[kictanet] [Skunkworks] Are we letting the PS get away with this too?

Tue Jan 18 19:17:09 EAT 2011

Hi Walu and other esteemed Kenyans,

This debate is interesting. As mentioned earlier by someone, the debate
would be more enlightening if the cost structure of these MNOs had been in
the public domain. But all is not lost; there are some basic parameters
already in the public domain ie. (1) Safaricom's dominant position of about
77% market share and (2) Airtel's low price strategy including their 1 bob
on-net offer in an attempt to eat into Safaricom's market share. It appears
a little premature then to raise a concern of Anti-Trust against a
non-dominant player, when they have not even achieved a half of the dominant
player's market share.

The current cost structure and profit margins for voice, SMS and all other
product offerings is what we really need to understand before going into any
conclusion on long term sustainability. It seems easy to see that brand
loyalty and patriotic sentiments are strong everywhere this debate comes up
but it might also help to see these harder facts.

Lastly, in today's dynamic economic environment, one has to either innovate
or die - and our dear Safaricom has demonstrated substantial competence on
this. It then appears that innovation is what will sustain growth of the
industry - really not regulation and protectionism.

Best regards

On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <jwalu at yahoo.com> wrote:

> Harry, tough questions you have and the answers may most likely neutralize
> my argument. But the bigger point is/was that certain type of competitive
> tactics can be counterproductive when looked at from a Macro perspective.
> Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will
> lose the war.
>
> With the  Microsoft Case- European Courts ruled that their tactic was
> anti-competitive and they were forced to seperate their Browser from their
> OS, rather than sell as a bundle. But I think it was a case of too little
> too late.  Did internet numbers go down? probably not since Internet numbers
> do depend on more factors other than just Browsers.
>
> But for the mobile industry, their growth and expanse does depend on
> revenues. I can forcasts that VOICE Revenue generated from all players might
> be the same as last year because the voice industry may not grow - it will
> simply be shared out.. And after the price-wars are over and an equilibrium
> is established (maybe Airtel  50% others 50%) it will dawn on everyone that
> they incoming revenue streams is insufficient to deliver expansion or extend
> the services outside their current levels.
>
> walu.
>
>
>
>
>
> --- On *Tue, 1/18/11, Harry Hare <harry at africanedevelopment.org>* wrote:
>
>
> From: Harry Hare <harry at africanedevelopment.org>
> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with
> this too?
> To: "Walubengo J" <jwalu at yahoo.com>
>
> Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke>
> Date: Tuesday, January 18, 2011, 5:22 PM
>
> Walu good analogy with Netscape and MS IE. However
>
>    1. Did the Internet die with the death of Netscape?
>    2. Did the Internet numbers stay constant with the death of Netscape?
>    3. Did Microsoft marketshare drop?
>    4. Did innovation on the internet stop?
>
> Guys, let get real, this is business…natural selection comes into play.
>
> Kindest Regards
>
> Harry Hare
> Director
> *
> eDevelopment House  : :  604 Limuru Road
> * Old Muthaiga  : : P O Box 49475 00100
> Nairobi : : Kenya
> T +254 20 3741646/7 : :  C +254 725 650044
>
> Training :  : Research:  :Consultancy:  : Publishing
>
> From: John Walubengo <jwalu at yahoo.com<http://mc/compose?to=jwalu@yahoo.com>
> >
> Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST)
> To: Harry Hare <harry at africanedevelopment.org<http://mc/compose?to=harry@africanedevelopment.org>
> >
>
> Cc: KICTAnet ICT Policy Discussions <kictanet at lists.kictanet.or.ke<http://mc/compose?to=kictanet@lists.kictanet.or.ke>
> >
> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with
> this too?
>
> Here are my thoughts.
>
> The PS is right about predatory pricing never aimed at growing the
> Industry.  For those who were "alive" at the beginning of the web-browser
> wars in early 1990s. Netscape was King. Then Microsoft came in and gave away
> its product Internet Explorer(IE) - for free. Everyone was happy - until
> they realized they were paying for the Microsoft IE through other means (by
> buying for the OS for example). But by then Netscape as a competitor was as
> dead as the Dodo. Microsoft Mission accomplished.
>
> Folks, Airtel is not here because they love giving free things. I am not
> privy to their Strategy but it can be read by anyone.  Their aim is not to
> grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer
> level, nothing really wrong with that and infact it is Christmas time for
> consumers.  BUT at a national level, what you have is that the 20million
> subscribers you currently have in the country, will remain 20million
> subscriber five years later.  Only that half of them will be sitting on
> Airtel's network and the other half will be with "Others". Net growth for
> Kenya? =ZERO
>
> Airtel's strategy wont kill the mobile industry, but believe you me, it
> will stiffle its growth in the long run, because the returns to the
> investors will not be sufficient to sustain operations, let alone extend the
> network or pay for innovation.
>
> That said, as a consumer, Airtel's offer is truly irresistible and worth
> considering.  But as a scholar, I do know, and agree that it is not good for
> the industry in the long run.
>
> walu.
>
>
> --- On *Tue, 1/18/11, Odhiambo Washington <odhiambo at gmail.com<http://mc/compose?to=odhiambo@gmail.com>
> >* wrote:
>
>
> From: Odhiambo Washington <odhiambo at gmail.com<http://mc/compose?to=odhiambo@gmail.com>
> >
> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with
> this too?
> To: jwalu at yahoo.com <http://mc/compose?to=jwalu@yahoo.com>
>
> Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke<http://mc/compose?to=kictanet@lists.kictanet.or.ke>
> >
> Date: Tuesday, January 18, 2011, 1:22 PM
>
>
>
> On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <otieno.barrack at gmail.com>wrote:
>
> You have a point Brainiac, there are many factors in your argument which
> need to be tackled and as such we may need expert opinion on some issues, a
> corporate entity is treated as a person  and as the saying goes one mans
> meat is another mans poison, what are the implications of certain moves on
> new market entrants? How will the other Telcos survive in the market?, this
> is where regulation comes in to ensure a piece of cake for everyone.
>
>
> Before making this debate so complicated, is Airtel's move interpreted as a
> means towards crippling the mobile industry?
> Why is this position not being applied on the Internet Service Provision
> industry then? We always heard promises of "prices will come down" but when
> they do now, the govt is gonna lose revenue? Puleease!
>
> --
> Best regards,
> Odhiambo WASHINGTON,
> Nairobi,KE
> +254733744121/+254722743223
> _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
> Damn!!
>
>
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