Busia senator Okiya Omtatah has moved to court seeking to quash mobile termination rates (MTR) set by Communications Authority of Kenya (CA) last November, arguing that it is arbitrary and the highest in the region.
The regulator set the MTR at Sh0.41 per minute on November 17, 2023 but the legislator argues that the new rates, although a reduction from the previous Sh0.58 per minute, is seven times more than the Sh0.06 recommended by the consultants hired by CA.
MTR refers to what a telco charges its rivals when they terminate their calls on its network.
Mr Omtatah said in arriving at the MTR of Sh0.41 per minute, the CA disregarded the cost study undertaken by its own consultants and failed to demonstrate a plan to move the rate towards the scientifically derived MTR of Sh0.06 per minute.
The current rates will run for two years from March 1, 2024.
“It is a matter of public knowledge that the cost of making phone calls in Kenya is inflated by the high mobile termination rates (MTR) charged by telephony service providers for facilitating calls across rival networks,” Mr Omtatah said.
High Court judge Chacha Mwita directed the case to be mentioned on June 24, for directions.
Mr Omtatah said a cost study that set the MTR at Sh0.06 per minute went through public participation as required by law.
But the new rates set by CA were made without consulting the stakeholders or the public, hence it disregarded public interest, he says.
“The petitioner has moved this Honourable Court seeking orders quashing the arbitrarily arrived at MTR of 0.41 per minute and compelling the CA to implement the scientifically derived MTR of KES. 0.06 per minute as recommended by the Cost Study Report,” he said.
The Busia senator said it was unacceptable that Kenya should have such high rates when other East African countries have much lower rates and Rwanda has zero MTR.
He argued that a high MTR means that the retail prices for calls from one provider to another remains high and providers are not able to offer voice bundles or packages whose effective price per minute is below the MTR because both on-net and off-net calls are charged the same.
He pointed out that the Kenya Information and Communications (Interconnection) Regulations, 2010 require that MTRs be objective, independently verifiable and fair and that they should not be used by an interconnect provider to facilitate cross-subsidies.
“MTRs are further required to be sufficiently below retail service charges to allow for recovery of the incremental retail costs associated with provision of the retail service supported by interconnection,” he said.
The charges have come down over the years but they have been contested fiercely at each implementation with Safaricom --the net beneficiary due to its leading market shares-- pitted against smaller rivals Airtel Kenya and Telkom Kenya from which it earns billions of shillings in revenue per annum.
The implementation of MTR was, for instance, suspended in 2012 following a complaint by Safaricom that reduction of the rate would have negative impact on competition, exchequer revenue, tax stability, profitability and the economy.
Later, the MTR of Sh0.99 per minute was put in place from 2014 to 2021 since no network cost study was conducted by the CA in this period.
In July 2021, the CA noted that the rates of Sh0.99 per minute MTR did not reflect the true cost of interconnection and hindered service providers from offering consumers more affordable and competitive prices and they carried out a benchmarking exercise to derive new MTRs.
However, the implementation which effected a reduction of MTR from Sh0.99 per minute to Sh0.12 per minute was suspended because Safaricom challenged the reduction before the Communication and Multimedia Appeals Tribunal.
Mr Omtatah said by disregarding the recommendations of the cost study, the CA failed to account for the public funds used to fund the study, which goes against prudent management of public funds.
