Safaricom opposes CA’s move to slash mobile call rates

Kenya’s leading telco Safaricom has filed a case with the Communications and Multi-media appeals tribunal opposing the recent move by the Communications Authority of Kenya to lower mobile calling rates. 

Safaricom says CA ignored its own procedures and erred by using benchmarking methodology rather than the long-run incremental costing (LRIC) that has been used in previous reviews. 

Last week, CA cut the rates commonly known as Mobile Termination Rates (MTRs) local mobile phone operators charge each other for interconnecting customers by Sh0.87 or 87.7 percent in what it said is to match shifts in technology that have made mobile telephony more efficient. The regulator cut the rates from Sh0.99 to Sh0.12. 

“The review was founded on the recognition that higher MTRs mean higher calling rates for consumers.” CA director-general Ezra Chiloba said through a press statement. 

Safaricom wants the matter certified as urgent considering that CA wants the new rates to take effect on January 1. It wants the tribunal to issue an injunction restraining CA from implementing the cuts until the appeal is heard and determined. It says CA  ignored public participation, adding that it was not given an opportunity to be heard and make representations before the final decision was arrived at.

Safaricom says CA did not furnish it with the information, materials, and evidence it relied on in making the decision to reduce the MTR and fixed termination rates (FTRs).

Telkom Kenya however welcomed the move saying it’s timely and a progressive step towards making voice services more affordable and accessible to Kenyans.

In a statement shared last week, Telkom Kenya said big and dominant players or incumbents in mobile telephony markets have had a pricing advantage due to the imbalance of connecting traffic between themselves and other network operators. Higher MTRs and FTRs it said have the potential to negatively impact the consumer if these larger operators are to price discriminate between on-net and off-net calls. 

‘’This could lead to the creation of a “club effect” where customers of the larger operators are offered attractive price incentives (that are not affected by the MTRs and FTRs) to stay on the network. Consequently, “new” customers could also feel compelled to join the larger operator’s network, which has a higher number of subscribers, to keep their voice call costs low, due to lower on-net rates compared to the high off-net pricing were they to join an alternative network. This would in the end stifle competition and deny customers of choice. ‘’ it said. 

Airtel Kenya, in a statement issued today also threw its weight behind CA saying the move will greatly benefit the Kenyan consumer, enabling them to call more across networks with ease and with little worry of how much they will spend

”Customers will also get to benefit from better services as Telcos will now have more money to invest into their infrastructure and networks, as opposed to using the same money to pay high interconnection fees.” it said the statement signed.

Airtel says this reduction will also increase mobile penetration in Kenya and enhance access to voice and data services to support the Government’s broadband strategy and better position Kenya as a regional ICT Hub.

”We believe that any attempt to delay or scuttle the implementation of the MTR will deny consumers the benefits of more affordable calling prices,”

”This benefit to consumers needs to be protected considering that high Mobile Termination Rates are not meant to be a revenue source for Mobile or Fixed voice service providers but an enabler for seamless calling which improves consumer access to communication.” it added.

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