[kictanet] [ke-internetusers] Fw: [NVK-Mageuzi] Re: MOBILE PRICE WARS COULD DERAIL NEW KATIBA - JOKE OF THE YEAR (Was Are we letting the PS get away with this too?)

Thu Jan 20 12:07:03 EAT 2011

Well Leonard i suppose its the tone the debate was adopting :-) , in this
day and age we are all part and parcel of the of the government either
through ppp or other multistakeholder approaches, it is for this reason that
i thought we might as well look at the issues raised as opposed to
addressing them as comments at the end of the day i hope we will gather some
usefull conclusions from the discourse which  has been great.

Best Regards

On Thu, Jan 20, 2011 at 11:44 AM, Leonard Mware <mleonardo at yahoo.com> wrote:

>
>
>   Barack, I have not seen any personalized or politicized debate targeting
> the PS. Personally as someone who views PS Dr. Ndemo as a National Hero, I
> am deeply saddened by your statement. The issues raised in the debate are
> very important and if you check today's Daily Nation page 27, MoIC and CCK
> basically agree with our arguments. If there was any attack on the PS then
> I disassociate myself from it.
> Leonard
>
>
>
> --- On *Wed, 1/19/11, Barrack Otieno <otieno.barrack at gmail.com>* wrote:
>
>
> From: Barrack Otieno <otieno.barrack at gmail.com>
> Subject: Re: [kictanet] [ke-internetusers] Fw: [NVK-Mageuzi] Re: MOBILE
> PRICE WARS COULD DERAIL NEW KATIBA - JOKE OF THE YEAR (Was Are we letting
> the PS get away with this too?)
> To: mleonardo at yahoo.com
> Cc: "Ke Internet Users" <ke-internetusers at bdix.net>, "KICTAnet ICT Policy
> Discussions" <kictanet at lists.kictanet.or.ke>
> Date: Wednesday, January 19, 2011, 10:06 PM
>
>
>  Well Listers i suggest we move away from a personalised (political :-))
> debate targeted at the PS and tackle the issues that have been raised in the
> article soberly, i have picked some excerpts from the article posted by
> Shem. Could we also comment on the comments attributed to Michael Ghossein
> (TKL) and Mr. Peter Wanyonyi?
>
> Regards
>
> “We have asked CCK (industry regulator Communications Commission of Kenya)
> to evaluate if this kind of pricing is sustainable,” Dr Ndemo said on
> Monday.
> “I am not opposed to reduced prices but they have to make business sense,”
> he said. “Competition has to take care of re-investment in the sector as
> well as shareholder value.”
>
> Orange Kenya CEO Mickael Ghossein said on Monday that the future of the
> industry’s profitability appears grim should the current price wars be
> allowed to prevail.
>
> “There has not been largely significant increase in the traffic across
> networks that would indicate that the low pricing model offered by the
> competition has resulted in massive recruitments. In any case,
> cannibalisation of another player’s market share cannot be considered as
> industry growth,” Mr Ghossein said.
>
> “Operators will see little justification in improving call and related
> quality when profits are falling under assault from Airtel’s strategy.
>
>  “Improving service quality requires investment in new infrastructure, but
> with ever-reducing revenues, this will not happen,” warns Mr Peter Wanyonyi,
> a telecoms analyst.
>
> But India’s Bharti Airtel-owned Kenyan subsidiary has defended its
> decision.
>
> On Wed, Jan 19, 2011 at 5:16 PM, Shem Ochuodho <shemochuodho at yahoo.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=shemochuodho@yahoo.com>
> > wrote:
>
>  Fyi
>
> Sorry, I forgot to include the "Nation" site with the full story (for those
> who might have missed it):-
> http://www.nation.co.ke/business/news/PS%20fears%20mobile%20phone%20price%20wars%20could%20derail%20new%20Constitution/-/1006/1091554/-/wnxn0ez/-/index.html
> .
>
> Happy reading.
> Shem
>
> Shem J. Ochuodho, MSc (Eng), PhD, LLD (Hon)
> Senior Advisor
> Ministry of Telecom & Postal Services
> Government of Southern Sudan (GoSS), Juba
> Commonwealth Telecom Organization (CTO/GoSS) 2010 African Internaut Award
> Recipient
> Kenya Community Abroad (KCA) 2006/07 Excellence Award Winner
> AfricaOnline 2005 Industry Pioneer Award Recipient
> Father of Internet in Kenya (CSK 2000)
> Cell: +249-955-021-040/+256-477-232025/+254-734-137371
> Skype: shem.ochuodho
>
>
>  ------------------------------
