•It will reduce the need for consumers to own multiple SIM cards as charges across networks come down
•Telcos will have more money to invest into infrastructure and networks, as opposed to using the same money to pay high interconnect charges
Between 2007 and 2013 call termination rates dropped by 84 percent, and by 65 percent between 2007 and 2010. The rates were last lowered in 2015 from Sh1.44 per minute to Sh0.99 per minute.
In its quest to make call rates all the more affordable to Kenyans, the Communications Authority (CA) in December fixed the Mobile Termination Rates (MTRs) and Fixed Termination Rates (FTRs) at Sh0.12 per minute from Sh0.99 per minute, a reduction of 87.7 percent, with effect from January 1, 2022
The MTRs and FTRs are costs that mobile operators charge each other to allow customers communicate across networks. When calls or texts are exchanged between two numbers of same service provider, it is called on-net call. Call or text exchange between two numbers of different service providers are off-net.
Call rate has been falling gradually from a high of Sh4.42 in 2011 to Sh0.99 in 2021. The current revision was carried out after a stakeholder engagement in July 2021 as per the constitution.
CA argues that the cut will have a positive impact on both consumers and operators. It will also reduce the need for consumers to own multiple SIM cards as charges across networks come down.
It states that the review was founded on the fact that higher mobile termination rates and fixed termination rates mean higher calling rates for consumers.
Consumers will enjoy access to a variety of affordable services across networks while at the wholesale level, operators will have more price flexibility.
The reduction in termination rates, and by extension calling rates is therefore a welcome move as MTR constitutes a greater percentage of off-net call bills.
Telcos will have more money to invest into infrastructure and networks, as opposed to using the same money to pay high interconnect charges.
In Namibia, lower retail prices led to an expansion of the market, which, in turn, led to higher investment and profits for the dominant operator.
On the strength of the most recent empirical evidence from Africa, the paper by Research ICT Africa shows that cost‐based mobile termination rates increase competition between operators and lead to lower prices, resulting in more subscribers and more investment in networks and services.
As stated in the CA’s December 22nd statement, the initiative is aligned with the Authority’s vision of a Digitally Connected Nation, as well as the National ICT Policy Guidelines 2020 broad goal of ensuring accessibility and affordability of ICTs by Kenyans.
The onus is now on the operators to cooperate with the regulator to ensure that Kenyans enjoy the best call rates as they contribute to the country’s growth and development.
Chris Wangalwa is a Communications Consultant at Bael Limited. [email protected]