LETTERS: Controlling telecoms prices desirable at this time

Assertions by George Bodo in his March 23 Business Daily article titled ‘Price Control of Kenya’s Telecoms isn’t Necessary’ cannot go unchallenged.

In the piece, the writer makes two sweeping statements showing blatant capitalism and do not augur well for the country’s telecommunications industry, viewed from the lens of public interest.

The interest of mobile subscribers, the final consumers reign supreme and always have to be taken into account in all decisions and points of view.

First, in his piece, Bodo dismisses the place of price controls in Kenya’s telecoms market. Secondly, he advises against direct intervention in the retail market.

Starting with price controls, experience in other industries locally and in other markets has demonstrated that they indeed add value. The oil industry is a perfect case study.

Every month, the Energy Regulatory Commission gives guidance on prices of petrol, diesel and kerosene, taking into account trends within the different key parameters. These price controls became necessary when the market could not be relied upon to get to a favourable equilibrium in the fuel industry.

Besides, though it may not be obvious, the regulator already, to some extent, plays a consumer protection role to shield people from being exploited by mobile operators through exorbitant rates. If operators had their way, they would be charging manifold what we are paying at the moment.

Of course, there is the effect that market forces have had in driving down the cost of calling, texting, accessing the Internet on mobile and transacting on mobile money; but, we cannot ignore the hidden hand of the regulator in this regard.

However, as it continues becoming apparent that on their own market forces do not suffice, the regulator may now need to explicitly provide guidance and controls on what are fair rates for the different services.

On whether or not the regulator should intervene in the primary mobile market, it still goes back to public interest.

Whereas growth in the industry has been phenomenal from its advent at the turn of the millennium, pundits say that further opportunity could be unlocked by addressing certain imperfections in the market.

The often talked about Analysys Mason report that was commissioned by the Communications Authority already found significant dominance in the mobile communications and mobile money markets, with one player (Safaricom) commanding up to 80 per cent market share of these segments.

This startling finding cannot be ignored. Having unearthed it, the next natural action is to take remedies that correct the effect of these factors and eliminate barriers to entry by other players.

READ: Call tariffs rise looms in planned price controls

Discouraging such a move because ostensibly ‘ex-ante interventions have been limited to the wholesale markets’, is dishonest and insensitive to the plight of consumers.

Dominance has been found and it has to be duly corrected through appropriate remedies. Anything short of this is bad for the industry, and beats the purpose for which the study was initiated in the first place.

It may be necessary for the regulators — the Communications Authority and the Competition Authority of Kenya — to step up, take control and shepherd this conversation to avoid such opinions being peddled as gospel truths.

Nature, as it is always said, abhors a vacuum.

In the absence of an independent voice that offers direction from the regulator, of course backed by facts and guided by global best practice, such opinions crop up.

The telecommunications industry has had a huge impact on Kenya’s economy over the last decade. A lot more economic potential can be unlocked by addressing imperfect competition.

Let’s do the right thing.

Kenneth Basanga Via Email.