Telkom: 3G’s $25m licence fee ‘too high’

There is growing disquiet in the telecommunications industry in Kenya that the development of mobile phone technology could be stifled by exorbitant licence fees charged by regulators.

Already, the deployment of the 3G network by Telkom Kenya hangs in the balance over $25 million license fees levied by the Communications Commission of Kenya (CCK).

“The CCK should reduce the license fees as it could ultimately be a barrier to deepening communication services,” said Telkom Kenya chief executive Mickael Ghossein.

Under the Orange brand, Telkom Kenya provides wireless and Internet services such as Orange Mobile, Orange Fixed Plus and Orange Broadband.

The 3G network supports enhanced applications of the mobile phone technology such as video conferencing and mobile TV services thanks to its high speed data connections.

3G is a higher form of the 2G networks that are currently in use.

2G was principally developed to provide voice and relatively low speed data connectivity.

Orange has warned that it could put a halt to the commercial deployment of the 3G network if the industry regulator does not lower the “way out of reach” fees.

Mr Ghossein said that licences to operate the network are provided free of charge in some African countries though accompanied with some terms and conditions, and challenged the regulator to consider similar action.

Presently, Orange is in the process of carrying out a test run for the 3G network in partnership with Ericsson, a network infrastructure and telecommunication service provider. The test run is expected to be concluded by October 2010.

15 sites for the test run

About 15 sites have been chosen including the central business district and the area around Jomo Kenyatta International Airport.

These will be progressively rolled out to other towns.

This is going on as the firm seeks an agreeable solution to the standoff with CCK over license fees.

According to the CEO, his firm has presented a proposal, which takes into account different scenarios during deployment of the 3G network, to the regulator for consideration.

Mr Ghossein said that the most favourable would be getting the 3G network licence free of charge, with even sharing of revenue and obligations.

Orange said that a positive response from CCK would enable it to affordably deploy 3G services on a commercial basis by March 2011 as it had already invested close to $3 million in the project.

The Telkom Kenya CEO stated that if granted the license at reasonable terms, this would make his firm the first GSM operator in Kenya to commercially market video conferencing services.

This would be delivered through Webex Solution, operated by CISCO.

Under this network, corporate customers will be able to access their office intranet platforms in a service dubbed “Business Everywhere” over 3G even while away from office.

If successful, Orange would become the second mobile network in the country to commercially deploy 3G services in Kenya.

Only mobile phone service provider Safaricom operates the 3G network in the country. It has been doing so since 2007.

Earlier in the year, Zain Kenya applied for a licence to commercially operate the 3G but with a rider that the fee be reviewed.

This was contested by Safaricom which argued that since it paid the $25 million licence fees, its competitors must do the same.

As the decision by CCK over the matter is awaited, industry players are hoping that it will not be to the detriment of the rapidly evolving mobile phone technology.

A response that is expected by end of January 2010 could determine the future course of mobile technology in the East African country.

Mr Ghossein said that though the system had been found to be working, the test run is only meant to ensure that the service is clear.

“Orange will be seeking to fine tune its network delivery capacity and will be working in partnership with a select team of leading local corporate enterprises,” he added.

Mr Ghossein said that if their wishes are granted, the 3G network would be commercially deployed in March 2011.

“We need about four months to add more sites and cover the entire country before roll out,” he added.

Orange estimates that up to $3 million has gone into setting up the network.

“With Business Everywhere, corporate customers can surf and access their office networks virtually from anywhere within Kenya and selected countries abroad,” he explained.