It was a further contention of TKL that the interconnection rates ought to be cost- based and commercially feasible. TKL also pointed out that a different tariff regime for payphones would require the parties to update each other's records any time a new payphone number is added to the network. In the same letter TKL sought to know whether a formal dispute had been registered by Kencell and that they ought to be given thirty (30) days as required by the Kenya Communications Regulations, 2001 (KCR). The Commission wrote on 3rd September, 2001 granting TKL the time required and also wrote to KenCell on 10th September, 2001 requesting them to confirm that they had registered a dispute with the Commission. The Commission has not received any response from TKL within the stipulated time period of thirty (30) days and M/s. Kencell have written to confirm that they are unable to put to service the installed payphones which, they further claim were now being vandalized for want of service by the public. After having received no formal response from TKL and in the interest of bringing this matter to finality the Commission would like to make the following observation arising from the above observations: 1. The provision of payphone services is based on the principle of Universal Service Obligation, which is a social need whose cost must, of necessity, be borne by all licensed Telecommunications Operators. 2. The ability to prescribe appropriate prices for each service stream must be backed by requisite costing data which the Commission had, requested both parties to submit as a basis for working out an interim payphone interconnect charge. In the absence of the requisite cost structures, interconnect charges should be based on retail price which should also consider unbundling and apportioning charges according to the leg of the network used to transport payphone traffic to the other network. 3. The Commission acknowledges that the current retail price of Kshs. 5.00 per unit on TKL's network is subsidized. It is also equally correct to state that TKL's tariff on long distance and international do not reflect cost of the service. The contention of TKL that it will be subsidizing another network fails to take cognizance of the fact that they will equally be charging rates in the long distance and international service stream on the customers of KenCell that do not reflect cost of providing that service. 4. It is recognized in the Regulations and in particularly section 38 (1) a, d that the rates charged for interconnection should not vary on the basis of the class of customers to be served and that there shall not be no less favourable treatment of customers of an interconnect provider and those of the requesting party. 5. Further, the Commission notes that the contentious price of Kshs. 1.67 is for a complete end to end call and the element of subsidization may not apply in the case of provision of interconnect capacity as the interconnect seeker will only use a portion of TKL's network to relay its traffic.