Talk time. Kenya’s interconnection rates are lower than the continent’s biggest economy, South Africa, where firms charge Sh9.31. File
Kenya’s telephone interconnection charges have dropped to the second-lowest in Africa, making the country’s communication costs among the cheapest on the continent.
The cross-network connection rates are only higher than Senegal’s among 17 countries sampled in the report by Research ICT Africa.
The Communications Commission of Kenya halved mobile interconnection rates from Sh4.42 per minute to Sh2.21 in August, compared to Senegal’s Sh1.72. Ghana comes in third with Sh2.8.
Interconnection rates are fees that operators are paid by their rivals for calls or short message services (SMS) terminating on their networks.
Kenya’s rates are at least two and a half times lower than her counterparts in East Africa, according to the report, with Rwanda coming in closest in the region with its Sh5.6 per minute charge, Tanzania 5.98, and Uganda at Sh6.44.
Kenya’s rates are lower than the continent’s biggest economy, South Africa, where companies charge an equivalent of Sh9.31; and the most populous African country, Nigeria, where it costs Sh6 to inter-connect calls. The report reviewed the ICT sector from a supply perspective in selected African countries to enable comparison of policy outcomes against national strategies and sector performance.
It was done in Kenya, Ethiopia, Rwanda, Tanzania, Uganda, Ivory Coast, Burkina Faso, Zambia, Benin, Mozambique, Cameroon, Senegal and Botswana. Others were Nigeria, Ghana, Namibia and South Africa.
The case is the same even for interconnection rates from fixed to mobile phones. The findings come at a time when the country has already initiated a three year glide path that will see the rates further come down to a marginal Sh0.87 by 2014.
Eventually scrapped
CCK came up with interconnection rates in 2007 that led to tariff across other networks to fall from a high of Sh48 to Sh30 in the first year of implementation.
A revised set of regulations that will govern the industry was gazetted earlier last month following recommendations by international consultants Frontier Economics.
But CCK relied on a study by Analysys Mason in reducing the rates. Analysys Mason said the fee should be cut from the current Sh4.42 starting September, going down in phases and eventually scrapped by January 2014. The rates will progressively decline by 35 per cent, 20 per cent and 15 per cent annually in 2011, 2012 and 2013 respectively to stand at Sh0.87 by 2014. Although the study recommended an immediate reduction of mobile termination rates to Sh0.87, CCK considered such a move as potentially disruptive to business plans of the operators, and therefore opted for a three-year glide path.
“We believe the glide path will provide an acceptable balance between the regulatory objective of attaining efficient cost levels as soon as possible while maintaining stability in the business plans for the operators,” said CCK director-general Charles Njoroge in a statement.
Termination rates
The commission has also directed all operators to renegotiate lower mobile and fixed SMS termination rates and file the new rates — expected to be below two shillings —with CCK by end of this month.
CCK says extending SMS services to consumers costs just Sh0.01 for each SMS sent across networks. An estimated 200 million SMSes are sent in Kenya every month. Airtel has welcomed the rates saying they are in line with their business model.
“Reduction in rates increases penetration as the services become more affordable to a larger population. This increases competition, increases volumes, and forces mobile companies to be more creative and innovative in their approach to business,” said Airtel Kenya managing director Rene Meza.
