Regulator seeks another drop in SMS rates

January 7, 2011
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, NAIROBI, Kenya, Jan  7 – The Communications Commission of Kenya (CCK) has directed all mobile service operators to immediately implement lower SMS termination rates and pass on the benefits to the consumers.

The regulator said on Friday that the operators are expected to interconnect at Sh0.60 per SMS, a rate which they are expected to progressively reduce to Sh0.05 by 2013.

“The Communications Commission of Kenya has issued an addendum to the Interconnection Determination No.2 of 2010 on Short Message Service (SMS) Interconnection termination rates. Operators are now required to implement lower termination rates with effect from January 1 2011,” the regulator said in a statement.

The rules which were issued on August 16, 2010 noted that the prevailing wholesale termination rates for SMS’s were way above the incremental costs of providing these services across networks. 

This was established through the Review of the Network Cost Study carried out by the Commission in collaboration with Analysys Mason in 2010.

“The study established that the incremental cost of offering mobile SMS termination services for an efficient operator in Kenya was Sh0.015 per SMS while the prevailing negotiated termination rate among operators was Sh2.00 per SMS,” indicated the regulator.

And following the large discrepancy, the operators were instructed to re-negotiate lower termination rates and file the new charges with regulator before November 16 2010.

CCK however said that the operators had not reached an agreement by the set deadline prompting it to intervene.

“As the industry regulator, CCK is mandated to among other things, promote the development of a competitive telecommunications sector in the country. The Commission’s intervention in this respect is intended to provide guidance to the sector and ensure that the Kenyan consumers enjoy more services at reasonable prices,” it added.

The regulator’s directive came a few hours after Safaricom announced a drastic reduction of SMS’s sent within its network to Sh1 and Sh2 for off net messages.

The three other competitors, Telkom Kenya, Airtel Kenya and Essar Telecom are expected to follow suit and make announcements that are in line with the CCK’s directive.
 

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