Kenya’s consumer-watcher the Consumer Federation of Kenya (Cofek) has come out to express disapproval of President Kibaki’s interference in the slashing of mobile termination rates (MTR) claiming he is “distorting market forces at the expense of consumer interest.”
The federation said in a statement it condemns the ‘suspect’ approach used by the President to stop a reduction in MTR for the second time.
The Kenyan mobile telephony sector has seen major reduction of MTR and this has brought down the costs of cross-network calls.
Big players in the market including Safaricom have seen their profits drop in the recent years due to recent MTR slashes.
The Communication Commission of Kenya (CCK) has been pushing for competitive pricing in the market having great support from the smaller players such as Airtel and Orange networks.
Price wars have also been witnessed in the market coming as a side effect of the lowering of mobile termination rate.
The low rate for consumers is seen as a “plus” as callers will spend less in making calls. This has seen mobile firms lose profit and turn into other means of making money such as data and mobile money transfers.
It is said that the Minister of Information Samuel Poghisio was expected to give the official communication from the government. There has been no such official communication, according to Cofek.
“Government, through several ministries, is strongly represented on the CCK board as are other stakeholders. High level direct intervention in the operations and decision-making of such a crucial regulatory agency sets a bad precedent,” Stephen Mutoro, the Secretary General of Cofek said.
Cofek however hailed the President’s proposal to have a more research-based decision before lowering the tariffs further.
“Our position is therefore, we must lower MTR but it must be on condition that is evidence-based, reasonable, practical and one that does not break its elasticity point and thereafter come back to haunt consumers after a short-term low tariff holiday,” Mutoro added.
Stakeholders will keenly look at this development to see who will carry the day.