The recent 87 per cent cut in call interconnection rates announced by the Communications Authority of Kenya (CA) is laudable as it could unlock massive benefits to our economy.
Besides lower call rates, that will also make mobile voice services accessible to more people, thus fostering inclusive development that leaves no one behind.
Considering the important role the telco industry plays, this is likely to trigger even more economic goodies. This is critical in these times of the pandemic, when technological solutions spanning voice, SMS, data and mobile money have kept economies running with restrictions on physical interactions.
The newly reviewed mobile termination rate and fixed termination rate — defined as the cost that operators charge one another to allow subscribers to call across their networks — come into effect next year. Taking into account the ever-increasing cost of living, it is a perfect New Year’s gift to the country from the CA.
The CA’s decisive action is the first we have seen in six years. It sets in motion long-overdue reforms in the telco sector. This momentum should not be lost.
Sustained, this is guaranteed to benefit the sector, by making it more competitive for the benefit of consumers. In addition, operators now have more flexibility in pricing, allowing them to craft and roll out more innovative and affordable products.
It will also unlock the interest of investors, who have been kept away by an uneven playing field, resulting in some players exiting the market. Telcos will have more money to invest in infrastructure and networks as opposed to spending it on high interconnection fees. This will lead to improved services and, hence, value for money.
However, two more actions are outstanding in efforts to reform the telco market, addressing the imbalances with respect to mobile money (wallet and agent) interoperability and network sharing among operators. These three remedies outlined by a 2016 study commissioned by the CA promise to make competition in the industry more robust.
This will eliminate any advantages hitherto enjoyed by the dominant player, taking advantage of the imbalance in connecting traffic with the smaller players by incentivising subscribers to stay on their network. Now, the smaller players will have some legroom to better compete.
The review is likely to attract new operators to the market, offering more choice to consumers.
However, this is too enormous a task to be left in the hands of the telco industry regulator alone. Other agencies with a policy and regulatory role need to play their part.
Key is the Central Bank of Kenya, in whose remit regulating the mobile money market falls.
Parliament also need to take similar decisive action, although past efforts over the years have not borne much fruit.
The time is now.
Kenneth Basanga, Nairobi