By Henry Neondo
The GSM Association (GSMA), the global trade association for mobile operators has welcomed the Kenyan government’s decision to grant international gateway licenses to its two mobile operators, Celtel and Safaricom.
International calls for mobile users are already 50 percent cheaper for Kenya’s 6 million mobile subscribers who previously had to connect through state owned Telkom Kenya’s gateway, paying a large premium.
Tom Phillips, Chief Government and Regulatory Affairs Officer at the GSM Association comments: “This is a great development for Kenyan consumers who are already seeing improved services and greatly reduced prices for overseas calls.
Liberalising international gateways removes a bottleneck that has been choking African businesses as they seek to compete in a global market. It also allows operators to interconnect at a regional level, leveraging existing infrastructure to provide better quality and more affordable services to consumers.”
The Kenyan decision contrasts with draft legislation in Sierra Leone, which threatens to return exclusive gateway rights to the incumbent fixed operator, SierraTel, thereby raising costs and compromising service levels.
Phillips adds: “It is disappointing that the Sierra Leone government is considering such legislation. Not only does it threaten the service currently enjoyed by 350,000 mobile subscribers but also it goes against the pro competition principals endorsed by WATRA and ECOWAS.
Sierra Leone would join Gambia as the only country in the region that maintains monopoly control of gateways and as such it risks missing out on the substantial the economic and social benefits, and increased tax receipts, that competition brings.”
Celtel, the pan-African operator, has businesses in both Kenya and Sierra Leone and can point to the great consumer benefits of international gateway liberalisation. Marten Pieters, CEO of Celtel International comments “When Celtel received regulatory approval to connect its networks across the Congo B, DRC border, traffic between Kinshasa and Brazzaville increased 20 fold as we passed on cost savings to our customers.”
The elasticity of demand for communication services is extremely high in Africa. A study by PriceWaterhouse Coopers has highlighted the critical impact that government regulation has on mobile operators’ business plans and their ability to meet the demand for mobile services.
“Across Africa policy makers recognise that liberalisation has brought growth and investment not only to the telecoms sector but also to the wider economy, creating jobs and boosting GDP,” added Pieters.
“We know that foreign direct investment levels correlate strongly with the quality of the telecoms infrastructure and therefore call on the Sierra Leone government to reject the proposed amendment that threatens all stakeholders.”
The GSMA points to the specific drawbacks of the proposed legislation and said creating a monopoly will destroy competition, increase prices and reduce efficiency. “The demand for low cost, high quality services will not be met”, points out GSM.
The GSM association said that both consumers and business will suffer from higher costs. Fewer calls will be made and lower traffic volumes will reduce Government tax receipts from international calls adding that creating a monopoly bottleneck will lead to traffic congestion and result in poor service quality on international calls.
The GSM association said that an advanced liberalised telecoms sector, such as that enjoyed by Sierra Leone, is a requisite for foreign direct investment. Returning the international gateway to monopoly control would send the wrong signal to international investors.