Did this man really act for the President?

By Kenneth Kwama

Confusion has hit the mobile phone sector after it emerged that people other than the Head of State may have authored a letter purportedly suspending implementation of lower Mobile Termination Rates (MTR).

The letter reported to have been written by President Kibaki had petitioned the Ministry of Information and Communications to suspend the rates, a decision that some industry players are now claiming had cost them dearly.

Focus has now turned to the president’s private secretary Nick Wanjohi, who signed the letter and some top Government officials said to harbour strong personal interest in the outcome of the interconnection rate debate. The question now is whether Wanjohi was acting on behalf of the President when he authored the letter.

The mail has thrown the communications industry into a spin, effectively blocking the implementation of MTR, which was in line with the Government stated policy reforms in communication industry.

The mystery deepened last Friday when State House, through head of Presidential Press Service Isaiah Kabira declined to respond to queries over the origin of the correspondence and instead referred Business Weekly to Information and Communications PS Bitange Ndemo to who the letter in question was originally addressed.

“I will not be able to respond to these questions.  We shall, however, deal with the issue next week,” wrote Ndemo in response to questions Business Weekly e-mailed to him.

Dr Ndemo, however, declined to state whether he knew who the author of the letter was and instead asked Business Weekly to talk directly to the President’s private secretary, Nick Wanjohi, who signed it.

MTR is the amount of money mobile firms pay to each other for calls that terminate in a rival’s network. Kibaki, through a letter signed by Wanjohi, directed that the rates remain unchanged until an all-inclusive study of costs is undertaken and forwarded to his office for consideration.

“I am directed, therefore, to inform you that until an all-inclusive study of costs and other relevant issues is undertaken and forwarded to this office for His Excellency’s consideration, the status quo should remain,” read in part the letter signed by Wanjohi.

The controversy over the new interconnection rates deepened after reports emerging that some stakeholders could be planning to go to court to challenge the President’s action. Consumer watchdog — the Consumer Federation of Kenya (Cofek) — has dug in and termed the move to suspend the implementation of lower interconnection rates illegal.

“It’s illegal on the basis of the Kenya Information and Communications Act Section five (b), which states and we agree that ‘except as provided for under (the) Act or any other law, the Commission shall exercise its functions independent of any person or body.’

At worst, the directive should be ignored in the interest of the law and stemming impunity. CCK must come out soonest to reclaim its independence,” said Cofek Secretary Stephen Mutoro.

The consumer body waded into the controversy demanding that it should be allowed to have its nominee on the board of CCK with immediate effect, as per provisions of Kenya Information and Communications Act to help it effectively check what it referred to as ‘executive meddling.’

Cofek says that meddling is distorting market forces at the expense of consumer interest.

If indeed the letter came from Kibaki, then it would be the second time in as many years he would be directing the CCK to suspend plans to reduce MTR.

There are, however, concerns of what could have motivated this action as industry stakeholders had previously met under the chairmanship of Information minister Samuel Poghisio and agreed on a new Sh1.60 interconnection rate.

Representatives of all mobile companies attended the meeting and none disputed the proposal to lower interconnection charges.

There were concerns about the possible repercussions of the President’s action on external investors after Airtel Kenya and yuMobile said they invested in the Kenyan market partly because of the promise by the Government to lower interconnection rates. The two mobile providers disclosed that the presidential decree had seriously weakened their financial position.

“Part of the decision to enter this market and investment was based on a promise by the Government that it would lower interconnection rates and this included a promise that the interconnection glide path would be fully implemented,” said yuMobile Country Manager Madhur Taneja.

Currently, the interconnection fees stand at Sh2.21, after it was slashed in July 2010 from Sh4.42. The rates were set to come down further  in July last year to Shl.44, and follow a glide path that would have seen them settle at less than a shilling by July 2013 before the controversial intervention.

Cofek says that high level direct intervention in the operations and decision-making of crucial regulatory agencies like the CCK is setting a bad precedent.

“The Competition Authority, Competition Tribunal and Communications Appeal Tribunal should separately write to the President and urge him to refrain from meddling in regulatory regimes generally and specifically on issuing such directives to CCK and any other regulatory agency,” states the federation.

Last week, Airtel wrote to President Kibaki and Prime Minister Raila Odinga seeking a meeting to request for a reversal of the President’s decision.

In the letter signed by Airtel Kenya’s chief executive Shivan Bhargava, the firm says that the change in government policy, before full implementation of lower MTR that were agreed on earlier, has resulted into significant losses to its business.

On May 29, operators agreed to a deal to cut the 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.