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Let sense prevail in mobile termination rate debate

By - | May 15th 2012 | 3 min read

A few weeks from now, State think-tank Kenya Institute for Public Policy Research and Analysis (Kippra) will provide verdict on a contentious, but serious issue in the mobile industry-the Mobile Termination Rates (MTR).

MTR is the amount of money an operator pays rivals if its subscribers call another network. The amount has fallen from Sh4.42 in June 2009 to Sh2.21 in July 2010 and was to drop to Sh1.40 last July before President Kibaki suspended its implementation for one year following intense lobbying from Safaricom and Orange.

The suspension period will end next month and Communications Commission of Kenya (CCK) through its acting Director-General Francis Wangusi says there should be no qualms about the implementation of the rates recommended after a study carried out by international firm Analysis Mason showed that the rates in the country were too high.

Safaricom’s preferred way of dealing with the issue is contrary to the position being pushed by Airtel and yu, both of which are pursuing the low-call cost model. To be precise, the imbroglio about MTR is actually about mobile providers pursuing their own interests.

Bottom lines

The truth is that the rates debate has been plagued by media excesses. There have been submissions supporting the new rates and attacks against it. Both sides of the divide have tried to stir things up.

The picture that emerges is a complex one that defies easy pigeonholing. The strains of negotiating an issue that service providers say will have profound effect on their bottom lines are evident.

Those agitating for implementation of the inter-connection rates and those against are heavy weights, but referees to the dispute should not forget that customers need affordable services.

The standoff has put CCK on the spotlight and the country is keenly watching how it will sort out the matter.

In an industry controlled by deep-pocketed players with a lot of influence, both the industry regulator and Kippra should settle for the most viable arrangement that will serve consumers’ interest, while also taking that of operators into account.

It is in the interest of the country, service providers and customers that a solution to this impasse is found soonest possible. This is why we support the appointment of Kippra to conduct a study to determine whether to lower or retain the mobile termination charges.

While we do not want to speculate on what Kippra’s findings will be, we feel it would be prudent for the Government to look at it alongside the proposals that were made by Analysis Mason and provide the industry with a solution to this quagmire. This will help save time and move the agenda to other pressing issues.

But even as we look forward to an amicable solution to the impasse, we would like to remind the State that Governments that interfere with their own policy decisions have always been adjudged hostile to business. This is not good for a third-world country in the scramble for foreign investors.

This is why industry players should strive for a middle ground to stop any situation that might give the impression that Government interference in private business.

Last year’s situation where President Kibaki suspended the implementation of lower inter-connection rates even after it was validated by a study endorsed by CCK should not be allowed to happen again.

Drawing board

The President’s decision means that mobile operators, which factored the expected reduction of MTR in their growth strategy went back to the drawing board to adjust their strategies and there have been concerns that last minute interference on policy issues by the Government could pass the wrong message to foreign investors.

The industry is looking up to Kippra for a solution and these are indeed heavy expectations. The body has the opportunity to provide the country with what we hope will be a fair assessment of the situation and offer an acceptable solution to guide the industry.

The country needs an amicable solution because the communications industry is a key to the achievement of Vision 2030.

We hope CCK will use Kippra’s findings to provide a way forward and free the industry and Kenyan consumers from anxiety.

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