Telcos to pay users for outages in law change

Mobile phone operators, including Safaricom #ticker:SCOM, Airtel and Telkom Kenya, will compensate businesses and customers when network outages knock out voice, data and text services under new draft regulations.

The draft regulations, which were published yesterday for public comment, seek to compel the telecommunications providers to either pay or offer credit equivalent to the time mobile phone users are without voice and SMS services.

The new rules are aimed at shielding millions of mobile phone clients from poor services related to network outages, including lack of Internet connections.

The regulator is permitted by law to sanction any telecommunications company that inconveniences customers through service interruptions as a result of omission on its part.

An operator found in breach risks a fine of up to 0.2 percent of its revenues, which could run into hundreds of millions.

Now, the Communications Authority of Kenya (CA) wants to include compensation to clients for mobile phone outages.

“A licensee shall develop and implement an outage credit policy in situations where service is unavailable due to system failure and not as a result of scheduled and publicised maintenance, emergency or natural disaster,” say the draft rules.

“(The policy) will compensate subscribers or issue credit equivalent to usage over similar period that outage lasted (and) compensate customers for each day that service has been unavailable.”

Compensation will be based on how much the telecoms operator charges per minute for calls and data.

Kenya last year had 55.2 million mobile phone subscribers who made 58.78 billion minutes of calls, up from 39.19 billion in 2015.

Scheduled outages and those caused by factors beyond the control of an operator, technically known as force majeure, usually do not attract sanctions.

Kenya seeks to join countries in the West where users of telecom services are compensated in the form of a credit on their bill after network outages.

In some European countries customers are able to claim for any out-of-pocket expenses that resulted from being without phone services. This must be a genuine loss which can be proved with evidence.

In Kenya, Safaricom and Airtel have faced regulatory investigations after outages left their customers without services for hours.

The law provides for fines should the outage be deemed to be the product of omissions by firms.

In 2017, Airtel was fined Sh26.6 million by the CA for failing to meet the set standards on call quality in a period that saw rival Safaricom slapped with a hefty penalty of Sh270 million.

Telkom Kenya paid Sh14.9 million for quality breaches during the same period.

Last year, Airtel Kenya restored its services after 27 hours of downtime, which affected its data, calling and texting services.

Safaricom’s mobile money platform M-Pesa was also hit with a downtime, inconveniencing customers who rely on it for payment transactions.

The outage saw ICT Cabinet Secretary Joe Mucheru direct the CA to carry out an investigation and issue a report.

M-Pesa handled a total of 649.3 million transactions valued at Sh1.7 trillion in three months to June 2019, showing its growing significance to the economy.

Telecommunications service outages have also been viewed as a threat to the economy, especially for critical services such as money transfers.

A 2016 Treasury report warned that a collapse of the M-Pesa service could, for instance, cause widespread disruption in the economy.

The CA has been considering imposing steeper penalties on operators that offer poor quality voice, data and messaging services.

In 2018, it unveiled a new monitoring system, procured at a cost of Sh400 million, that was to track network performance and customer experience.

The new system was procured from French firm Rohde Schwarz through its local partner Broadband Communication Networks.

Before the adoption of the 0.2 percent of gross revenue fine, firms were required to pay a flat rate of Sh500,000, which the communications regulator at the time deemed too lenient.