High cross-border call rates hold back EA integration
By Ramadhan Yusuf, Arusha
High calling rates across East Africa are slowing down communication, holding back regional trade. ICT experts say despite the laying of fibre optic cables in most countries in East Africa, the calling charges are still high and are contributing to high costs of cross-border trade.
The interconnection rates payable between mobile operators in countries like Somalia, Uganda, Southern Sudan and Tanzania rank among the highest in the world, according to details in a report by Research ICT Africa.
Interconnection charges is the fee that an operator pays its rival for each call connection that terminates on their network.
“Termination and interconnect rates in developing countries have been and continue to be amongst the highest globally when compared with developed countries. This is mostly due to high mobile and fixed telephony penetration rates, harmonisation of markets and also liberalisation of the various regional bloc economies,” said Bob Collymore, Safaricom CEO.
Safaricom, Orange and Airtel charge Sh3 to China, USA, Canada and India while Yu charges Sh2.49. Airtel charges Sh20 per second to the East Africa and South Africa.
The mobile operators revised the international calling rates in October last year but have given the East African region a wide berth.
However, Airtel Kenya MD Rene Meza says that some these disparities were not of their own doing, but country-independent. “Lower calling rates to countries like America are influenced by a host of issues including government regulations, economic policies and the level of infrastructure development. For example, transmitting traffic via fibre optic is cheaper than relaying traffic through satellite or microwave links”, he said.
Telecom industry operators are, however, optimistic that the rates will drop in future.
“Africa is headed there, and especially Kenya’s market trends show that these high termination and inter-connect rates will gradually decline,” Mr Collymore said.
Mobile phone operators are looking at ways to lower the call rates by partnering with already established companies in these countries to use their infrastructure and negotiate favourable termination charges.
Safaricom’s recent deal with Somalia’s Telesom mobile operator is seen as a move to cash in on the high population of Somalis in the country who live and travel in between Kenya and Somalia.
Yu also struck a deal with of Warid of Uganda while Orange did the same in Southern Sudan; with the latter being driven by the growing business ties between Juba and Kenya. These partnerships that allow for preferential rates exist where one operator piggybacks on already established infrastructure of other companies and pays a revised termination rate since the deal essentially means higher traffic for both partners.
The report by Research ICT Africa last year ranked Kenya’s mobile operators as having the second lowest interconnection charges in the continent; standing at Sh2.21 per minute.
Kenya comes second to Senegal which charges Sh1.72 per minute. Communication Commission of Kenya has since directed that the rate will progressively decline by 35 per cent, 20 per cent and 15 per cent annually in 2011, 2012 and 2013 respectively and rest at Sh0.87 by 2014.
Other countries in East Africa follow closely with Rwanda’s interconnection fee standing at Sh5.6 while Tanzania and Uganda follow closely with Sh5.98 and Sh6.44 respectively.