Cofek backs regulator in battle with telco giant, Safaricom over mobile termination rate cut

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STANDARD >>>The Consumer Federation of Kenya (Cofek) is backing the Communications Authority of Kenya (CA) on the recent 88 per cent cut in mobile termination rate (MTR) that is being opposed by Safaricom.

Cofek says the rights of consumers would be “greatly infringed” if CA is not allowed to implement the reduced rates that are expected to translate into reduced calling charges.

Safaricom’s biggest rival, Airtel Kenya, had welcomed the move but Safaricom applied to the Communications and Multimedia Appeals Tribunal seeking to stop the changes, arguing, among other things, that CA’s move was unprocedural.

“The appellant’s (Safaricom) request hereof is predatory, outrageous, unreasonable, punitive, irrational, unfair, unjust, oppressive, unjustified, unlawful, illegal and offends the spirit and provisions of the Constitution of Kenya,” says Cofek in its application.

“There is no reasonable cause to retain high charges by the respondent (Safaricom) at a time when most consumers are struggling to meet basic amenities for their families such as food, housing, healthcare…”

Safaricom had on December 24 applied to the tribunal to issue an injunction restraining CA from implementing the cuts until the appeal is heard and determined.

The tribunal’s chairperson, Rosemary Kuria, has already granted the injunction to the changes that CA had intended to implement from January 1. Airtel had earlier welcomed the MTR cut, terming it fully aligned with the interests of consumers.

“This benefit to consumers needs to be protected considering that high MTR are not meant to be a revenue source for mobile or fixed voice service providers but an enabler for seamless calling,” said Airtel in a statement.

High mobile termination rates are currently in favour of Safaricom, with CA data showing more customers call from other networks to Safaricom.

The hearing of the application in which Safaricom is accusing CA of ignoring public participation and using benchmarking methodology rather than the long-run incremental costing method is set for Wednesday.

Cofek is further accusing Safaricom of misleading the tribunal that lowering mobile termination rates will automatically result in revenue losses without factoring in the expected economies of scale.

The lobby says consumers stand to gain from the “long overdue MTR glidepath that has stagnated for far too long.”

“The appellant (Safaricom) has been making massive profits from its diverse array of services and with ever rising number of subscribers. Thus the MTR should have been lowered much further or totally eliminated,” says Cofek.

The mobile termination rate have been falling gradually from a high of Sh4.42 in 2011 to the current Sh0.99, which has been in place since 2015.

Safaricom is accusing CA of arriving at a determination that is “opaque” and “cannot be independently verified.”

The tribunal is expected to listen to presentations from Safaricom, CA, Cofek and any other party that may be enjoined in the suit before making its final decision.

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