[kictanet] Safaricom shuts down cash for Bonga Points platform

Fri Nov 8 11:54:02 EAT 2013

I think we had this conversation before - infact several times.

We have to grudgingly agree with Mwangi's comments below. For me Safcom is a monopoly - though the laywers who get paid for splitting hairs prefer to call it a "dominant" player. 

Economists know the characteristics of a monopoly/dominant player and so this action suprises only those not in that discipline (like most of us :-).  But I have come to understand what Safaricom does and unfortunately, I would do the same in a free market environment where profits and market share as demanded by the Shareholders is the main focus as a CEO.

Whatever you do to grow your profits and protect your market is often a good thing in a market that has "equal" players. In a market that has "unequal" players the  social benefits of a free market economy often fail to materialize - even as those of the private investor increases.

On a related note, I just read the President's tweet saying that from next year April 2014, ALL government services will be paid through cash-less means (I would read that as MPESA :-). This is a very good thing, but what redundancies do have as nation. What happens in the unlikely event that Vodafone (the UK owners of MPESA) chose to close down or refuse to operate in .KE due to some (un?)forseen circumstances like western-country engineered sanctions?

The best redundancy would have been a working competitor - not a limping one like (what was the name of MPESA's competitor again? :-)

We must cautiously celebrate the success of Safaricom, but seek ways to address the elephant in the room:-market failure.

walu. 

--------------------------------------------
On Fri, 11/8/13, Mark Mwangi <mwangy at gmail.com> wrote:

 Subject: Re: [kictanet] Safaricom shuts down cash for Bonga Points platform
 To: jwalu at yahoo.com
 Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke>
 Date: Friday, November 8, 2013, 9:15 AM

 Bonga points are a loyalty
 system that are meant to work purely within the Safaricom
 Ecosystem. The system is thus under the terms and conditions
 of Safaricom and it can be manipulated and even shutdown
 anytime if they so wish. Safaricom has no obligation to help
 anyone make money off its system It may be immoral but not
 illegal. 

 On Thu, Nov 7, 2013 at
 9:56 PM, Ali Hussein <ali at hussein.me.ke>
 wrote:

 Kamotho
 Can one argue that Bonga Points is a currently
 created by Safaricom and hence they have a right to sort of
 regulate its usage?

 Ali Hussein
 +254 0770
 906375 / 0713 601113
 "Kujikwaa si kuanguka, bali ni
 kwenda mbele" (To stumble is not to fall but a sign of
 going forward) - Swahili Proverb

 Sent from my iPad
 On Nov 7, 2013, at 7:43 PM, Kamotho Njenga <kamothonjenga at gmail.com>
 wrote:

 Thanks Hussein for bringing up
 this matter.

 It seems Safcom is so engrossed in protectionism to an
 extent that the firm has little respect for individual
 liberties, flexibility of choices or the law of the land.
 Needless to say, once a firm has made an undertaking to
 customers to award Bonga points when they spend their
 airtime on its network, the firm becomes duty bound to
 fulfill that obligation in its entire measure. As soon as
 the Bonga points have accrued to a subscriber, they
 immediately cease to be mere sales talk or a discretionary
 bonus which the firm can choose to honor or not. They
 immediately mutate into a perfect entitlement that is
 legally recognizable. No reasonable firm would therefore
 limit how a loyal subscriber chooses to activate such an
 entitlement. The only acceptable limitations are those that
 may naturally arise due to lack of technological capacity
 that would widen the range of options through which
 customers could gain full benefit of their hard earned bonga
 points.

 Instead of celebrating and embracing the landmark
 application by Onfon Media and its associated flexibilities,
 Safcom shut it down. By so doing Safcom  lost an
 opportunity to further the scope of options within their
 loyalty program. Most significantly, the firm flouted the
 trade law and its conventional tenets. According to Section
 21 of the Competition Act (2010) "Agreements between
 undertakings, decisions by undertakings or concerted
 practices by undertakings which have as their object or
 effect the prevention, distortion or lessening of
 competition in trade in any goods or services in Kenya, or a
 part of Kenya, are prohibited". 

 Section 24 of the Act reads as follows:
 24. Abuse of dominant position
 (1) Any conduct which amounts to the abuse of a dominant
 position in a market in Kenya, or a substantial part of
 Kenya, is prohibited.
 (2) Without prejudice to the generality of subsection (1),
 abuse of a dominant position includes―

 (a) directly or indirectly imposing unfair purchase or
 selling prices or other unfair trading conditions;
 (b) limiting or restricting production, market outlets or
 market access, investment, distribution, technical
 development or technological progress through predatory or
 other practices;

 (c) applying dissimilar conditions to equivalent
 transactions with other trading parties;
 (d) making the conclusion of contracts subject to acceptance
 by other parties of supplementary conditions which by their
 nature or according to commercial usage have no connection
 with the subject matter of the contracts; and

 (e) abuse of an intellectual property right.
 (3) Any person who contravenes the provisions of this
 section commits an offense and shall be liable on conviction
 to imprisonment for a term not exceeding five years or to a
 fine not exceeding ten million shillings or to both.

 This action of disabling the phone code that was being
 used to trade in Bonga Points by Onfone media by Safcom
 borders on intrusion into private transactions between
 consenting parties. Unless Safcom can show evidence that the
 inter-party dealings with Bonga points have exposed the firm
 to any fraud or justifiable risk, they owe an apology to the
 ICT fraternity and the entire world for attempting to stifle
 innovation.

 Kamotho

 On Thu, Nov 7, 2013 at
 9:58 AM, Ali Hussein <ali at hussein.me.ke>
 wrote:

 Safaricom has
 disabled a phone code that was being used to trade in Bonga
 Points by a Nairobi-based IT firm.

 Onfon Media developed the code, *981*400#, that it
 was using to buy the loyalty points from Safaricom
 subscribers at Sh0.20 each and selling them for Sh0.35,
 hence earning a return of 75 per cent.

 Read
 on http://www.businessdailyafrica.com/Corporate-News/-/539550/2055474/-/xk1n6az/-/index.html

 There should be a healthy debate on
 whether doing this is the right thing to do by Safaricom and
 whether it is anti-innovation...
 I for one wouldn't mind some cash event
 for my thousands of bonga points...:)

 Ali Hussein
 +254 0770
 906375 / 0713 601113
 "Kujikwaa si kuanguka, bali ni
 kwenda mbele" (To stumble is not to fall but a sign of
 going forward) - Swahili Proverb

 Sent from my iPad
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 The Kenya ICT Action Network (KICTANet) is a
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 network aims to act as a catalyst for reform in the ICT
 sector in support of the national aim of ICT enabled growth
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 -- 
 Regards,

 Mark Mwangi

 markmwangi.me.ke

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 network aims to act as a catalyst for reform in the ICT
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