By Kenneth Kwama
The mobile phone sector is on the cross. In as many attempts, Communications Commission of Kenya ( CCK) has yet again failed to cut termination rates — the amount of money mobile firms pay each other for calls that terminate in a rival’s network.
CCK, the industry regulator, has uncharacteristically been slow to approve the decision to lower Mobile Termination Rates (MTR) from the current Sh2.21 per minute to Sh1.60.
Fears are now rife that Treasury could secretly be pushing to scuttle the agreement to stem potential loss of revenue from the telecom sector.
In May 29, operators agreed to a deal to cut the mobile termination rate to Sh1.60 a minute as from July 1 from the current Sh2.21.
This, however, never came to pass because the CCK board did not meet to ratify the decision.
If implemented, it could have seen to an end of the executive one-year freeze and cut the cost burden on smaller operators and by extension, subscribers.
The rate fell from Sh4.42 in June 2009 to Sh2.21 in July 2010 and was to drop to Sh1.44 last June before President Mwai Kibaki froze it for one year following intense lobbying from Safaricom and Telkom Kenya’s Orange.
Sources privy to the issue, say that operators are divided on the way forward. Airtel Kenya, second largest mobile phone operators by subscriber numbers is said to demand a lower rate of Sh1.44 while Telkom Kenya is comfortable with the Sh1.60 but on condition that regulator caps minimum calling rate at Sh4 a minute.
Status quo
This is said to be among the reasons that have made it difficult for CCK to effect the new rates. Essar Telecom Kenya Ltd, which trades as yuMobile, holds the view that the status quo will benefit Safaricom and hurt its meagre earnings.
The Consumer Federation of Kenya (Cofek) and ICT Consumers Association of Kenya have waded into the controversy saying non-implementation is against the interests of investors and consumers.
