Okiya Omtatah questions mobile termination rates set by regulator

Busia Senator Okiya Omtatah has gone to court to try to overturn mobile termination rates (MTR) set by the Communications Authority of Kenya (CA) last November, arguing that they are arbitrary and the highest in the region.

The regulator set the MTR at Sh0.41 per minute on November 17, 2023, but the lawmaker maintains that the new rates, although a reduction of Sh0.58 per minute, are seven times more than the Sh0.06 recommended by the hired consultants. by AC.

Omtatah said that in arriving at the MTR of Sh0.41 per minute, the CA ignored the cost study carried out by its own consultants and did not demonstrate a plan to move the rate towards the scientifically derived MTR of Sh0.06 per minute.

The rates will be valid for two years starting March 1, 2024.

“It is common knowledge that the cost of making phone calls in Kenya is inflated by the high MTRs charged by phone service providers for facilitating calls over rival networks,” Mr Omtatah said.

Fixed and mobile termination rates (MTR/FTR) are charges paid between mobile and service providers for the termination of calls on their networks.

Charges are charged by a telephone service provider to other providers for terminating their calls on its network.

High Court Judge Chacha Mwita ordered the case to be mentioned on June 24 for further directions.

Omtatah said a cost study that pegged the MTR at Sh0.06 per minute went through public participation as required by law.

But the new tariffs set by CA were set without consulting stakeholders or the public, thereby ignoring public interest.

“The petitioner has applied to this court for orders quashing the arbitrarily achieved 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,” said.

The Busia senator said it was unacceptable for Kenya to have such high rates when other East African counties have much lower ratings and Rwanda has an MTR rate of zero.

He argued that a high MTR means that retail prices for calls from one provider to another remain high and providers cannot offer voice packages or packages whose effective price per minute is below the MTR, because both inside and outside the network calls are charged the same.

It noted that the Kenya Information and Communications (Interconnection) Regulations 2010 requires that MTRs be objective, independently verifiable and fair and should not be used by an interconnection provider to facilitate cross-subsidies.

“In addition, MTRs are required to be sufficiently lower than retail service charges to allow recovery of the incremental retail costs associated with the provision of retail service supported by the interconnection,” it said.

The implementation of the MTR was suspended in 2012 following market leader Safaricom’s complaint in 2012 that reducing the MTR would have a negative impact on competition, tax revenue, fiscal stability, profitability and the macroeconomy.

Subsequently, the MTR of Sh0.99 per minute was implemented from 2014 to 2021 as the CA did not conduct any network cost study in this period.

In July 2021, the CA noted that MTR rates of 0.99 shillings per minute did not reflect the true cost of interconnection and prevented service providers from offering consumers more affordable and competitive prices and carried out a review exercise. benchmarking to obtain new MTRs.

However, the implementation which effected a reduction in the MTR from Sh0.99 per minute to Sh0.12 per minute was suspended as Safaricom Limited challenged the reduction before the Communications and Multimedia Appeals Tribunal.

Omtatah said that by ignoring the recommendations of the cost study, the CA did not take into account the public funds used to finance the study, which goes against prudent management of public funds.