Mobile Termination Rates -The Move by CA Should be Supported

“Please call”

“You have received reverse call”

Are some of the ways that most rural folks get the people to call them back
without spending on the call. Despite the call rates dropping to the level that
is comfortable to urban folks, the rates are still very high or many Kenyans. And
to add to the fact that off net call rates are even more expensive. According
to the latest stats by Communication Authority, “In Q1 FY2021/222, mobile users
spent an average of 1.8 Minutes per on-net call and 1.0 minutes per off net

Mobile termination Rates - Minutes of use per call per operator

People spent less time on off net calls because the rates are just not favorable
for many. And in order to build an inclusive economy then there is need to
ensure that every citizen is able to connect and communicate effectively with
people around them. It is well documented how the mobile phones have changed
the lives of Kenyans and it could only be better if the Government make it
fordable to communicate, be it for private calls or business transactions.

That is why I support the latest move by Communications Authority of Kenya (CA)
to cut the Mobile Termination Rates to close to Zero. I think the move is well
intentioned and actually has pleased the majority of mobile operators though
not all.  Airtel Kenya for example sent
out a press statement describing the move by the CA as “timely”.

“Airtel commends the CA for this timely determination on MTR and FTR
and supports the directive, which will greatly benefit the Kenyan consumer,
enabling them to call more across networks with ease and with little worry of
how much they will spend given the vital role of communication, especially in
the current tough economic times occasioned by the pandemic. Customers will
also get to benefit from better services as Telcos will now have more money to
invest into their infrastructure and networks, as opposed to using the same
money to pay high interconnection fees”, read part of the statement.

After the revised rates, mobile operators from where a call originates are
now required to pay Kshs 0.12 (12 cents) per minute to the operator whose network
receives (terminates) the call. Personally, when I heard that the new MTR will
be Kshs 0.12 per minute I wondered why the rate can’t just be flattened to
zero. The explanation provided by the CA as to why the rate cannot be zero is
that that the MTR allows mobile operators to cater for the interconnection
charges. Interconnection, CA explained in a document proposal for the adoption
of the new MTR, involves the physical and logical linking of telecommunication
networks to allow customers of one service provider to communicate with
customers of another service provider. This implies that in order for customers
of one operator to communicate with the customer of another operator, the
systems of the two operators must be interconnected for the traffic to flow
through. Basically, therefore, the interconnection comes with costs that are
supposed to be taken care of by the mobile termination rates.

But this still doesn’t make much sense given that mobile subscribers call
each other across all networks. For example, when Safaricom subscribers call
Airtel subscribers, Safaricom is required to pay Airtel the Kshs 0.12 for every
minute the Safaricom caller stays on call. Similarly, when an Airtel subscriber
calls a Safaricom subscriber, Airtel has to pay Safaricom the MTR. The problem
however arises due to the imbalance in the number of subscribers. Safaricom
being the leading Telco, it parts with a lot more compared to Airtel on MTR.
But again, the amount it parts with accounts for a very small portion compared
to total calls that originate from its network, given that majority of the
calls are on-net. Airtel on the other hand parts with a larger proportion since
a more significant number of its subscribers will make off-net calls.

Due to the aforementioned imbalance, Safaricom would love a scenario where
MTR is higher so that the competition can feel the pinch of their subscribers
having to make a lot of off-net calls. This explains why Airtel is in support
of the lowering of MTR, given that it will now incur very little operating
costs, and the savings it will incur will either be invested in infrastructure
or passed on to their subscribers through the introduction of new
low-cost-tariffs. Airtel explained as much in their statement:

“This reduction will also increase mobile penetration in Kenya and
enhance access to voice and data services to support the Government’s broadband
strategy and better position Kenya as a regional ICT Hub. We believe that any
attempt to delay or scuttle the implementation of the MTR will deny consumers
the benefits of more affordable calling prices. This benefit to consumers’
needs to be protected considering that high Mobile Termination Rates are not
meant to be a revenue source for Mobile or Fixed voice service providers but an
enabler for seamless calling which improves consumer access to

It should also be remembered that it was lowering of MTR from Kshs 4.42 per
minute to Kshs 2.21 per minute in July of 2010 that the mobile operators
started going after each other’s throats in price wars. Before the lowering of
the MTR, calls were generally charged at between Kshs 8 to Kshs 10 per minute,
but after the Communications Authority lowered the MTR to Kshs 2.21 Airtel
Kenya introduced their Kshs 6 per minute for on-net calls, a move that drove
the mobile operators into cyclic price wars that has ended up with an average
of Kshs 3 per minute on-net and off-net calls across the telcos, in as much as
Safaricom is still charging Kshs 4 per minute. With the new MTR, it is expected
that the average call rates will go down and probably settle at around Kshs 2
per minute.

Whichever way you look at it, the move by CA is great and will
basically help the consumers. Remember Communication Authority have made some great decisions before which were not popular with some stakeholders but later proved to be very beneficial to the public. Looking at the digital migration, Mobile number Porting, Mandatory registration of Mobile numbers and so on. Time will tell but I think the  this latest move to reduce the Mobile Termination Rates will prove beneficial to the economy in general.


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