Attempt to control mobile phone tariffs ill-advised
I JUST DON’T ACCEPT THAT SOME red tape-obsessed bureaucrat sitting on an arm-chair somewhere in the Waiyaki Way offices of the Communications Commission of Kenya (CCK) should be given power to set and direct consumer tariffs for mobile telephones.
I don’t agree that a CEO of a mobile company must first seek approval from the CCK whenever he wants to introduce the latest version of ‘Bonga points’ or ‘Okoa Jahazi’, or seek approval when a marketing promotion should stand and end.
Make no mistake. I am not opposed to regulation of monopolistic behaviour. Nor am I opposed to the control of abuse of dominant market power.
But the price control regime the government is trying to introduce for mobile phone companies is anachronistic.
The government should suspend these price controls immediately. This thing could spark a wave of agitation for the return of price controls in the country whose momentum may prove unstoppable.
If you can subject mobile phone services to price controls, how will you defend not introducing price controls on petrol, sugar, cement, beer, or any other sector that has a dominant market player?
The anti-enterprise mind-set running through the new regulations on mobile firms must be nipped in the bud before it entrenches itself in the minds of our policymakers.
In my view, Safaricom is just but the latest scapegoat by these new breed of anti-capitalist and control freaks within government.
If we give the CCK such draconian powers to approve consumer prices, turning the institution into a place where companies must go regularly cap-in-hand to seek approvals for price increases, you will have inadvertently turned this important institution into a point for extracting pay-offs.
Why are we giving politicians another loophole and avenue which they will want to exploit to meddle into the operations of some of the most successful and vibrant companies in the country?
The most pertinent question in this saga is the following: From where on earth did the CCK borrow these draconian and anti-enterprise laws?
In the statement he put out defending the regulations last week, the director-general of CCK, Mr Charles Njoroge, revealed that the regulations were mainly based on a 2006 study by a reputable London-based firm of experts on competition policy, Messrs Analysys McCarthy Tetraut.
MR NJOROGE SAID THE CONSULT-ants also conducted a network costs study, which made the case for new regulations on fair competition.
I have had the opportunity to look at the report by London experts and it is patently clear to me that the controversial regulations have their genesis in the study by Analysys.
As a matter of fact, sections of the report have been lifted word by word and included in the controversial regulations. Yet the statement put out by CCK last week only gave half the story.
In the first place, that study was conducted at a time when there were only two mobile phone companies.
In terms of market share, Analysys recorded 53 per cent for Safaricom and 47 per cent for what was then known as Celtel. Why are we applying what was meant for a totally different competitive landscape?
But even more important, the London experts did not recommend the introduction of price controls on retail mobile services.
Here is what the experts say on Page 68 of the report: ‘‘We do not know any jurisdiction where the regulator has implemented price controls on retail services, and do not recommend that the CCK does so.’’
Clearly, the impetus for introducing these tariff regulations came from elsewhere.
What consumers want are affordable prices, real choice and greater availability of advanced services. Introducing price controls in the manner the government is trying to do will eventually turn out to be counter-productive.
As it is, the CCK is being made to implement a complex price control regime that will tax its capacities to the very limits. It has to craft and impose price cap guidelines and designate a basket of regulated services.
The government must not give up seeking to control abuse of market dominance in the mobile phone sector. However, what it must not do is to return the industry to the ancient regime of administrative price controls.
