This document discusses competition regulation in the communications sector in Kenya. It explains that regulation aims to ensure a level playing field for all players, and covers competition, pricing/tariffs, and market analysis. Economic regulation addresses market failures and pursues efficiencies. The regulator enhances competition by licensing new operators, removing barriers to entry, and addressing anti-competitive practices. It also designates dominant players and curbs anti-competitive behavior with ex-ante and ex-post measures like tariff regulation. Tariffs are set to maximize profits, encourage investment, affordability, and internalize externalities. Infrastructure sharing limits duplication and gears investment toward underserved areas. The regulator identifies significant market power and imposes obligations. Outcomes of effective

1. Managing
Competition
Competition, Tariffs and Market Analysis
Communications Authority of Kenya
By Eva Mwasho

2. Why Manage Competition?
To ensure a level playing ground for all
players in the sector
What Regulation?
Competition;
Pricing/tariffs;
Market Analysis/R&D
Why Economic Regulation?
Market Failures
Pursuit of market efficiencies

3. Enhancing Competition
Licensing new operators
Identification & Removal
of entry barriers in the
market; ie MVNO’s
Addressing practices
that are anti-competitive
Regulation of natural
monopoly segments
Designation and Regulation of
Dominant Market Players (DMP)

4. Curbing Anticompetitive Behavior
Ex-ante: before
market behaviour is
allowed to occur
e.g tariff reg
Ex-post: remedy
after an
anticompetitive
action e.g penalties

5. Tariff Regulation
Optimum tariff setting ensures:
Maximized profits for the operator, encourages appropriate levels of investment and
reflects costs
Appropriate level of consumption-affordability to consumers
Externalities internalized
In competitive markets,
efficient prices are
determined by the forces
of demand and supply-
maximizes welfare
Source: kiplimochemirmir.wordpress.com

6. …Tariff Regulation
In non-competitive markets,
prices are determined by the
Authority e.g wholesale
tariffs (termination rates)
Source: dsxmedia.com
In line with economic efficiency principles and interconnection rates are based on the
economic costs of providing such interconnection services
Done through cost study and issuing of determination to the industry. E.g Determination
2010 MTR contributed to reduction in tariffs

7. Promotion Regulation
The general rule :
Operators should ensure that all promotion and
special offers are not discriminatory or anti-
competitive.
Also promoters not allowed to overstate the
consumers’ chances of winning prizes or gaining
from the promotion;

8. Infrastructure Sharing
It is common practise in nascent
Communication markets for operators
to capitalize on expansive network
infrastructure in order to gain a
competitive edge
Building and operating
communication infrastructure is a
significant cost(sunk) for operators
Source: aurecongroup.com

9. …Infrastructure Sharing
Limits duplication
gears investment
toward underserved
areas
product innovation
improved customer
service
Competitors are becoming partners in order to lower
their increasing investments
Source: biztechafrica.com

10. Significant Market Power (SMP)
Basic steps
taken when
identifying
SMP
1. Defining Relevant Markets in
terms product/services, customer
groups, retail/wholesale and
geographic/route
2. Analyzing each Relevant
Market, to determine
whether any providers have
SMP
3. Issue decisions as to
providers having SMP in a
Relevant Market
4. Imposing regulatory
obligations on those
providers identified as
having SMP

11. Outcomes of Competition
Growth in
the
economy
Innovative
services,
competitive
prices and
more
production
Competitive
market

12. Conclusion
Well-function market based on the demand and
supply principles is hard to come by;
Regulatory intervention especially in developing and
emerging economies will continue being desirable
for sometimes;
Regulatory frameworks would need to be regularly
monitored and reviewed so as to ensure their
effectiveness and suitability with a view to
guaranteeing maximization of consumer welfare and
productivity efficiency.

13. Thank You!
info@ca.go.ke
www.ca.go.ke
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