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Kibaki slams brakes on lower call rates

kenyafakephonestory

Mobile phone users in Kenya will not enjoy cheaper call rates any time soon, after President Mwai Kibaki stopped the Communications Commission of Kenya (CCK) from lowering the Mobile Termination Rates (MTR).

This is the second time president Kibaki has directed the CCK to suspend plans to reduce MTR, which would automatically lead to a cut in call rates.

MTR, the amount of money mobile firms pay each other for calls that terminate in a rival’s network, currently stands at 2.21 shillings per minute in Kenya. Consumers and stakeholders hoped the rate would be reduced to 1.60 shillings.

President Kibaki has directed that the rates remain unchanged until an all-inclusive study of costs is undertaken and forwarded to his office for his consideration.

“I am directed, therefore, to inform you that until an all-inclusive study of costs and other relevant issues is undertaken and forwarded to this office for His Excellency’s consideration, the status quo should remain,” read part of a letter signed by Nick Wanjohi, the President’s private secretary.

The letter cited by the Business Daily newspaper was sent to the Information and Communications ministry permanent secretary Bitange Ndemo.

The MTR was last adjusted in July 2010 to 2.21 shillings from 4.42 shillings . The rate was supposed to drop to 1.44 shillings in June last year, but this was stopped by a presidential freeze.

Mobile operators Safaricom and Telkom Kenya sought the president's intervention last year, alleging that further reduction of MTR would affect their business operations. Competitors Airtel Kenya and YU have however supported plans to reduce the MTR.

There are also concerns that a reduction in MTR would lower taxes government collects from the telecommunications industry. The government collected about 41 billion shillings ($ 487,514,871) in taxes from the industry last year and stands to lose up to 5 billion shillings ($ 59,453,033) if MTR is revised downwards.

The president's directive is yet another blow on the CCK's ability to operate as an autonomous state organ. The CCK has in recent months faced trouble in enforcing certain rules and actions due to meddling from the country's top executives.

The regulator's plans to revoke frequencies owned by the Royal Media Services Limited which it accused of operating radio services without a licence were scuttled after Prime Minister Raila Odinga's office issued an order barring the move.

A June 14 letter cited by local media directed the CCK director-general to withdraw the notice to revoke Royal Media Services frequencies.

“The Prime Minister has directed that you immediately withdraw the notice referred to above and obey the court order referred to above. This means you do not at all interfere with any frequencies and licences issued and being used by Royal Media Services Limited as contained in your notice,” said Mohamed Isahakia, the permanent secretary in the office of the Prime Minister in a letter to the CCK.

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