The Commission has issued a new determination on interconnection tariffs for fixed and mobile telecommunications services in the country.

According to Interconnection Determination No. 2 of 2010 dated today(16 august 2010), the Commission reduced mobile interconnection rates from the current Kshs4.42 per minute to Kshs2.21, representing a 50 per cent drop. The rates will progressively decline by 35%, 20% and 15% annually in 2011, 2012 and 2013 respectively to stand at Kshs0.87 by 2014.

This determination follows conclusion of a study carried out for the Commission by Messrs Analysis Mason on the review of the prevailing interconnection framework developed in 2007. The study also developed pricing models for infrastructure sharing and co-location as well as broadband interconnection framework.

Although the study had recommended an immediate reduction of mobile termination rates to Kshs0.87, the Commission considered such a reduction as potentially disruptive to the business plans of the operators, and therefore opted for a three-year glide path.

“We believe the glide path will provide an acceptable balance between the regulatory objective of attaining efficient cost levels as soon as possible while maintaining stability in the business plans for the operators,” said CCK Director-General Mr. Charles J.K. Njoroge.

Meanwhile, the Commission will soon introduce price caps on the retail mobile and fixed markets in order to curtail the ‘club’ effect by operators with large subscriber base who maintain high off-net tariffs to discourage their subscribers from calling other networks.

Mr. Njoroge described this pricing mindset as offensive to competition as it entrenches traffic imbalances in favour of large operators and makes other operators net payers to large networks. The effective date for implementing price caps will be immediately after designation by the Commission of dominant operators in the retail mobile and fixed voice markets in line with the existing laws and regulations.

At the same time, the Commission considers the wholesale termination rate of Kshs.2.00 per SMS negotiated by operators extremely high, given that the actual cost of terminating an SMS on both mobile and fixed networks is less than Kshs0.01. The Commission has, therefore, directed all operators to renegotiate lower mobile and fixed SMS termination rates and file the new rates with the Commission within three months.

In respect to mobile money transfer service, the Commission noted the high charges imposed on the non-registered users and users of other networks. In line with the converged telecoms market, the Commission has directed all mobile money transfer service providers to pursue interconnectivity options for the service in line with regulatory obligations and review the charges accordingly.
Meanwhile, the Commission will continue discussions with the Central Bank of Kenya in order to develop a fairly inclusive regulatory framework that delivers the benefits of this service to the public at cost-effective rates.

Click here for the full press statement on the determination


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