[kictanet] Fwd: [i-network] Zain Kenya Crying Foul at Safaricom

Fri Aug 27 11:56:50 EAT 2010

Listers I found this discussion interesting, interesting opinions from our
brothers across the borders.

Kind Regards

---------- Forwarded message ----------
From: Timothy Kabaza <tkabaza at gmail.com>
Date: Fri, Aug 27, 2010 at 9:57 AM
Subject: [i-network] Zain Kenya Crying Foul at Safaricom
To: I-Network Uganda <i-network at dgroups.org>

Badru,

agreed from a purely free and competitive market environment. But it has
never happened before anywhere in the world or in any industry? Why?
Remember (Prof Micheal) Porter's five forces of competition

   1. * Existing competitive rivalry between suppliers*
   2. *Threat of new market entrants*
   3. * Bargaining power of buyers*
   4. * Power of suppliers*
   5. * Threat of substitute products (including technology change)*

here in our region, the biggest distortion of competition is #4, the power
of suppliers (operators), not # 1 because of the oligopolistic/cartel
tendencies.

Hence my view that the regulators step in to protect the consumers. i am not
advocating that the regulators protect the suppliers , NO, but to protect
us, the consumers against the power of the suppliers.

The last time the market was left to the power of suppliers with a 'self
regulating' regime ( at most with minimum regulation), we ended up with the
global financial collapse - (we are still suffering from the same and we
should expect further failures, bail outs notwithstanding!).

Tim

On 24 August 2010 14:24, Badru Ntege <ntegeb at one2net.co.ug> wrote:

