[kictanet] Price Control in the Telecom Market in Kenya?

Wed Feb 16 14:32:38 EAT 2011

Is this price control dialogue coming too soon?

Safaricom is not only the biggest ICT player but the most profitable  
company in the country. Does that not mean that it still has plenty of  
financial room to expand and improve its operations - price/service  
competition not withstanding?

Airtel could say more about their loyalty to this market. The  
instability of the brand that they are taking over could be working  
against them and their low price strategy. The patchy hurriedly put  
together TV ad is not helping.

regards,
Wamuyu

Quoting Francis.Hook at gmail.com:

> We have to think of the internecine effects of unsustainable low  
> prices  across the market that affect :
> 1- the airtime seller (who used to make 5% on every shilling sold  
> but now  seems to make 5% on every 50cts) - many people rely on  
> airtimes sales to  either make a living or augment their revenues.
> 2 - The investors in operators (whether publicly listed, privately  
> owned,  etc) and the overall effect on our investment climate when  
> recent entrants  who had a business case and certain near and mid  
> term ROI expectations, now  find themselves back at the drawing board.
> 3 - The people employed directly and indirectly.
> 4 - The government who need taxes from operators to invest in   
> infrastructure (roads, comms, elec),
> 5 - The people who will remain technologically marginalised because   
> operators are hard pressed to expand infrastructure,
> 6 - The existing users who are becoming more sophisticated and  
> demanding -  will suffer quality of service/congestion/etc because  
> operators cannot  really invest in more bandwidth/network  
> upgrades/network expansion, .
> 7 - Submarine cable operators (and investors who include various  
> operators)  - seeing how margins are really thin, operators cannot  
> take up more  capacity than they presently need - in some cases,  
> operators do not really  disclose the capacity the end user gets  
> (contention ratios) and some  dishonesty starts to creep in as  
> operators find ways to make money
>
> I know there have been arguments that the two shillings I save on  
> each  minute will be spent elsewhere - I agree. And overall it means  
> the revenue  I will divert to EABL, Total, Uchumi, Nakumatt, BAT,  
> Mama Mboga, etc etc  will still help other parts of the economy but  
> in the near to mid term,  stifle one part that stimulates all the  
> other parts.
>
> My two pesetas
>
>
>
>
> On , james ratemo <jratemo at gmail.com> wrote:
>> It will be interesting to hear what CCK has to say about this.
>
>> As for me I think there could be some bullying going on in the  
>> industry.  But again we should guard against price predation where  
>> some operators  could bring the price so low, kick out or  
>> discourage potential 'other'  competitors that would lead to a near  
>> monopolistic regime.
>
>
>> Yeah as Ndemo argues, we need the operators to rollout 3G  
>> extensively. As  much as we need low prices we also need quality  
>> services. A balance must  be struck to ensure satisfaction for  
>> customers and sustainability for  investors.
>
>
>> Keep the debate rolling.
>
>> On Wed, Feb 16, 2011 at 11:58 AM, bitange at jambo.co.ke> wrote:
>
>> Edith,
>
>> Prices will eventually come down even below one shilling especially when
>
>> Subscriber base begins to exceed 100%. It is selfish for us now to
>
>> celebrate lower tarrifs when coverage is at 40%. We need to improve
>
>> coverage to at least 90%. There are pockets even in Nairobi where none of
>
>> the operators has covered. The quality of service is still wanting as new
>
>> technologies that put pressure on capex keep on emerging. We are not
>
>> seeing aggresive rollout of 3G which all of you agree that it is critical
>
>> to our last mile broadband.
>
>
>
>> For many years, Kenya's development has largely been minimalist,
>
>> depressing and expensive. In the past few years, we started moving from
>
>> such experiments and made serious interventions in the Telcoms and Road
>
>> sectors. Serious investors are now considering Kenya as a good investment
>
>> destination. Other consideration include return on investment not only
>
>> for foreign investors but local investors too. Margins therefore become a
>
>> critical factor.
>
>
>
>> There is no where in the world where lower margins have kept pace with
>
>> technology. Any analyst will tell you that at the pace which prices are
>
>> coming down in Kenya, one operator is bound to die. Unfortunately, most
>
>> of the celebrating crowd will train their spears on government asking what
>
>> it was doing. Whichever way the government gets the flak. That is why I
>
>> make no apologies for taking a conservative stand.
>
>
>
>
>
>> Regards
>
>
>
>
>
>> Ndemo.
>
>
>
>
>
>
>
>
>
>
>
>
>>> Listers,
>
>>>
>
>>> The news I heard today made me wanna shadder!
>
>>>
>
>>> A player with market power asking for price controls in the telecom
>
>>> market? Are we progressing or retrogressing?
>
>>>
>
>>> Telecom Economics dictates otherwise and this must NOT happen in a free
>
>>> and competitive market! Our recent discussions on broadband access just
>
>>> goes to confirm that we are not there yet. We have not yet reached the
>
>>> most remote and isolated corners of this country....control MUST not be  an
>
>>> option!
>
>>>
>
>>> The Kenyan consumer continues to be constrained by availability,
>
>>> accessibility and affordability to fully realize the socio-economic
>
>>> benefits of telecoms.
>
>>>
>
>>> As a voice for the common consumer.....among a million other
>
>>> voices......price control is NOT an option!
>
>>>
>
>>> Edith
>
>>>
>
>>> ________________
>
>>> Edith Ofwona Adera
>
>>> Senior Program Specialist
>
>>> ICT4D Program and Climate Change & Water Program
>
>>> International Development Research Centre | Centre de recherches pour le
>
>>> développement international
>
>>> Regional Office for Eastern and Southern Africa
>
>>> Tel: +254202713160 | Fax/Téléc: +254202711063 | Skype: edithadera
>
>
>
>>> eadera at idrc.or.keeadera@idrc.or.ke> |
>
>>> www.idrc.cahttp://www.idrc.ca/> | www.crdi.cahttp://www.crdi.ca/>
>
>
>>>   
>>> [https://email.idrc.or.ke/owa/attachment.ashx?id=RgAAAAANayfd3%2b2VQYZo%2flcEcy23BwBGVjMm%2bu2wT5L%2b09sJnJi7AAACCuteAABGVjMm%2bu2wT5L%2b09sJnJi7AB4xzB0cAAAJ&attcnt=1&attid0=EAAMf1dr1NMFTaXab9x9F4f4]
>
>
>>>
>
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>> --
>> James Ratemo
>> ICT reporter,
>> The Standard Newspaper,
>> PO Box 49990-00100,
>> Nairobi
>> Cell Phone: 0724960649 OR 0731960649
>> Other Emaili-jratemo at standardmedia.co.ke or jratemo at gmail.com
>
>> Website:www.ictcradle.com.
>> Twitter accounts: kenyacurrent and jratemo
>> Skype account:ratemoj
>
>> Who is rich? He that is content. Who is that? No one.
>
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