Mobile Termination Rates Must Gradually Be Phased Out

By Alex Gakuru

Date: 09 May, 2012

Suppose one realises that the implementation of a certain section of Kenya’s brand new Constitution hurts their private interests, for over a decade they had grown accustomed to. Successfully lobbies the Commission for the Implementation of the Constitution to suspend such a section on claims of extreme adversities. The Commission, shingo upande (grudgingly) agrees to it though for a defined short period of time, if just to eliminate all doubts on their legal mandate. The the time window expires but the said individual contrives new excuses to rubbish the entire document and begins calls for a complete rewrite -never mind how long it took to get the new Constitution.

In 2006, the Communications Commission of Kenya (CCK) announced a policy resolve to shift from ‘perception’ to data-based telecommunications regulation. Explained the need to make rulings grounded on factual data. On their website is post dated 13 April, 2006 titled, ‘Commissions telecommunications network cost study .’

IN SIX MONTHS tasked Analysys McCarthy Tétrault to specifically seek input from stakeholders on views on expected future development of the Kenyan telecommunications market provision of data for the market model, cost model and development of price controls . But the firm could not deliver the results in six months. An interconnection dispute between Safaricom and Telkom Kenya poured ice to their work.

They however concluded their work on 12 January, 2007 with a presentation to telecommunications stakeholders that included a 52-page summary of three study reports a) Cost model guidelines, b) Interconnection technical guidelines, and c) Pricing guidelines –in total 135 pages of rich regulatory content. And wherein recommended to CCK the gradual phase-out of Termination Rates(or “MTR”).

The Commission implemented the first phase of MTR reduction to the delight of consumers. Online article, ‘Kenya Telecoms Regulator Slashes Mobile-Phone Interconnection Fee by 50%’ by Bloomberg reported.

“The rate mobile companies charge each other for connecting calls across networks was reduced to 2.21 shillings (3 cents) a minute from 4.42 shillings effective immediately, Communications Commission of Kenya Director-General Charles Njoroge told reporters in Nairobi, the capital, today.

The amount will be reduced annually until it reaches 0.99 shillings in 2013, which equals the cost incurred by operators to transmit cross-network traffic, he said, citing the findings of a market study commissioned by the regulator this year.

“The benefit must be passed onto the consumer in terms of lower prices,” Njoroge said.

“This phenomenon is a common practice in telecommunications markets where operators with large subscriber bases price their off-network services onerously in order to discourage their subscribers from calling other networks,” Njoroge said.

Then Zain Kenya reduced its call charges by half to 3 shillings per minute, the lowest in the country, Managing Director Rene Meza said in an e-mailed statement.

Kill MTR, By All Means Necessary?

Phase II of MTR reduction was to be effected last year but lobbying led by Safaricom resulted in a temporary one year suspension. Now that the suspension has ended, bizzare new calls for abolishment of indisputably working consumer protection move by CCK are rife. Safaricom’s delaying tactics never end – just as it delayed the initial study for over four months, caused Phase II reduction suspension for one year now wants the study trashed altogether.

The firm regulatory environment has resulted in Safaricom losing its choking grip on consumers. Therefore read its latest moves as desperate attempts to reclaim its bygone supremacy.

Constructing New Monopolies?

Kenyans celebrated last week’s labour day reading on The Financial Standard ‘APA working on proposals that could lock out small agencies’ by Kenneth Kwama, which stated Kenya’s advertising industry is amongst the most vibrant in the continent. The industry has posted significant growth in recent years and last year raked in Sh65 billion in revenues up from Sh49 billion in 2010. It has grown five fold in just five years, having generated Sh13 billion in revenues in 2006.

“The quest by advertisers’ umbrella body — Association of Practitioners in Advertising (APA) — to control sourcing of clients and regulate tenders in the industry could give big firms the power to squeeze smaller agencies and create a monopolistic regime. If the proposals being fronted by the APA sail through competition and regulatory authorities, advertising agencies pitching for clients in the country will look for clients through the professional body. Of the agencies that send in their bids for a job, only four will be shortlisted..”

In short, APA is seeks to monopolize advertising and determining WHAT consumers will by and HOW MUCH they will pay.

Suspended Constitution and the Law?

