Kibaki Now Intervenes to Stop Kenyans from Enjoying Cheaper calls
You might have thought that this government cared for consumer but now you might get the real picture. Safaricom and Orange were very loud in calling for the stopping of the drop of the call charges. The government which holds shares in both Safaricom and Orange has intervened through a Presidential decree.
So when CCK through the no nonesense DG, Mr Njoroge, could not agree to be pushed to the wall by the operators, the decided to go to the media which they control since they pay big amounts in adverts and the mainstream media was singing their tune. So state house schedules a meeting with the operators, CCK, and the Information and Communication ministry on 18th May. The President heard the plea and without much thought and expertise, issued a state house decree that there shall not be much drop in interconnection charges and almost went as far as directing that no operator reduce charges any more.
The prices were to drop considering tha interconnection charges should have reduced from Ksh 2.21 to Ksh 1.44 by July 2011. This move clearly makes it hard for Airtel and Essar Kenya (Yu) to rethink their strategy for the market since they were most successful not in innovation but through serious price-war. Rene Meza, CEO Airtel, told Business Daily that infact their whole strategy was pegged on Mobile Termination Rates (MTR).
The Prime Minister’s office had a committee put into place to look into what the operators were asking for and was set to release a report of the finding next week. The President, using the PNU and ODM arm-twisting tactics in the government, jumped the gun, sidelined the PM with his committee and issued what amounts to a roadside declaration stopping the further drop of call charges. Now that is the kind of leadership we hate.
What we are not sure of is whether there were consumer organisation representatives and even application developers and consumers at the state house meeting.
“The Communication Commission of Kenya board held a meeting on May 20 and the implementation of the mobile termination rate cuts was suspended pending a detailed evaluation of the economic impact of the current charges,” Information permanent secretary Bitange Ndemo said in a letter to the Permanent Secretary in the Office of the President, Ambassador Francis Muthaura. That is according to the Business Daily article.
You will find the mainstream media arguing about the profitability of the ICT sector being eroded by the vicious price wars. The truth is that with more than 25% of the market share in a market like this, one operator will forever kill the spirit of the competition in the country and not show any growth. A situation where one operator makes over Ksh 20 Billion and all other operators, some ten years later have not even broken even is simply insane.
What do you think of Kibaki’s directive?