Other Methodologies Considered
The Commission noted that the study considered other methodologies
particularly benchmarking. The countries used for benchmarking
were selected on the basis of regional proximity and a number of
economic and geographical factors. In weighting the factors, a scoring
system is used that assigns a higher weighting to economic factors
(i.e. similar GDP per capita and GINI coefficient to Kenya), as these
tend to be particularly important factors in determining the level of
penetration and usage of telephony services.
Desire to Promote Competitive Rates and Attract the
Market
The Commission notes that the study results indicate that all
operators, fixed or mobile, have a monopoly on terminating calls into
their networks. In order to promote fair competition on retail tariffs,
the Commission is of the opinion that there is need for regulating
interconnection rates when the market fails.
The Commission has noted that lowering interconnection charges will
provide the impetus for lowering retail prices, expanding the market
and subscriber base. Lower retail prices will result from competition
which is likely to emanate from a well regulated interconnection
regime preventing operators with Significant Market power (SMP) in
the interconnection service market from abusing their dominance.
Financial Implications
The Commission notes that in the short run there will be less revenue
realized from interconnection by operators who are currently net
receivers. However, net payers will experience a reduction in costs by
paying less interconnection charges to other operators and that traffic
patterns will change through increase of subscribers and talk time.
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