About 4.4 million mobile phone subscribers may lose their lines following a directive by the Communications Commission of Kenya to the operators to block handsets that are "unknown" on their networks in a bid to fight the sale of counterfeits. Such handsets do not have an International Mobile Equipment Identity ( IMEI), the unique number used to identify original GSM devices.
Following the directive, the mobile phone operators have asked for more time to weigh their options and propose other solutions to the counterfeiting problem. A meeting between them and the CCK is scheduled for September 9. Counterfeiting of mobile phones and their accessories has risen over the last seven years. It is estimated that one in every five mobile phones sold in the global market is a counterfeit.
According to the CCK statistics there are about 22 million mobile subscribers. This translates theoretically to 4.4 million counterfeit phones in circulation in the country. “Consumers, who believe they are buying a genuine phone, when in fact it is a counterfeit, will likely blame the manufacturer of the genuine product if they do not get value for money resulting in loss of good will,” said John Akoten, Deputy Director – Research & Awareness at the Anti-Counterfeiting Agency. Consumers go for the fake phones as they are much cheaper than the genuine brands.
The ACA estimates that the economy loses up to Sh3.2 billion in tax revenues as a result of counterfeit mobile phones. In March this year, the ACA seized counterfeit mobile phone batteries in Nairobi worth Sh2.4 million and has so far filed 38 intellectual property right cases. If the CCK directive is implemented after next month's meeting, Safaricom will be the most affected as it says there are already nearly one million devices with non-recognized IMEI on its network.
On the handset IMEI is identified by dialing *#06# . Without it the phone is counterfeit, but having one does not mean it is genuine as it could be duplicated. “What is required is a regulator that would not affect the customers who are already victims of the counterfeiters, “ said Nzioka Waita, the Director of Legal and Corporate Affairs.
On the one hand, the operators could lose billions in revenue while on the other the use of these handsets is ruining the reputation of their networks as the counterfeits offer substandard services. The company is proposing to the regulator to first carry out consumer awareness programmes before any radical action. It is also seeking to protect itself from what would be a massive outrage. “Operators need to be protected from any liability in law that may arise as a result of blocking some line,” said Waita.
It is also asking for adequate time to implement the directive if the regulator decides the numbers must be blocked. But the market leading handset maker, Nokia, says the CCK strategy might not work. Dorothy Ooko, Nokia's Communication Manager in East, Central and Southern Africa, says there should be a more cautious approach to the problem. “India tried to do the same thing, but did not succeed as it ended up blocking even the genuine phones on the grey market.” She says without a clear mechanism, the action would penalise phone users who buy genuine phones outside the country.
Globally, Nokia is the most counterfeited mobile phone due to its immense public demand. The blame game on who is responsible for the counterfeits has been going on for two years. Manufacturers, the Kenya Revenue Authority, the police, Kenya Bureau of Standards have been blaming each other. Some manufacturers are opting to protect themselves by conducting raids on dealers.
Robert Ngeru, the deputy managing director of Samsung Electronics EA, said the company was making plans to carry out raids on counterfeit dealers. But other stakeholders feel there should be stringent laws to protect their intellectual property rights. The current penalties and fines are too lax to discourage the crime. Infringement of intellectual property rights attracts a fine of not more than Sh2 million or imprisonment not exceeding three years, regardless of the value of goods.
Studies have shown that counterfeit phones emit radio frequency radiation higher than what is internationally stipulated as safe for human exposure and therefore harmful to those who use them. Counterfeit phones also have a negative effect on the environment. Consumers Federation of Kenya Secretary General Stephen Mutoro dismissed the directive as "a measure which will have nil or negative impact." Cofek said government agencies and individual importers of counterfeit phones should bear full responsibility following the dumping of sub-standard and contraband phones in Kenya.
The IT Consumers Rights chairman, Alex Gakuru, commended the CCK directive. “But CCK should first create a facility database for the genuine phones in the market, that way suppliers would know counterfeits will be traced back to them. There will be pain initially for those who have already invested, but it is for the benefit of all," he said.
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