The Communications Authority of Kenya (CA) has just made a fresh judgment that the rate at which telecommunication companies charge each other for finishing calls across networks will be reduced gradually to 30 cents per minute during the next four years.
The regulator explained that the new mobile and fixed call termination rates have been put in place aiming at balancing two things: on one hand, to be a generous incentive for local network operators to keep on upgrading their infrastructure, and on the other hand, ensuring competition in the market stays at a healthy level.
Phased Reduction Plan
Moreover, this adjustment is an outcome of a 2022 Telecom Network Cost Study that revealed that current call termination rates were higher than the efficient cost of providing the service.
In light of this, the CA has gone for a phased glide path that will, step, by, step, adjust the rates downwards to long, run incremental cost levels that are more or less in line with international norms.
The existing termination rate of 41 cents per minute, which was set in March 2024, will be used until the new framework is implemented this Sunday. On the contrary, after that the rates will be undergoing a game plan four years falling to the 30, cent goal.
Scope and Implementation
The adjusted rates will be specifically for voice traffic calls that originate and terminate within Kenya. The determination will serve as a price cap. Therefore, operators will be given the freedom to negotiate lower commercial rates if they find that viable.
Telecommunication companies have been instructed to change their interconnection agreements so that the contracts reflect the new framework and submit the revised arrangements to the regulator before the implementation.
This step is just one of the interventions following a series of regulatory reviews to encourage pricing that is oriented to cost, competitive neutrality, and efficiency in Kenyas telecommunications market.
By industry players aligning their pricing structures with the revised termination framework, the regulators objectives towards a market that is more competitive and friendly to investment will be achieved.
