Kenya: Lowered Call Tariffs to Affect Number Portability

By Ben Omondi

The recent lowering of voice and SMS tariffs by the country’s four mobile network operators is set to have an impact on the success of the imminent introduction of mobile number portability (MNP) or porting in the industry by December this year.

This is because among the main reasons why people port (or change networks without the need to change their subscriber numbers) is the rate of call and SMS tariffs charged by operators, meaning that a users may decide to port because one’s current network tariffs are high compared to a rival player’s.

The reduced tariffs currently prevailing in the market and introduced by all the four operators means that subscribers who would have previously found porting attractive might decide to stay connected to their present networks, now that the tariffs are almost similar across the board.

The significantly reduced rates by operators, which were in response to the industry regulator’s Communication Commission of Kenya’s (CCK) downward revision of call interconnect rates from US $ 0.06 (Kshs 4.42) per minute to US $ 0.03 (Kshs 2.21), were effected after a network cost study conducted by UK’s Analyssis Mason.

Zain Kenya was the first to drop its call rates to US $ 0.04 (Ksh 3) per minute last month, forcing Safaricom to introduce new tariff structures, with some as low as 2 shillings per minute. The other mobile service providers - Telkom Orange and YU - also made reductions on their voice and SMS tariffs.

The move by the CCK to review the rates downwards was aimed at encouraging telecoms operators to lower call tariffs. The CCK aims gradually to reduce the fees to Kshs 0.99 (US$0.013) by 2013.

Supporting the introduction of MNP in Kenya, Rene Meza, Zain Kenya chief executive said porting is expected to “positively increase competitiveness of the industry,” as subscribers would be looking forward to improved services from operators as well as lower service charges.

“By granting customers the freedom to move from one operator to another, the telecoms industry is headed for very exciting times. With MNP, differentiation amongst mobile service providers will no longer be based on pricing but a combination of value propositions mainly value added services, customer service and network coverage and quality,” said Meza, who was the first to reduce call and SMS tariffs heralding the current price wars.

He emphasised that Zain Kenya’s key focus will be to enrich the customer experience through providing affordable and flexible services in line with the changing market needs, adding that MNP, if well implemented, would later Kenya’s mobile telephony landscape.

“The Kenyan telecommunications market is one of the most concentrated (having monopolistic tendencies) in Africa and the world. MNP will increase competitiveness thereby greatly unlock potential in the sector,” he added.  

CCK recently announced that the country will introduce MNP by December 2010 to enable the industry’s estimated 19 million subscribers to change service providers without losing their mobile numbers which has become an identity to most people.

Netherlands’ based Porting Access was awarded a contract to supply, install, commission and manage porting services in the country to boost competition in the mobile market after paying a license fee of US $ 2,564 to the CCK.

The firm has committed to invest between US $ 2,032,370 to US $ 1,968,750 per year in the coming years to boost uptake of MNP in country while subscribers would be charged US $ 2 (Kshs 173) per port though details about how frequently one can port are yet to be worked out.

Patrick Musimba, Porting Access Kenya chairman expressed optimism that MNP would succeed, saying that porting “marks the last level of competition for mobile telephony as it will lead to tariff neutrality and usher in the new era of consumer being truly king.”

“Subscribers will embrace MNP as it gives them flexibility of choice and network identity which leads them to embrace the best innovations by operators. This will lead to operators adopting the best customer care experience and loyalty programmes,” said Musimba, chair of the Dutch subsidiary which has successfully implemented MNP in Netherlands and various locations in the UK.

Musimba said that network quality and indeed quality of service parameters will become a big differentiation parameter, adding that innovation in products and services will be the driving force for consumer choice and will herald new opportunities in mobile applications and content sector being championed by Kenya ICT Board.

He added that Kenya’s MNP process, whose deadline has been put at December 31 by CCK, would be successful and define the convergence between voice and data services being witnessed.

Muruiki Mureithi, chief executive of Summit Strategies, an ICT and telecoms consultancy firm, said that mobile number portability (MNP) is meant to get subscribers out of the “walled garden” situation where the number belongs to the operator.

“MNP liberates the subscriber by getting them out of the control of a single or dominant  market player though operators still put many features on their networks (read numbers) to discourage porting. But the network’s tariffs and quality of service leads to porting by subscribers,” said Mureithi.

Mureithi said that Kenya’s industry trends currently indicate that prices and tariffs have come down and operators can only compete on the quality of service offered to subscribers, however adding that even globally, the number of people who port is very small.

An example is Pakistan which introduced porting in March 2007 to offer more choice to the country’s subscribers served by five operators. By April this year, statistics from the country’s telecoms industry regulator indicated that only about 3 million of Pakistan’s 95 million mobile subscribers had embraced MNP.     

Mobile number portability, first introduced in Singapore in 1997, is currently used in 62 countries globally and has recorded mixed levels of success with only 3 countries in Africa adopting the technology – Morocco, Egypt and South Africa.

After Kenya, the other African country that has announced plans to implement the practice before end of 2010 is Nigeria, which currently has about 70 million subscribers and mobile penetration rate of 50 per cent.

Other EAC countries are yet to put up or announce elaborate plans for the implementation of porting for telecoms operators in their jurisdictions, with Uganda’s telecoms industry regulator Uganda Communications Commission (UCC) announcing in mid 2009, when the country had about 8.2 million subscribers, that following a feasibility study, introduction of MNP was “not necessary” and would only be considered when the country’s mobile industry attains a 10 million subscriber base.