Nairobi — Telkom Kenya Limited has been barred from offering Internet services to the end users.

An appeals board of the Communications Commission of Kenya on Friday evening ruled that only licensed Internet Service Providers could provide the service under strict regulation, in accordance with the Kenya Communication Act.

Telkom has been providing the service to end-users without proper CCK licensing for a long time under the Value Added Service licence, but the commission says that is illegal.

The board's decision was handed down in a ruling on a petition lodged by ISPs against Telkom in June this year. The ISPs had appealed against Telkom's continued provision of Internet services to end-users without having a licence to do so.

Telkom is only licensed to provide Internet backbone facilities and services by offering both uplink and downlink international connectivity to ISPs in the country through Jambonet.

It was also heard that by providing Internet service to end users bundled with infrastructure, Telkom has provided the service in an anticompetitive and unfair manner.

In the ruling, the Commission noted; "Guided by the provisions of the Kenya Communication Act and the sector policy the Commission in 1999, licensed Telkom to provide several services including the Internet node and backbone and VAS (Value Added Service). The VAS licence granted to Telkom provides rights to offer value added voice and data services defined as all telecommunication services not including basic service to the public, telex and telegraph services, either mobile or fixed and is authorized by this license to provide the services in Kenya."

Additionally, the Commission granted Telkom a licence to provide International Internet Backbone services.

The ISP's also claimed that Telkom had been providing Asymmetrical Digital Subscriber Line service illegally. ADSL is a technology that enhances the performance of the existing telephone line infrastructure by making it possible to simultaneously surf the Internet while at the same time using the same telephone line for other things.

Now, Telkom will not provide the ADSL service and the 944 national dial-up services in bundled form until a negotiated agreement between it and ISPs is arrived at.

Telkom has been tasked that when it discontinues the service, its must inform existing customers to facilitate migration to licensed ISPs within 14 days.

The regulator has also directed Telkom to establish a non-discriminatory cost-based and firm pricing policy that is sensitive to the needs and demands of consumers. It should give sufficient notice of any proposed price changes to the Commission and customers as stipulated in regulations.

Telkom's Jambonet licence limits the connection of the International Internet backbone to ISPs only. The Commission cited condition 4 that states: "International Data Gateway Links: The Licensee should make international data gateway access available to ISPs, on a first come-first served, non-discriminatory and tariff rate basis."

The condition also provides for the licensee to operate an ISP under a separate licence. "If Licensee offers Internet service to the public under an ISP license, the cost of the associated Internet Backbone Service shall be reflected in the ISP company's books at a rate no lower than the rate it charges to its most preferred ISP customers."

The Commission noted that Telkom applied for an ISP license in March 2000. In its response, CCK noted that Telkom had been exclusively granted an Internet Backbone system and service licence, and consequently could not offer similar services in competition with licensed ISPs.

Telkom then formed a subsidiary, Jambonet Telkom and applied to be licensed as an ISP in a letter dated October 2, 2001. The intention to license Jambonet Telkom was published in the Kenya Gazette of November 9, 2001. The notice received objections from the Telecommunication Service Providers of Kenya (TESPOK) based on the fact that Jambonet Telkom was 100 per cent owned subsidiary of Telkom. That made Telkom have exclusivity in the provision of Internet backbone services.

Subsequently, and in recogntition of objections received, Jambonet Telkom was granted an ISP licence in April 2002, with strict conditions to prevent cross subsidy, control monopolistic tendencies and maintain fair competition given that Telkom has monopoly and exclusivity in the provision of access infrastructure and international gateway.

On Friday, the Commission ruled that Telkom had contravened the licence conditions, the Commission said, "ADSL and dialup are Internet access infrastructure comparable to digital leased lines. It is the view of the Commission that the bundling of Internet access service services through the 944 dialup and ADSL services has resulted in cross-subsidization between the provision of the local loop infrastructure and the provision of Internet access to end users and has therefore distorted the Internet services market segment."