Regulator at Protecting Consumers

[The Daily Nation]
CCK acts to lower cost of mobile phone calls
Story by KABURU MUGAMBI
Publication Date: 2/23/2007

Mobile phone users may soon find it cheaper to call across networks after a ruling by the market regulator yesterday.

The commission directed that mobile telephone calls across networks should not exceed Sh30 a minute with effect from July 1, 2007.

Yesterday’s ruling appeared to back Celtel in its dispute with Safaricom over pricing of calls.

Safaricom charges its subscribers up to Sh50 a minute for calling the Celtel network, and Sh45 a minute for calls to Telkom, while calls within its network are as low as Sh8 a minute.

Last month, Celtel wrote a letter to the Commission accusing Safaricom of using price strategy to lock in its subscribers.

The letter from CCK said: “This is an unfair trade practice, because by penalising subscribers who chose to make calls across networks, Safaricom has made it economically disadvantageous to be a customer on other networks and in this way has restricted and distorted competition.” Celtel said that because it has not adopted a pricing strategy that locks in its subscribers, from time to time, its customers move to Safaricom.

“This is meant to ensure that subscribers are able to communicate across networks without being hindered,” CCK (Communications Commission of Kenya) director-general John Waweru told reporters at his Nairobi office. Currently, Celtel charges its subscribers a flat calling rate for calls within its network, as well as to Safaricom and Telkom Kenya.

Celtel’s corporate and regulatory affairs director Clare Ruto, who was present during the announcement, said she was delighted by outcome. “I am very happy because the ruling came out as we expected and it is in line with what is done worldwide,” Ms Ruto said.

Safaricom chief corporate affairs officer Joseph Ogutu, who also attended the Press briefing, said Safaricom was studying the ruling, and he had no immediate response.

Further, CCK has reduced to Sh6.28 a minute from Sh8.12 a minute the fee Safaricom and Celtel charge each other for calls across their networks, commonly known as interconnection rate. As a result of the new interconnection rates, the operators are required to enter into new interconnection agreements, and submit them to the commission by March 15.

“However, all operators are at liberty to negotiate lower interconnection rates subject to the capped in the determination by CCK,” Mr Waweru said.

Although she could not be drawn into whether the new pricing guidelines would mean immediate reduction in tariffs, Ms Ruto said Celtel has been lowering its prices, but was unable to push for interconnection rates reduction. Mr Waweru asked telecommunications operators to ensure that their tariffs are published and communicated on regular basis “in a concise, simple and easily understood manner by consumers.”

CCK also modified Telkom’s licence for basic retail narrow band services and its services will have a new price cap beginning July 2007. Mr Waweru said CCK would monitor the evolution of all telecommunications service prices through competition to guard the interest of consumers.

Competition between Safaricom and Celtel has intensified of late.

Recently, Celtel launched its One Network that gives subscribers one tariff for East Africa. Safaricom responded swiftly, signing a partnership with MTN in Uganda and Vodacom in Tanzania that would allow its subscribers to enjoy a similar advantage.

CCK acts to lower cost of mobile phone calls

[The Standard]
Communication regulator caps mobile tariffs at Sh30
By Tom Mogusu
Friday February 23, 2007

Mobile phone users will now pay a maximum of Sh30 on calls regardless of the tariff they are in.

Industry regulator, Communications Commission of Kenya (CCK), on Thursday ordered Safaricom and Celtel to adjust their call charges to a maximum of Sh30 from next month.

The regulator also slashed the cost of connecting calls between mobile and fixed line operators by 57 per cent to Sh1.74 from Sh4.

The CCK orders were contained in new guidelines, released on Thursday, that should open the way for a decline in the costs of telecommunication.

CCK also announced that by next month, interconnection rates between mobile networks would drop by 23 per cent to Sh6.28 from the current Sh8.12.

Guidelines expected to end a price war

CCK Director-General Mr John Waweru said the new rates are aimed at slashing the huge costs incurred when making calls across the networks.

The cost of making calls between mobile phone networks will also drop to less than Sh30 by July 1, the regulator said.

"Coupled with the lower termination rates being unveiled today, it is the Commission’s conviction that this will cultivate traffic growth, long-term revenue flows for operators and delivery of the benefits of competition to consumers and the economy at large," said Waweru.

"We believe that this new pricing system will stimulate competition and facilitate the delivery of quality and affordable services. We do not expect this to have any negative financial effect on the companies because the market’s potential is yet to be fully exploited. You just have to wait and see what I am saying ," he said.

The guidelines are expected to end a price war between Celtel and Safaricom.

Thorough analysis of the market

Mr Waweru said the new guidelines were effected after a thorough analysis of the market, which took 12 months to conclude.

The study was undertaken by Analysis Consulting Limited of the UK. It was aimed at establishing acceptable wholesale and retail costs and prices of telecommunication services to help CCK determine the best way the industry could grow.

Safaricom’s Chief Corporate Affairs Officer, Mr Joseph Ogutu, told The Standard that the firm was satisfied with CCK’s decision.

"We are satisfied so far but it takes time before we can come up with acceptable rates across the board," Ogutu said.

He said the company was aware that there would be pressure to lower the costs of telecommunications among mobile firms and defended his company against allegations that Safaricom had abused its position as the market leader.

"Our tariffs have always been at the same level even though the cost of doing business has been rising each year."

Communication regulator caps mobile tariffs at Sh30