[Kictanet] Day 6 of 10: Best Business & Regulatory Model for provisioning OFC ( EASsy, TEAMs, etc)

Tue Jan 30 08:09:08 EAT 2007

Hi Everyone,

Sorry for entering the discussion so late. I have been keenly following the
various comments;

My proposal:
----------------

Completely separate ownership of the fiber from management. (for example the
Government owns majority of Safaricom but does not have management control).
Let a completely independent competent management team run the fiber taking
into account the various needs of the consumers, who in this case will be
the Telecommunications companies and service providers, who eventually serve
the mwananchi. 

The management must equitably and fairly provide access to all operators and
service providers but must ensure no single operators consumes more than 40%
of their services because this leads to control. (suggestions please on how
they can do this and still be fair, equitable and profitable).

The management must run the business for a PROFIT and further more must not
get preferential treatment from CCK. Other private operators must continue
to get the same rights and access to resources and government support.

In terms of investment/ownership there should be a fair structure that will
allow for as wide ownership as will allow for the cheapest money but with a
MAJOR bias to Kenyan ownership.

This is why!
---------------

1) The consumer is King ( both local and International consumers). The
consumer wants sustainable quality services at an affordable price. This
creates DEMAND. (By the way, Trust me on this, being an owner of a business
des not guarantee you quality and affordable services. So listing the
business is not a magic answer. Ask the government!)

2) The investor on the other hand wants a sustained return on their
investment, they see the demand in the market and they create SUPPLY. This
is highly dependent on the risk factors, competition and so on. Look at KDN,
they have invested so much in fiber based on the "existing market structure"
and now are not sure what the new competition model is going to look like
now that the government is coming to the party (in what form? Yet to be
defined. Investors hate uncertainty) Am sure all the various discussions are
not making it easy for KDN's capital raising. KDN of course is not alone,
and sorry to single them out. I know other players including Safaricom will
be waiting to see what the new structure will be, before they decide on
their investment strategy (Uncertainty again).

3) The Government is there to ensure both the Consumer and the Investor are
protected to ensure they both have sustained benefits. They therefore create
a market structure that ensure the sustained growth. This could range from a
monopoly or duopoly situation to a fully open market. They do this for a
"small" fee - TAX! & Various Licences fees.

Today Kenya is not competitive at all in the communications sector, compared
to our primary African competitors (South Africa and Egypt) not only are our
power bills 8 times higher that both countries, we also don't have
connectivity to international fiber and the Government is certainly doing
it's job in getting into TEAMS and the National Fiber projects.

We of course are also in a position where the government is the largest
supplier of communications services in the country, through Telkom,
Safaricom, Posta amongst others. Suppliers by definition do not like
competition and put up all sorts of barriers to competition and this will
range from capital raising, access to markets and so on. In the same breath
Government is also by default the largest consumer of services and has a
desire to obtain better quality and affordable services.

I could go on and on here to indicate the various forces affecting various
decision. The primary being "to invest or not to invest" Today I have a lot
of faith in the current leadership at the Ministry of Information and
Communications and their desire to see a vibrant expanded communications
sector.

The challenge for them and us is to have a working model that will allow
investment in the sector and in the backdrop of the various issues I raised
above, it is not been easy to get real competition in Kenya, look at the 3rd
GSM and now the SNO saga. Our problems are both historic and current and are
made worse when CCK is not able to for instance address competition issues
without change in regulations (the Communications ACT)

Sorry people this is a long email. I have of course not been exhaustive,
only covered some areas I think we should debate.

--
Joseph Mucheru
Executive Director
mucheru at wananchi.com

> From: Bill Kagai <billkagai at gmail.com>
> Reply-To: Kenya ICT Action Network - KICTANet <kictanet at kictanet.or.ke>
> Date: Mon, 29 Jan 2007 22:01:42 +0300
> To: <mucheru at wananchi.com>
> Subject: Re: [Kictanet] Day 6 of 10: Best Business & Regulatory Model
> forprovisioning OFC(EASsy, TEAMs, etc)
> 
> I agree with both [Ndemo and Kai] Esq.. albeit in part.
> 
> Open Access can be re-defined at a new (higher) level if both Govt (TEAMS)
> and Private (FLAG) float shares to the public in these ventures before the
> projects commence. We (Mwananchi) thus becomes consumers in ownership
> earning dividend...and everybody goes home happy.
> 
> Maybe our primary recommendation should be that a venture which entails
> public consumables like this cable should first be floated to the public so
> that we ALL gain.
> 
> Bill
> On 1/29/07, bitange at jambo.co.ke <bitange at jambo.co.ke> wrote:
> 
>> Dear All,
>> It is appropriate to thank Walubengo for the excellent job he is doing in
>> moderating this discussion.  I am suprised that some of you are making
>> outrageous statements like "TEAMs is to go to a monopoly".  This is not
>> true because I am sure that the TEAMs design has not been made public.
>> Secondly, it in the Government interest that these projects benefit
>> mwananchi.
>> 
>> The Government would continue to encourage competition to ensure the costs
>> are at the lowest.  The only reason one would feel hurt about competitor
>> progress is when that person wants the monopoly status.
>> 
>> Regards
>> 
>> 
>> Ndemo
>> 
>> 
>> 
>> 
>> 
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