Busia Senator Okiya Umtatah has moved to court seeking to overturn the Mobile Termination Rates (MTR) set by the Kenya Communications Authority (CA) last November, arguing that they are arbitrary and the highest in the region.
The regulator set the mid-term price at Sh0.41 per minute on November 17, 2023, but the legislator sees the new prices, although lower than the previous rate of Sh0.58 per minute, as seven times higher than the rate of Sh0.06 recommended by consultants. Hired by CA.
MTR refers to the fees a carrier charges its competitors when they terminate calls on its network.
Mr Umtatah said that in arriving at the MTR of Sh0.41 per minute, CA ignored the cost study conducted by its consultants and failed to demonstrate a plan to move the rate towards the scientifically derived MTR of Sh0.06 per minute.
The current rates will apply 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 high mobile termination rates (MTR) charged by phone service providers to facilitate calls over competing networks,” Umtatah said.
High Court Judge Chacha Mwita ordered the case to be mentioned on June 24 for directions.
Mr Umtatah said the cost study which set the mid-term rate at Sh0.06 per minute had passed with public participation as required by law.
But the new rates set by the CA were set without consulting stakeholders or the public, and thus ignored the public interest, he says.
“The petitioner has moved this Hon'ble Court seeking orders quashing the arbitrary access to the MTR of 0.41 per minute and compelling the CA to implement the scientifically derived MTR of KES. 0.06 per minute as recommended in the cost study report,” he said.
The Busia senator said it was unacceptable that Kenya had such high rates when other East African countries had much lower rates and Rwanda had a mid-term rate of zero.
He said the rise in MTR means that retail rates for calls from one provider to another remain high and that providers are unable to offer voice bundles or bouquets whose actual price per minute is lower than the MTR because on-net and off-net calls are charged the same way.
He noted that the Kenya Information and Communications (Interconnection) Regulations 2010 required that mid-term reports be objective, independently verifiable and fair, and that they should not be used by an interconnection service provider to facilitate cross-subsidies.
“It is also required that MTR rates are sufficiently lower than retail service charges to allow recovery of the additional retail costs associated with providing an interconnection-supported retail service,” he said.
The charges have declined over the years, but have been vigorously contested at every turn with Safaricom – a net beneficiary due to its market-leading shares – facing smaller rivals such as Airtel Kenya and Telkom Kenya from which it earns billions of shillings in revenue. In the year.
For example, the implementation of the MTR system was suspended in 2012 following a complaint by Safaricom that a rate reduction would have a negative impact on competition, treasury revenues, tax stability, profitability and the economy.
Later, a mid-term rate of Sh0.99 per minute was introduced from 2014 to 2021 since CA did not conduct any network cost study in this period.
In July 2021, the CA noted that the Sh0.99 per minute rates in the MTR did not reflect the true cost of interconnection and hindered service providers from offering more competitive and affordable rates to consumers, and carried out a benchmarking exercise to elicit the new MTRs.
However, the implementation which reduced the MTR rate from Sh0.99 per minute to Sh0.12 per minute was put on hold because Safaricom appealed the reduction before the Communications and Multimedia Appeals Tribunal.
Mr. Amtatah said that by ignoring the recommendations of the cost study, the legislature failed to account for the public funds used to finance the study, which is inconsistent with the prudent management of public funds.
