CCK denies claims of meddling over termination fees

Kenya's telecommunications industry regulator has denied claims that its delay in implementing the mobile termination fee is influenced by political and business interests.

(Read: Airtel hits at Kibaki over rate cut freeze)

In a statement on Wednesday, Communication Commission of Kenya (CCK) said it is still awaiting a final report from Kenya Institute for Public Policy Research Analysis KIPPRA on the impact of a lower MTR on the economy and the operator’s finances.

Kippra presented the draft report on September 20 and was expected to submit the final copy on 4th of October.

CCK was expected to make a decision on MTR , the fee which mobile firms charge one another for calls terminating into their systems from rival networks, to either Sh1.44 a minute or Sh1.60 from current Sh2.21 on 27th last month.

However, the move was delayed after CCK’s board feared upsetting State House, which had issued a directive in August that the cut should not be implemented before a new study on the issue is conducted.

“I wish to assure the mobile telecoms industry, consumers of ICT services and other stakeholders that CCK shall make a decision on the MTR as soon as we receive the final report from the contracted consultant,” said Francis Wangusi, the CCK director general in a press statement.

“Our decision shall be fair and in the wider interest of consumers and mobile telecoms industry, and without influence from any quarter.”

He added that the reports that the CCK is hostage and beholden to certain political and business interests, has casted aspersions on the ability of the Communications Commission of Kenya (CCK), as presently constituted, to effectively regulate the fast-growing ICT sector.
“The reports have elicited disquiet in the local ICT market, and therefore merit a response,” said Mr Wangusi.

Airtel and Essar’s yu has since said the delay is negatively impacting on their business strategy that they had based on lower MTR rates and is meant to benefit their rivals where the government has stakes.

Telecoms operators are deeply divided over the possible impact of fresh MTR cut on the profitability of the industry and ultimately the overall sustainability of the sector.

The fee has divided the telecoms down the middle pitting Safaricom, the largest player with more than 20 million subscribers on its network and Telkom Orange, against the two Indian firms Airtel and Essar, which operates under the yu brand.

Safaricom and Telkom have argued that a further cut in the MTR will render the industry unprofitable making it impossible to invest in the networks, a development that will ultimately harm the consumer.

Their opponents reckon that the status quo will benefit Safaricom and hurt the earnings of the smaller operators whose significant share of calls head to Safaricom, which remains dominant with 64 per cent of Kenya’s mobile phone subscribers.

Airtel has 16.5 per cent, Orange 10.5 per cent while yu trails with 9 per cent.

The government owns 35 per cent of Safaricom and 49 per cent of Telkom Kenya.

The rate fell from Sh4.42 in June 2009 to Sh2.21 in July 2010, and was to drop to Sh1.44 last June before President Kibaki froze it for a year following intense lobbying by Safaricom and Orange.