GeoNet to sue CA over interconnection fee row with mobile network operators

A US-based Kenyan telecommunication firm is preparing a legal action against the telecoms sector regulator for failing to resolve an interconnection fee dispute with the three local mobile network operators.

GeoNet, which was initially registered in Delaware USA in 2000, says through its local subsidiary that it is losing business because it is unable to use the licence it was granted by the Communications Authority of Kenya (CA) due to the three-year interconnection fee dispute with Safaricom, Airtel and Telkom Kenya.

The firm, which operates several licences, including an international gateway service (IGS) provider, says it has paid the CA more than Sh32 million in IGS fees alone but has not been able to use the licence because of the stalemate.

Airtel wants to be paid at the rate of Sh20 per minute while Safaricom and Telkom Kenya’s Orange want to charge Sh10 per minute for international voice traffic terminating on their networks, instead of Sh0.90 stipulated in the regulations, according to GeoNet.

The three mobile operators are also said to be unwilling to allow GeoNet’s international traffic to terminate on their networks.

CA director-general Francis Wangusi, responding to GeoNet’s concerns on September 21, indicated inability to intervene in tariff pricing or tariff structures because IGS is not a regulated licence service.

GeoNet argued that the mobile operators should charge cost-based fees rather than the commercial rates they have quoted.

Mr Wangusi’s response prompted GeoNet to write a protest letter to ICT secretary Fred Matiang’i accusing the CA of promoting anti-competitive behaviour by refusing to investigate why the three mobile operators do not want to interconnect with licensed service providers.

“The affront to CAP 411A, the accompanying licence condition and regulations by CA cannot go unchallenged. It has been an assault on GeoNet’s financial integrity and denies its investors lawful gains from a lawful business,” the firm said, adding that it had chosen to seek redress at the High Court.

The CA’s interpretation of the matter is that GeoNet should pursue the interconnection matter using the application service provider (ASP) licence it has instead of the IGS.

“GeoNet is, therefore, advised to seek interconnection from the MNOs [mobile network operators], under their ASP licence without insisting on the current mobile termination rates (MTRs). Nonetheless, MNOs will be expected to interconnect with you using non-discriminatory rates given to other ASPs who are offering similar services,” Mr Wangusi said.

GeoNet, however, insists that the IGS is a regulated service and that any interconnection practices going against the Kenya Information and Communication Act are illegal.

Standard practice

“With CA adopting a technology-neutral universal licence framework, content type and origin between the licensees is a non-issue,” GeoNet says. “Based on that, blocking GeoNet international traffic that is transmitted over ASP licence segment would be unlawful, and anti-competitive.”

Airtel Kenya CEO Adil El Youseffi said his company was negotiating the interconnection charges with GeoNet and that the rates are guided by relevant regulations. He noted that it is standard practice not to regulate international rates across the world.

“International incoming traffic is a source of hard currency for countries and a source of revenues for operators,” Mr Youseffi said.

“Intervening in it to regulate prices leads to significant losses to both the Treasury and local operators for the benefits of firms operating outside the country and paying their taxes abroad.”

Safaricom and Telkom Kenya had not responded to our questions by the time of going to press.

GeoNet started as a self-help project for Kenyans in the USA in 2001 aiming to tap into ICT technologies to reduce the cost of calling Kenya from North America, Europe and Asia. The company is 78 per cent owned by Kenyans and 28 per cent by Americans.