transactions between the member states and represent the region in international
forums while the NRAs have full regulatory authority over telecommunications
transactions and services that do not cross national boundaries.
Centralized Policy/National Implementation
Under this model, the RRA issues binding regulatory and other policy directives which
are then adopted by the member states and converted into national law. The NRAs
have the full responsibility to implement and enforce these directives. Thus, each
Member State retains its sovereignty over regulatory matters but it is obligated to
implement its national policies in accordance with the overall policy recommendations
and directives issued by the center.
In this model, the RRA acts as a policy-making body that establishes regional policy
through a consultative process. It is very similar to the one adopted by the EU where
the Commission formulates policy and issues directives that have the force of European
law. But it is the responsibility of the Member States to adopt the directives into
national laws and regulations and thus to establish and implement national regulation.
This model treats the entire EAC region as a single economic space while at the same
time it recognizes the importance of national sovereignty and the reality of significant
cross Member States differences in institutional endowments and legal structures,
traditions and processes. The practical outcome of this compromise between
maintaining national sovereignty and pursuing regional policy harmonization is likely
to be the uneven adoption and implementation by the member states of policies
developed by the regional authority. Inevitably, some member states will be slow and
reluctant to implement the RRA directives into national laws and regulations.
30
Decentralized Harmonization
Under this model, the RRA acts as a central source of technical expertise, undertakes
regional and benchmarking policy studies, facilitates information exchange, publishes
reference papers that summarize the emerging international experience on important
policy issues, and organizes regional training programs. The RRA has no regulatory
authority but it can issue non-binding regulatory and other policy guidelines. While
this model, at least in the early stages of regional integration, represents the most
realistic organizational option, it offers very little assurance that uniform and consistent
regulatory policies will be effectively implemented across the EAC. Thus, trade
distortions created by differences in regulatory efficiency among the EAC Member
States are likely to persist.
Based on that foregoing, the recommendation is to establish independent regulatory
bodies along the lines of The Body of European Regulators for Electronic
Communications (BEREC) of the EU. A regional regulatory authority could play a very
important role in reducing the regional risk of regulatory failure due to the lack of
technical and economic expertise in critical areas by: encouraging the design of effective
and practical regulatory regimes in the Member States; identifying less sophisticated
regulatory instruments that do not impose significant informational and analytical
requirements on the NRAs; undertaking benchmarking and other studies on important
areas of policy and disseminating the findings of those studies through the publication
of reference papers and technical guidelines; designing training programs for the staffs
of the NRAs.
Thus, such a body should carry out the following tasks:
 Identify the substantive regulatory issues that are likely to arise in the Member
States that are implementing restructuring and privatization programs in
telecommunications (e.g. the pricing of access to bottleneck network facilities,
reducing rigidities and inefficiencies in retail tariff structures, competitively
neutral mechanisms for funding universal service mandates), and suggest
strategies for addressing these issues
 Deepen the regional understanding of how to design effective and practical
regulatory mechanisms in the face of scarce technical and economic expertise
 Evaluate the efficacy of the new regulatory principles that have emerged in the
last decade stipulating a preference for competition and reliance on market-like
solutions and assess their applicability to the unique circumstances of the EAC
Member States-- in particular the consequences of unstable macroeconomic
31
conditions and imperfectly developed capital markets for the pace and extent of
appropriate regulatory decontrol
 Identify options for the structural reorganization of industries that reduce the
need for regulatory oversight
 Develop more precise criteria distinguishing between cases where regulatory
intervention is required and those where it is not
 Develop models for optimal allocation of scarce regulatory resources among
firms and sectors with different sizes, technologies, information asymmetries,
and political constraints
 Identify appropriate, perhaps less sophisticated, tools of intervention better
suited to regulators in the EAC region
 Identify the fundamental principles that must be articulated publicly by the
NRAs as the basis for their policy analysis and regulatory decisions—e.g.,
commitment to the financial interests of investors at the baseline level established
by the terms of privatization; reliance on the workings of the market wherever
there is or could be reasonably effective competition; weigh the cost of rules
against the benefits; allow open access to bottlenecks on terms that reflect
competitive parity; assure service quality and price levels that are consistent with
the competitive standard; provision of economically efficient signals and
incentives to final consumers, to suppliers of complementary and substitute
services, to upstream suppliers, and to investors.
There are a number of policy and regulatory safeguards that would create an enabling
regional environment for the success of the cross-border initiatives. They include the
following:
 Harmonize international gateway licensing procedures to help overcome
‘artificial’ barriers within the EAC region to flows of intra-regional traffic.
 EAC Intra-Regional Interconnection Service: EAC Member States need crossborder interconnection agreements between States to allow traffic flow.
 International termination charges: The effect of implementing a transit service
within EAC is that traffic from an operator in one Member State can flow to
another uninhibited by tariffs or licensing barriers.
6. CONCLUSION
The paper has demonstrated that with the establishment of the common market in the
EAC in 2010, most telecommunication service providers are venturing into regional
operations. Currently, there is a lack of a regionalized regulatory framework and
32
therefore regulation remains at the Member States level. There various divergences
from the national policies, regulation to institutional settings. Therefore, market players
are faced with various dissimilar regulatory requirements in the various Member States.
The experience of the EU has been studied as an example from which the EAC should
draw lessons from. The European experience of regulating telecommunications (as
with the European experience of regulating any other sector) is as much about
establishing a common market, as it is about controlling the market power of ex
incumbent and powerful newcomer operators and service providers, as it is about
curtailing the sometimes diverging interests of individual member states.
The EU has achieved and continues to seek to achieve these objectives with
adoption of a variety of regulatory instruments. With these instruments,
European institutions have sought to maintain flexibility and consistency
approach, with varying but overall satisfactory results, especially in light of
differences amongst the 28 Member States.
the
the
of
the
Further experience of the EU is that effective regulation needs to respond to
technological
innovation. The ECRF continues to struggle with the problem of
harmonization.
All in all, the examination of ECRF has provided a solid background for the ongoing
research on the future regulatory models for the EAC. This experience provides
ideas and insights that could inform discussions about the way in which the
EAC should approach its reform of the ICT legislation and regulation in this era of
convergence and regionalization.
33