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Mobile termination rate reduction is excellent news

By - | June 7th 2012

The communications industry regulator the Communications Commission of Kenya (CCK) is set to further reduce Mobile Termination Rates (MTR) to Sh1.60.

MTR is the amount of money an operator pays other operators when its subscribers call the other network.

Initially there were calls for the regulator to reduce to cut the amount to below one shilling. Although this has not happened yet, we hope the dream, which was first mooted after a study by international firm Analysis Mason, will soon become a reality.

CCK announced last month, it would bring down the rates from the current Sh2.21 to Sh1.44 a minute in July. But after agreement with other telecom operators, it settled on Sh1.60. This is good news for mobile subscribers and the industry.

High termination rates have been an impediment to growth in our communications industry.

There have been reports that other mobile companies owe Safaricom hundreds of millions as a result of cumulated termination fees and some players within the industry have expressed doubts it would recover the full amount.

The new rate is a plus  as it will reduce the amount mobile companies pay each other for calls that terminate in a rival’s network and if possible, help avert situations where debts accumulates exorbitantly.

The review follows a study by international firm Analysis Mason report — released in 2010 that compared Kenya’s interconnection charges with other countries and concluded they were too high.

Low termination rates would encourage competition amongst the operators resulting to cheaper calling rates and customer-designed packages to enable operators stay ahead of the competition.

invested billions

The sector is vital to the economy. It also provides both direct and indirect jobs to locals. Consumer Federation of Kenya and ICT Consumers Association of Kenya have also backed low MTR rates.

High termination rates discourage small players from pricing their products competitively. It hurts subscribers with high priced calling rates. While high rates are bad for some operators, rates that are too low, may affect some firms as well, stifling their growth.

It is our hope that as CCK fixed the rate, mobile operators were not arm-twisted to take it or leave it because the firms have invested billions of shillings in return for profits.

Their investments and interests should be safeguarded to spur growth and subsequent expansion in the sector and make Kenya an investment hub.


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