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CCK refutes political interference claims

BUSINESS
By - Macharia Kamau | Oct 13th 2012 | 3 min read
By - Macharia Kamau | October 13th 2012
BUSINESS

By Macharia Kamau

The Communications Commission of Kenya (CCK) has disputed reports that it has been yielding to political and business interests that led to its failure to make a decision on mobile termination rates (MTRs).

The telecommunications industry regulator said it would make an independent and impartial decision on MTRS soon. It said that it remained focused on promoting a conducive regulatory environment for effective competition.

CCK added that it has not been indecisive on the issue of MTRs and is instead waiting for a final report from a consultant tasked with evaluating the impact of reducing the rates from Sh4.42 to Sh2.21.

MTRs are fees that a mobile phone company pays to its rivals for calls originating on its network and terminating on the competitors’ networks. The fees are at times passed on to consumers and hence arguments that bringing them down can bring about a further decline in calling rates. “CCK shall make a decision on the MTR as soon as we receive the final report from the contracted consultant,” said CCK Director-General Francis Wangusi (pictured)   in the statement yesterday.

“Our decision shall be fair and in the wider interest of consumers and mobile telecoms industry, and without influence from any quarter.”

One of the operators recently accused CCK of yielding to influence by political interests and mobile operators favoured by the current termination rates.

This has resulted in CCK delaying implementation of a glide path arrived at after an industry study on pricing. The glide path was also agreed on by the operators but with minor adjustments.

In August 2010, CCK reduced MTRs by 50 per cent to Sh2.21, up from Sh4.42, a move that resulted in lowering of call rates in the country from an average of Sh12 per minute to about Sh4.

CCK said these were positive signals in the market and had pushed up mobile subscriber numbers by making available the services to a larger population.

The move however did not go well with some of the operators and Government agencies that raised concerns that it was detrimental to the continued growth of the sector and the economy.

Opponents of the low MTR regime said low pricing would adversely affect Government tax revenues, stability of the stock market, the Government’s macro-economic agenda on employment and investments and the profitability and viability of telecommunication enterprises.

Following a presidential directive earlier on this year following lobbying by a segment of the industry, CCK froze the implementation of a glide path that was expected to bring the termination rates to under a shilling over the next two years.

 It further contracted a consultant to look at the effect of the low MTRs on the industry as well as wider market.

It is the final report from the consultant that CCK is awaiting to make a decision on whether to hold the MTRs at Sh2.21 or bring them further down.

“The consultant has submitted an inception report and is due to present the interim report to the CCK Management and Board soon,” added Wangusi.


 

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