> Tim
>
> There's two schools of thought here in a market environment the best
> performer wins and takes the lion share. However it seems that when this
> happens we then call for big brother the regulator to come help the none
> performers. I think that is a wrong way towards building a sustainable
> industry. Those players who cannot handle should seek partners who can help
> them build a competitive business as opposed to hoping that the regulator
> will always help them out.
>
> Regards
>
> Badru
>
> Sent from my® smartphone
> ------------------------------
> *From: * "Timothy Kabaza" <tkabaza at gmail.com>
> *Date: *24 Aug 2010 11:58:30 +0200
> *To: *I-Network Uganda<i-network at dgroups.org>
> *ReplyTo: * "I-Network Uganda" <i-network at dgroups.org>
> *Subject: *[i-network] Zain Kenya Crying Foul at Safaricom
>
> Precisely!
>
> Remember what I contributed about interconnection charges and the resultant
> tariffs? I am of the view that regulators should take a strong stand in the
> interest of the users and pro-actively address the issue of tariffs across
> board. Perhaps the EAC Secretariat should include communication tariffs on
> the custom union agenda.
>
> Tim
>
> On 20 August 2010 06:48, Kiiza Edgar <edgar212516 at googlemail.com> wrote:
>
>> **
>> Zain accuses Safaricom of blocking calls
>> *In Summary*
>>
>> *What CCK says on competition*
>>
>> · Commission says a competition study by PricewaterhouseCoopers will
>> enable it identify the dominant companies, their price structure.
>> Commission to apply a price cap on off-net tariffs
>>
>> · It costs Sh0.01 to terminate SMS on mobile and fixed networks but the
>> operators charge up to Sh3.50. The lowest is Sh2 per SMS.
>>
>> A mobile phone company on Thursday sensationally accused its competitor of
>> sabotaging its customers’ calls as a business war looms in the industry.
>>
>> Zain, which cut its calling charges by half on Wednesday, accused
>> Safaricom of blocking its subscribers from calling the market leader’s
>> numbers.
>>
>> The accusations came on the day the regulator announced a cut in the
>> charges operators levy each other for calls across networks, setting the
>> stage for cheaper calls.
>>
>> Now networks can only charge each other Sh2.21 a minute for calls and
>> Sh0.01 for an SMS. Zain has already taken advantage and cut its calling
>> rates to Sh3 and SMS to Sh1.
>>
>> But the company on Thursday said its subscribers were having problems
>> making calls to Safaricom, because the bigger company was limiting the
>> access of Zain callers into its network.
>>
>> In a complaint to the Communications Commission of Kenya, Zain claimed
>> Safaricom was “abusing dominance” and asked CCK to intervene.
>>
>> “Our customers are experiencing congestion and call set-up issues when
>> they call Safaricom and not when calling Zain. This is purely for the simple
>> reason that our main competitor has been delaying the capacity increase
>> request from our side to accommodate the incremental traffic coming from us
>> after we launched our new offer in the market,” said Zain Kenya managing
>> director, Mr Rene Meza.
>>
>> Safaricom dismissed Zain’s claims and instead accused its competitor of
>> poor planning. Chief executive officer Michael Joseph said: “We feel that
>> their request to the CCK to declare Safaricom dominant so soon after the
>> launch of their new tariff is insincere, particularly as it was the result
>> of poor planning on their side.”
>>
>> He added: “We have always been courteous to Zain, even to the extent of
>> accommodating them when they were unable to clear the significant debt that
>> they owed us. This notwithstanding, we shall continue to cooperate with them
>> as guided by the inter-connect agreement and other industry rules. We invite
>> them to engage us within those parameters.”
>>
>> Mr Joseph said Zain ‘’is fully aware of the procedures that all operators
>> must adhere to when seeking to increase their inter-connect traffic
>> capacity. Under the agreement the inter-connect pipe belongs to them and
>> they should have upgraded it long before yesterday to accommodate their
>> changed tariff plan.”
>>
>> The Consumers Federation of Kenya (Cofek), welcomed the drop in charges
>> but asked CCK to ensure fair play in the sector. ‘‘We do hope that
>> competition among service providers shall remain decent, honest and
>> objective,’’ Cofek said in a statement signed by programme officer Calvin
>> Otieno.
>>
>> The organisation also asked CCK to tackle the issue of low speeds and high
>> charges for internet long after all major fibre optic cables landed in
>> Kenya. CCK director-general Charles Njoroge said Zain’s allegations would be
>> investigated.
>>
>> “We shall look into the complaints. We know there could be challenges when
>> the traffic is changing patterns and the important thing is to investigate
>> and once we have answers we shall be able to take corrective measures to
>> ensure whatever is happening is corrected,” he said.
>>
>> Mr Njoroge, speaking at CCK offices, said as the market opens up there
>> will be alignment in terms of efficiency, and operators should co-operate to
>> ensure there is access because the interconnection agreements demand they
>> facilitate seamless interconnection.
>>
>> He said CCK had noted the wide difference between what operators charge
>> customers to make calls within their networks and to competing networks and
>> how this was being used by the large operators to block competition. The big
>> companies were creating a “club effect” by using interconnection charges to
>> discourage their customers from calling other networks.
>>
>> “This pricing mindset is offensive to competition as it entrenches tariff
>> imbalances in favour of large operators and makes other networks net payers
>> to large networks,” he said. Mr Njoroge said the issue of dominance will be
>> comprehensively dealt with through a report to be released soon.
>>
>> He said the interconnection charges could have gone down to Sh0.99 but CCK
>> said this would disrupt business plans of the operators. The Sh2.21 had
>> factored the return on investment, but added that the benefits must be
>> passed to the consumers.
>>
>> “We need to move to the second step. We have initiated a process, and have
>> regulations and once we declare (a company) dominant and it is seen that the
>> company is abusing the dominance we shall come in and put a cap to regulate
>> the retail (prices),” Mr Njoroge said.
>>
>> He said they had a competition study by PricewaterhouseCoopers which will
>> enable them identify the dominant companies, their price structure and know
>> if there is an abuse of the market. He said in order to remedy the
>> competition problem at the retail fixed and mobile voice markets, the
>> commission intends to apply a price cap on the off-net tariffs
>>
>> Visit the I-Network website - www.i-network.or.ug Follow I-Network on
>> Twitter: http://twitter.com/inetwork The I-Network Dgroup is a platform
>> for ICT Knowledge Sharing
>>
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>
>
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