Mobile Tariffs: What Next?

Interconnection as the name suggests, refers to the arrangements between networks providers covering reciprocal acceptance of voice and data traffic among themselves. Interconnection "costs" are passed to the consumers.

Communications has been costly to users not because the actual cost of providing the service is high but because network owners deliberately keep interconnection rates high to “encourage” their subscribers to call and remain within their network and to retain dominance.

Analysis Consulting of UK together with McCarthy Tétrault last Friday presented their draft final telecommunications (voice) “retail and interconnection study” findings and recommendations to service providers steakholders at the Kenya College of Communications Technologies last Friday.

Inviting any substantive comments by Friday 26 January 2007, the consultants explained the study Initially expected to be completed over 6 month period was delayed by the interconnect dispute between Telkom and Safaricom mid-stream.

"Googling" Analysis Consulting before going to KCCT that returned many reputable institutions, governments and agencies certainly boosted confidence in their study findings considering that many past "experts" have come up with all manner of recommendations.

Dominant telecommunication providers (“dominant” being the new phrase describing emerging private monopolies in Kenya), safely avoids highlighting some of these networks openly stated opposition to the introduction of more players. Some of these dominant networks appear to believe that they “own” consumers on their networks, and lowering tariffs is their discretionary "favour" to subscribers.

But it should no be misconstrued that it was a favour from any GSM company to invest in telcom in Kenya. It continues to make business sense therefore seeking consumers understanding of their continued super profits does not hold much water.

Official support, “they need to recoup on their investment and expand their networks” is not very helpful to consumers much either especially while on the other hand they are fighting the introduction of more player “tooth-and-nail” as it were reported in the media defeating free market demand and supply principle.

Consumers need to severally replay every official pronouncement on this subject to know who is for, and against them.

Now, realising that the era of fixing high interconnection rates has come to an end, now they are resorting to handset offers that lock consumers to their network. This strategy takes away mobile phone user option of replacing their SIM card to enjoy a better offer a competitor may offer and also aimed at giving them a free hand at perpetually charge whatever tariffs they like within their network.

Even if offered for free, consumers should test if such handsets work with alternative networks SIM cards before succumbing to the tempting offers on their face value for they may be very costly in the long run.

Interconnection cost of shillings 8.20 per minute is charged to the consumer above the normal tariffs whenever they call that other network. If it is any consolation, this rate was shillings 23 per minute in 1999.

I re-confirm that there is no love lost between ICT Consumers Association of Kenya and them.

Meanwhile the GSM duopolist’ subscriptions numbers from January to November 2006 were as follows: -

GSM Subscribers Official Data (January - November 2006)

	Postpaid		Prepaid
	Safaricom	Celtel	Safaricom	Celtel
Month
January	65,115	23,508	3,560,216	1,860,094
February	67,955	24,335	3,717,098	1,920,113
March	70,794	24,937	3,883,348	1,999,011
April	72,428	25,630	3,965,825	2,078,883
May	74351	26,586	4,077,992	2,162,076
June	76,787	28,377	4,257,230	2,122,397
July	78,165	29,572	4,321,410	2,045,216
August	81,460	31,271	4,475,087	1,820,886
September	83,546	32,548	4,565,447	1,743,333
October	86,509	32,962	4,694,169	1,713,401
November	88,422	34,860	5,017,890	1,755,222
December

**December subscriptions are expected to be significantly different considering media reports of millions subscriptions following specials offers from rivalling networks.

One of the study recommendations proposes an active subscriber be redefined as “one who has used their line in the last 90 days” perhaps to correct networks’ misrepresentations of subscriber number as a sales gimmick.

Among the unanswered questions include: -

· Where and when do seven million mobile phones ring?

· When will we have at least five operators?

· Why is Telkom slow in rolling out and aggressively marketing their CDMA?

· Is it fair for KRA to award any company for paying taxes being legal obligations?

· Could telecommunication companies’ breakdown their CSR programs and expenditures?

· Will there come a time when customer care calls will get answered?

The Minister for Information and Communications is expected to make new rules based on the recommendations. You should make your contribution to ensure the Minister does not forget consumers plight - it has happened in the past.

If there existed an "open access" national fibre backbone cable, this whole exercise would not have been necessary because all current and future providers could connect to it infrastructure at pre-determined rates.

Thus, any provider opposed to this cable prefers the current status quo be maintained and they can continue pocketing "interconnection costs" profits.

Relevant documents should be available from the Commission website http://www.cck.go.ke/