Okiya Omtatah challenges regulator’s set mobile termination rates
Busia Senator Okiya Omtatah.
Busia Senator Okiya Omtatah has moved to court seeking to quash Mobile Termination Rates (MTR) set by the Communications Authority of Kenya (CA) last November, arguing that it is arbitrary and the highest in the region.
The regulator set the MTR to Sh0.41 per minute on November 17, 2023 but the legislator argues that the new rates, although a reduction from Sh0.58 per minute, it is seven times more than the Sh0.06 recommended by the consultants hired by CA.
Mr Omtatah said in arriving at the MTR of Sh0.41 per minute, the CA disregarded the cost study undertaken by their own consultants and failed to demonstrate a plan to move the rate towards the scientifically derived MTR of Sh0.06 per minute.
The rates will run for two years from March 1, 2024.
“It is a matter of public knowledge that the cost of making phone calls in Kenya is inflated by the high MTRs charged by telephony service providers for facilitating calls across rival networks,” Mr Omtatah said.
Mobile and Fixed Termination Rates (MTRs/FTRs) are charges that are paid between mobile and service providers for terminating calls on their networks.
The charges are levied by one telephone service provider on other providers for terminating their calls on its network.
High Court Judge Chacha Mwita directed the case to be mentioned on June 24, for further directions.
Mr Omtatah said a cost study that set the MTR at Sh0.06 per minute went through public participation as required by law.
But the new rates set by CA were made without consulting the stakeholders or the public, hence it disregarded public interest.
“The petitioner has moved this court seeking orders quashing the arbitrarily arrived at MTR of 0.41 per minute and compelling the CA to implement the scientifically derived MTR of Sh0.06 per minute as recommended by the Cost Study Report,” he said.
The Busia senator said it was unacceptable that Kenya should have such high rates when other East African counties have much lower rated, and Rwanda has a zero rated MTR.
He argued that a high MTR means that the retail prices for calls from one provider to another remains high and providers are not able to offer voice bundles or packages whose effective price per minute is below the MTR, because both on-net and off-net calls are charged the same.
He pointed out that the Kenya Information and Communications (Interconnection) Regulations, 2010 require that MTRs be objective, independently verifiable and fair and that they should not be used by an interconnect provider to facilitate cross-subsidies.
“MTRs are further required to be sufficiently below retail service charges to allow for recovery of the incremental retail costs associated with provision of the retail service supported by interconnection,” he said.
The implementation of MTR was suspended in 2012 following complaint by the market leader Safaricom in 2012 that reduction of MTR would have negative impact on competition, exchequer revenue, tax stability, profitability and macro-economy.
Later, the MTR of Sh0.99 per minute was put in place from 2014 to 2021 since no network cost study was conducted by the CA in this period.
In July 2021, the CA noted that the rates of Sh0.99 per minute MTR did not reflect the true cost of interconnection and hindered service providers from offering consumers more affordable and competitive prices and they carried out a benchmarking exercise to derive new MTRs.
However, the implementation which effected a reduction of MTR from Sh0.99 per minute to Sh0.12 per minute was suspended because Safaricom Limited challenged the reduction before the Communication and Multimedia Appeals Tribunal.
Mr Omtatah said by disregarding the recommendations of the cost study, the CA failed to account for the public funds used to fund the study, and which goes against prudent management of public funds.
