Highway Africa News Agency

Kenya's mobile phone users last week breathed a sigh of relief following a ceiling put on interconnection charges between the duopolistic mobile operators, Safaricom and Celtel.

The Communications Commission of Kenya (CCK),the country's communication industry regulator, capped the charges at Kshs 30 (43 US Cents) per minute. The decision came in the wake of price wars between the two mobile operators that were threatening to get out of hand.

In January, Celtel complained to CCK over what it termed were unfair trade practices and monopolistic tendencies by its competitor, Safaricom. Celtel contended that Safaricom was locking in its subscribers by charging them highly for placing calls to other networks. In response to Celtel's complaint, CCK warned that it would move swiftly in the next few months to pre-empt any monopolistic tendencies by any one player in the telecommunications industry.

"The commission will soon be releasing a Dominant Market Power (DMP) report designating various operators as dominant in the areas of retail and interconnect pricing?, said CCK in a statement. This designation of dominance will include the relevant regulatory obligations to be applied in each relevant market," the statement added.

It is noteworthy that before CCK cracked the whip, Safaricom was charging its subscribers at least Ksh 50 (71 US Cents) per minute to call a Celtel line and Ksh 45 (64 US Cents for a call to the sole landline operator, Telkom Kenya. Conversely, calls terminating within the Safaricom network were cheap, ranging from Ksh 8 (11 US Cents) per minute. Celtel on the other hand, charges Ksh 16 (22 US Cents for calls to other networks).

CCK's decision was therefore a win for Celtel, which had earlier accused Safaricom of unfair trade practices. The regulator also ordered the two competitors to enter into new interconnection agreements to reflect the new charges. Also brought down was the cost of connecting calls between mobile and fixed line operators by 57 per cent.

"The new rates are meant to ensure that subscribers are able to communicate across networks without restrictions," said CCK Director-General John Waweru, adding: "CCK will monitor the evolution of all telecommunications service prices through competition to guard the interest of consumers because it is the expectation of the commission that prices will continue decreasing as the cost of interconnection comes down."

Indeed, the consumers are expected to be the greatest beneficiaries of this move, while Safaricom is expected to lose as it has mainly been ripping off subscribers by locking them in. On the other hand, Celtel and Telkom Kenya are expected to generate more revenue, as more calls from Safaricom will now terminate in its network.

A price war between the two mobile phone operators have been raging for the last few months. Last year, Celtel, which has operations in the three East African Community member states of Kenya, Uganda and Tanzania, launched Africa's first integrated network, enabling callers from those countries to travel with their networks across the borders at no additional cost. Last month, Safaricom responded by partnering with MTN of Uganda and Tanzania's Vodacom to launch a seamless service.

Safaricom has a total subscriber base in Kenya of about five million while Celtel has three million. As they continue to scramble for subscribers, consumers will have to wait a little longer before cheaper rates become a reality. This is because attempts to release a third mobile operator have ended in false starts, with Econet Wireless failing to roll out after winning the bid in 2004 while Dubai's VTEL consortium had its licence early this year.

New guidelines to end tariff row.

The new CCK ruling is expected to provide a level playing ground for the two companies who are expected to harmonize their tariffs. For a long time now, Safaricom and Celtel have engaged in a bitter dispute over the pricing of calls, with the latter accusing the former of unethical business practices.

Currently Safaricom charges its subscribers Sh50 per minute for calling the Celtel network while calls within its network are as low as Sh8 a minute. Safaricom calls to Telkom stands at Sh45 per minute. In contrast, Celtel charges its subscribers a flat calling rate for calls within its network, as well as to Safaricom and Telkom Kenya.

Safaricom CEO Michael Joseph has since refuted claims that his company had abused its position as the market leader. "We are not distorting our position because only 5% of the total calls normally leave the network and 95% are normally made within the Safaricom network. If anything, our customers are free to migrate to any network of their choice for their convenience."

CCK guidelines also stipulate that the operators are free to negotiate interconnection rates subject to the capped rates as determined by the regulatory body.

Stiff competition between Safaricom and Celtel continue to intensify. In less than a month, the duo mobile companies have been in hot pursuit of who will score the first goal. When Celtel launched its sole Network that gives its subscribers one tariff for East Africa, Safaricom followed suit by signing a partnership with MTN in Uganda and Vodacom in Tanzania that would allow its subscribers to enjoy a similar advantage.

And responding to the new guidelines, Safaricom Chief Corporate Affair's Officer Joseph Ogutu said that his firm was contented with CCK's decision although it takes time before they can come up with acceptable rates.

Celtel's Corporate and regulatory affairs director Clare Ruto welcomed the move saying the ruling came out as expected and it was in tandem with what is done worldwide.