Consumer rights as espoused on Article 46 Consumers have the right to goods and services of reasonable quality; to the information necessary for them to gain full benefit from goods and services; to the protection of their health, safety, and economic interests… and Parliament shall enact legislation to provide for consumer protection and for fair, honest and decent advertising.

Part III (Restrictive trade practices) Section 21 on Competition Act, 2010, Restrictive Agreements, Practices and Decisions prohibits, “Agreements between undertakings, decisions by associations of undertakings, decisions by undertakings or concerted practices by undertakings which have as their object or effect the prevention, distortion or lessening of competition in trade in any goods or services in Kenya, or a part of Kenya, are prohibited..”

If APA officials were wiser, perhaps they should rush to their nearest police station to report themselves for conniving to violate the Constitution on their elaborately stated strategy to achieve the same. Then maybe, just maybe, the OCS may be kind enough to book them into a cleaner cell as they help the police with investigations.

Global Outlook – telecommunications, media and advertising

While a great number of Kenyans remain in the “excitement” phase of modern Information and Communications Technologies (ICTs), rapid acquisitions mergers and consolidations in the communications industries are resulted in private monopolies whose shareholders only care as much as their Public Relations advisers insist they should, for media image purposes. And acquisitions of media houses, a few advertising agencies and some film making here and there.

Fund potential politicians seeking elective offices to strengthen their “market” foothold securing their future business interests. As the next General Election nears, can we exclude the likelihood of aspiring County Governors, MPs or Presidential aspirants being funded by corrupt telecommunications firms?

Should it be true, the Constitution of Kenya would be seriously threatened. We, The People, shall be squeezed into a tight corner. The Mexicans, television viewers admire for their many SOAPS, know all too well how it feels to be stuck between a rock and a very hard place.

Published on their 9-25 April, 2007 edition, The Financial Post was an article titled, ‘Billion Dollar Baby’ published blurbed ‘Carlos Slim Helu’s fortune is up almost $20 billion in a year, built amid poverty and resentment in Mexico. Now he’s gaining on Warren Buffett.’

According to the Wikipedia, Carlos Slim Helú is today’s wealthiest person in the world and has been since 2010. Owns extensive holdings in a considerable number of Mexican companies through his conglomerate, Grupo Carso, SA de CV, have amassed interests in the fields of communications, technology, retailing, and finance. Present chairman and chief executive of telecommunications companies Telmex and América Móvil. América Móvil, which in 2010 was Latin America’s largest mobile-phone carrier, accounted for around US$49 billion of Slim’s wealth by the end of 2010. His corporate holdings as of March 2012 have been estimated at US$69 billion.

Why MTR Implementation Must Proceed

If it does not then the message sent out is clear, “We are never serious about implementing anything.”

Have vast proof of spending vast amounts of taxpayers money spent on public interest pretext initiatives, yet the motives and desired outcomes completely opposite. If we can allow APA to violate the Constitution, the Competition Act, 2010, Information and Communication Act, 2010 and Regulations and get away with it, what other proof does one need?

A chilling-effect warning foreign to investors rushing to invest and do business in Kenya. Eroding Reversing current Kenya’s current favourite investment destination in Africa. Casting doubts on the future of the economy and its governance.

Benefits of Successful MTR Reduction

It will demonstrate that Kenya has systems and processes, it follows. The Constitution is not violated, policies twisted, telecommunications laws bent and regulations rubbed off “on-the-fly” just suit an person, natural or corporate’s interests. A nations where set Rules and Procedures are adhered to and independent regulation respected.

It will transform us to a Just society thinking from the ‘Original Position’ – devoid of poverty billionaires. Where no-one gets everything they want, for there mere existence of others means must compromise.

The Original Position is a central feature in John Rawls’ social contract account of justice as fairness set forth in A Theory of Justice designed to be a fair and impartial point of view to be adopted in our reasoning over fundamental principles of justice. A distinguishing feature is the veil of ignorance – to ensure impartiality of judgement. The position of a free and equal persons who jointly agree upon and commit themselves to principles of social and political justice.

Kenya simply cannot afford to reverse the freedoms, economic, social and political gains achieved by allowing ad hoc Constitution, policy, law and regulations implementation.

Written by Robert

Respected Kenyan blogger, tech evangelist, and social justice activist. Robert is known for his hard-hitting articles and opinions disseminated through his Twitter handle @RobertAlai or Facebook page (

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