The Star (Nairobi)

10 September 2012

Kenya: Market Jitters Over Counterfeit Phones Switch-Off

THERE is a rare mix of panic, excitement and confusion in the mobile communications market ahead of the planned counterfeit handsets switch-off at the end of this month.

Millions of mobile phone users, the mobile operators, global device makers as well as local vendors are all worried about how they are likely to lose or gain if the Communication Commission of Kenya goes ahead with the plan.

Though the regulator first ordered mobile operators to switch off subscribers on counterfeit phones a year ago, it kept postponing the plan until the market took it as just another threat. But this time, it seems very serious with just about two weeks to go.

In the mix of all the plans are about 30 million consumers, who are more confused that prepared. Some do not even know they are on fake phones while others cant afford genuine one, at least not immediately.

Imagine you are relaxing at home when you get a text message from your service provider stating that your phone is a counterfeit and will be switched off in the next few weeks, what next?

An estimated three million (10 per cent) customers will not be able to use their handsets come October 1, the CCK warns.

But while the consumer wallows in disconnection confusion, it is business as usual- or unusual- for those in business.

The three million overnight demand have not gone unnoticed by the device manufacturers, with new offers popping all over.

Prominent manufacturers like Nokia, Samsung, Alcatel, who have been the greatest victims of the cheap counterfeits, are sensing a new lease of life with the new policy.

This time though, they are tactical to balance the needs and realities of Kenyans. They want more functionalities but low cost.

Take a case of Samsung, just fresh from launching the high-end Galaxy variety, they last week unveiled the counterfeits cushion phone for those who will be switched off. It has been cunningly dubbed 'Samsung Chief Hero' phone.

The timing of the Chief Hero could not be better since it has all that Kenyans were looking for in the counterfeits - dual-SIM phone, internet enabled, costs below Sh3,000 and on top, has Kiswahili language option, a 24 month warranty and even comes with free airtime. This way, they will not be fooled by Samsong or Sumsang, the company hopes.

Samsung Electronics East Africa Business Leader Robert Ngeru said: "The new internet enabled handset has been customised for local conditions to boost the uptake of genuine handsets and support CCK's anti counterfeit phones campaign".

Its main rival Nokia has also been popularising its Nokia Asha range with smartphone features for as low as Sh10,000 ahead of the CCK action.

Unluckily though, some genuine device makers may be on the wrong side of the whole counterfeits fight. For instance, there is a general misconception in Kenya (and globally) that all phones from China are counterfeits.

Huawei had to issue a statement last with, with CCK's backing, to defend its credibility in the market.

"As a global ICT leader serving 45 out of the top 50 global operators and a third of the world's population, Huawei adheres to the laws and regulations of the countries we operate in while meeting all the product requirements," said Wind Li, Huawei Kenya Representative Office CEO.

"Huawei has created a competitive edge by introducing original devices that ensure quality user experience at affordable costs for Kenyans at all levels," he added.

The company's portfolio in Kenya include Huawei IDEOS which broke the smartphones ownership barrier two years ago.

Huawei's Chinese counterparts like G-Tide, ZTE and Techno have also intensified their marketing efforts to grab a piece of the fresh demand.

"The commission wishes to state that China has globally recognised companies whose products and solutions are being used worldwide by top operators, and which meet CCK requirements in respect to quality and type approval" Francis Wangusi, Director General, CCK said.

Consumers can verify whether the handsets that they intend to buy are genuine by sending the International Mobile Equipment Identity (IMEI) of the handset via sms to 1555. The IMEI is the unique number used to identify original GSM devices.

CCK has since last year put together the IMEI query database in order to make it easy for consumers to verify their handsets.

The operators, who are also likely to suffer revenue loss when the fake phones go off are not taking the warning seated down.

Telkom Kenya recently launched the 'chagua original' offer where it is giving 60 per cent discounted price for handsets that, of course, come with its line.

The devices that form part of the 'chagua original' promotion range in prices from a ZTES309 for Sh599 down from the earlier price of Sh999 and the smart ZTE San Francisco retailing at Sh7,999 down from Sh9,999.

Safaricom is also running its own promotion that gives its subscribers a chance to trade in their accumulated Bonga points for genuine phones.

The vendors, especially those who have been dealing with fake handsets have also been put on the lookout. The Anti-counterfeit Agency as well as the police have vowed to go after them with some arrests expected.

John Akoten, a Director at ACA says it has recently caught over 1,000 counterfeit mobile phones and the cases are in the courts, with about 10 per cent concluded.

However, the efficiency of the agency in effectively combating counterfeits has been hampered by lack of sufficient resources.

"We have only one branch office in Mombasa with only two inspectors, but we do not have offices in all entry points. This has limited our effectiveness in combating counterfeiting," Akoten says.

This may mean that we may continue seeing the fake devices in the market despite the CCK action.

The regulator has laid emphasis on the partnerships with the relevant agencies such as the Kenya Revenue Authority, Kenya Bureau of Standards, Anti-Counterfiet Authority and the Kenya Police who have a more direct responsibility and presence at the ports of entry.

But as the regulator try to figure out how to best carry on with the plan while at the same time minimising the harm on individuals and protect businesses, the whole process has been criticised by some quarters.

Consumer Federation of Kenya secretary general Stephen Mutoro has complained: "At best, it is punitive on innocent consumers. At worst, a reflection of someone fighting a problem whose scope they have have no idea of."

Cofek however admits that the CCK is right in the fight against counterfeit phones on the strength of terrorism and other crimes.

In the meantime, the arguments go on. Is it KRA's or CCK's fault for allowing these gadgets into the market? Is it the device makers who first introduced 'costly' phones to the market attracting people to go for the cheaper fakes? Or do we just blame the consumers for wanting cheap things.

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