Mobile Phone Charges Ripe for Free-Fall Phase

Monday, August 13, 2007

When Communications Commission of Kenya director-general Joseph Waweru told journalists last November that mobile phone call tariffs would drop by half in the next 12 months, very few believed such a feat was achievable. Then, the average cost of a wireless call within one network stood at a high of Sh30 per minute, while calls across networks were priced at as high as Sh50 per minute. Aug 13, 2007 (Business Daily/All Africa Global Media via COMTEX) — When Communications Commission of Kenya director-general Joseph Waweru told journalists last November that mobile phone call tariffs would drop by half in the next 12 months, very few believed such a feat was achievable. Then, the average cost of a wireless call within one network stood at a high of Sh30 per minute, while calls across networks were priced at as high as Sh50 per minute.

According to Mr Waweru, the move would be driven by the entry of a new player on the market – Telkom Wireless.

When Communications Commission of Kenya director-general Joseph Waweru told journalists last November that mobile phone call tariffs would drop by half in the next 12 months, very few believed such a feat was achievable. Then, the average cost of a wireless call within one network stood at a high of Sh30 per minute, while calls across networks were priced at as high as Sh50 per minute.

According to Mr Waweru, the move would be driven by the entry of a new player on the market – Telkom Wireless.

Eight months have passed since Mr Waweru made the statement and the mobile phone market has changed completely. Mobile phone service provider, Celtel, was the first to make a move with the introduction of a uniform tariff for calls to all networks taking advantage of CCK’s directive on interconnection charges.

Safaricom, the market leader followed suit with a new set of tariffs across all its services. This offered consumers huge concessions on airtime costs bringing the average call costs to Sh14 per minute and Sh20 per minute for intra-network and across network calls respectively. But as Mr Waweru predicted, this drop in call costs is being driven by Telkom Wireless, the government-sponsored and CDMA-based service that was officially launched in June and boasts of the cheapest tariffs in the market.

Subscribers to the service can make calls to other networks for only Sh24 per minute and for a rock bottom price of Sh5 per minute within its network.

Besides, the service, run by national operator Telkom Kenya, is offering corporate clients irresistible packages that include employees of big companies using the wireless service as extensions even when out of the office. Safaricom and Celtel reckon that Telkom is only able to offer these savvy packages because of a regulatory loophole that has seen it exempted from paying excise duty on the tariffs.

But they are not just complaining. The two mobile phone service providers have continued to protect their turfs with new products and services with pricing as the main battle front. The free fall of costs deepened last week when Celtel Kenya launched two new products for its voice and data markets.

The company introduced data services on its One Network, declaring it yet another first in the global communications market and introduced the Shuka Shuka tariff structure that offers consumers price concessions based on the length of calls.

These new services are expected to boost Celtel’s bid to grow its subscriber base that has seen it increase by a million since the launch of flat calling fees in December. Shuka Shuka is a three step pre-paid tariff with a flat rate, across all networks that is priced at Sh20 per minute for the first minute then dropping to Sh14 for the second minute and Sh8 per minute thereafter.

Continue reading “Mobile Phone Charges Ripe for Free-Fall Phase

Source: Calibre Macro*World- Business Daily (link opens in a new window)