b)
Network externality surcharge to support penetration: There is no best
practice on inclusion or exclusion of network externality surcharge and
there is no guarantee that any additional surcharge would be used to
support penetration. The increased effectiveness of competition arising
from lower termination rates would guarantee benefits to all stakeholders;
c)
Cap on off-net to on-net tariff: The intervention of reducing the off-net
price for the large operators in mobile voice market will have a small
negative impact on their voice revenues, since the bulk of traffic volumes
are on-net. In addition, there is no significant cost differential in cost
burden to the operators as the cost of providing an off-net call per minute
is lower than the cost of providing an on-net call per minute;
d)
Modeling on 2G: 2G is primarily used for voice service while 3G will be
used for data services in the Kenyan market in the foreseeable future.
Therefore, the proportion of 3G voice traffic in the Kenyan mobile market
was too insignificant, if any, at the time of conducting the study and hence
did not warrant consideration in the modeling exercise. Moreover, due to
its better spectral efficiency propagation characteristics, the implications
of using 3G in modeling would be to lower the termination rates even
further;
e)
SMS termination charges: While termination rates for SMS are
significantly above the pure LRIC level, the review encourages
commercial negotiations to lower the termination rates to competitive
levels within a specific time frame and intervention effected only if the
negotiations do not yield optimal results; and
f)
Glide path to attain pure LRIC costs: The glide path is a balance between
the regulatory objectives to attain the efficient (pure LRIC) costs as soon
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