Zain accuses Safaricom of blocking calls

Zain MD Rene Meza and Safaricom CEO Michael Joseph. Photos/FILE

What you need to know:

What CCK says on competition

  • Commission says a competition study by PricewaterhouseCoopers will enable it identify the dominant companies, their price structure.
    Commission to apply a price cap on off-net tariffs
  • It costs Sh0.01 to terminate SMS on mobile and fixed networks but the operators charge up to Sh3.50. The lowest is Sh2 per SMS.

A mobile phone company on Thursday sensationally accused its competitor of sabotaging its customers’ calls as a business war looms in the industry.

Zain, which cut its calling charges by half on Wednesday, accused Safaricom of blocking its subscribers from calling the market leader’s numbers.

The accusations came on the day the regulator announced a cut in the charges operators levy each other for calls across networks, setting the stage for cheaper calls.

Now networks can only charge each other Sh2.21 a minute for calls and Sh0.01 for an SMS. Zain has already taken advantage and cut its calling rates to Sh3 and SMS to Sh1.

But the company on Thursday said its subscribers were having problems making calls to Safaricom, because the bigger company was limiting the access of Zain callers into its network.

In a complaint to the Communications Commission of Kenya, Zain claimed Safaricom was “abusing dominance” and asked CCK to intervene.

“Our customers are experiencing congestion and call set-up issues when they call Safaricom and not when calling Zain. This is purely for the simple reason that our main competitor has been delaying the capacity increase request from our side to accommodate the incremental traffic coming from us after we launched our new offer in the market,” said Zain Kenya managing director, Mr Rene Meza.

Safaricom dismissed Zain’s claims and instead accused its competitor of poor planning. Chief executive officer Michael Joseph said: “We feel that their request to the CCK to declare Safaricom dominant so soon after the launch of their new tariff is insincere, particularly as it was the result of poor planning on their side.”

He added: “We have always been courteous to Zain, even to the extent of accommodating them when they were unable to clear the significant debt that they owed us. This notwithstanding, we shall continue to cooperate with them as guided by the inter-connect agreement and other industry rules. We invite them to engage us within those parameters.”

Mr Joseph said Zain ‘’is fully aware of the procedures that all operators must adhere to when seeking to increase their inter-connect traffic capacity. Under the agreement the inter-connect pipe belongs to them and they should have upgraded it long before yesterday to accommodate their changed tariff plan.”

The Consumers Federation of Kenya (Cofek), welcomed the drop in charges but asked CCK to ensure fair play in the sector. ‘‘We do hope that competition among service providers shall remain decent, honest and objective,’’ Cofek said in a statement signed by programme officer Calvin Otieno.

The organisation also asked CCK to tackle the issue of low speeds and high charges for internet long after all major fibre optic cables landed in Kenya. CCK director-general Charles Njoroge said Zain’s allegations would be investigated.

“We shall look into the complaints. We know there could be challenges when the traffic is changing patterns and the important thing is to investigate and once we have answers we shall be able to take corrective measures to ensure whatever is happening is corrected,” he said.

Mr Njoroge, speaking at CCK offices, said as the market opens up there will be alignment in terms of efficiency, and operators should co-operate to ensure there is access because the interconnection agreements demand they facilitate seamless interconnection.

He said CCK had noted the wide difference between what operators charge customers to make calls within their networks and to competing networks and how this was being used by the large operators to block competition. The big companies were creating a “club effect” by using interconnection charges to discourage their customers from calling other networks.

“This pricing mindset is offensive to competition as it entrenches tariff imbalances in favour of large operators and makes other networks net payers to large networks,” he said. Mr Njoroge said the issue of dominance will be comprehensively dealt with through a report to be released soon.

He said the interconnection charges could have gone down to Sh0.99 but CCK said this would disrupt business plans of the operators. The Sh2.21 had factored the return on investment, but added that the benefits must be passed to the consumers.

“We need to move to the second step. We have initiated a process, and have regulations and once we declare (a company) dominant and it is seen that the company is abusing the dominance we shall come in and put a cap to regulate the retail (prices),” Mr Njoroge said.

He said they had a competition study by PricewaterhouseCoopers which will enable them identify the dominant companies, their price structure and know if there is an abuse of the market. He said in order to remedy the competition problem at the retail fixed and mobile voice markets, the commission intends to apply a price cap on the off-net tariffs.