> *From:* Shem Ochuodho <shemochuodho at yahoo.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=shemochuodho@yahoo.com>
> >
> *To:* Leonard Mware <mleonardo at yahoo.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=mleonardo@yahoo.com>>;
> KICTAnet ICT Policy Discussions <kictanet at lists.kictanet.or.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=kictanet@lists.kictanet.or.ke>>;
> NVK-Mageuzi Members List <NVK-Mageuzi at yahoogroups.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=NVK-Mageuzi@yahoogroups.com>
> >
> *Cc:* PICTA Kenya-LIst <picta-kenya at yahoogroups.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=picta-kenya@yahoogroups.com>>;
> NYCIV Group <nyciv at googlegroups.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=nyciv@googlegroups.com>>;
> ProgressiveMinds <ProgressiveMinds at yahoogroups.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=ProgressiveMinds@yahoogroups.com>>;
> Madaraka Party <madaraka-kenya at yahoogroups.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=madaraka-kenya@yahoogroups.com>
> >
> *Sent:* Wed, 19 January, 2011 15:57:28
> *Subject:* [NVK-Mageuzi] Re: MOBILE PRICE WARS COULD DERAIL NEW KATIBA -
> JOKE OF THE YEAR (Was Are we letting the PS get away with this too?)
>
>
>
> I have always wondered why one of the major mobile companies is treated
> with kids-gloves. The current case of SMS price-wars reinforces this
> concern. I would have thought that after passing the new katiba with Bill of
> Rights embedded (which includes consumer protection), everyone especially
> government, would celebrate when Airtel (I hold no brief) lowered SMS
> charges to KSh 1. This was even after their earlier push for interconnect
> rate to be pegged to KSh 0.2 was rejected, and instead GoK/CCK (with strong
> influence from Safaricom) settled on KSh 0.6. While one needs to look at the
> maths to know whether 0.2 or 0.6 should have been a more justified rate,
> Airtel has done us one more favour: which all Kenyans of goodwill should
> support. They have pegged their SMS costs to KSh 1.0, capping ‘other
> overheads + profit’ to KSh 0.4. I wouldn’t expect Airtel, a global reputable
> company to do this if the fundamentals were not right – unless it was a
> fly-by-night company! They confirm what a number of us have worried all
> along about: that mobile companies are over-reaping profits, most of which
> is repatriated to shareholders out of the country.
>
>
>
> My 3 main concerns:-
>
>
> 1)      Why would the same people who rejoiced/indeed occasioned
> retrenchment when nearly 18,000 Kenyans were retrenched on privatizing
> Telkom Kenya now be so worried about Safaricom retrenching to the extent
> that they would deny Kenyans an opportunity to reap the benefits of
> competition, innovation and creativity?
> 2)      CCK is supposed to be independent. Why should the government (read
> Ministry) always interfere in their decisions?
> 3)      When we are being told “we’ll lose so much revenue in tax
> collection”, why aren’t we in the same vein being told “but in the process,
> we’ll reduce capital flight by way of (foreign) investment repatriation by
> so much”, and even more importantly that “through lower phone tariffs,
> Kenyan consumers will have saved so much/economy will have grown by so much
> as a result of cheaper phone costs.”?
>
>
>
> Indeed some of the observations herein rooting against lower SMS costs
> remind me of my earlier (pupilage) days at the then KP&TC. For a while, a
> number of us advocated ‘lower costs, higher volumes’ (something that lately
> has become better known as ‘bottom billion’). The same way that it was
> dismissed then appears to me as the same way the ‘mobile price wars’ are
> being dismissed now by some. Haven’t Equity and Safaricom itself (actually,
> mobile companies) proven over time that this works?
>
>
>
> To be honest, every time I am home I shudder about using Safaricom. For
> voice, I long stopped using my Safaricom number except to receive – heko to
> Airtel, Yu and others. For Internet, even when I do bundles, Safaricom is
> still VERY expensive. Instead of government helping (as demanded by the
> constitution), they are helping to keep the prices up. In the end who really
> benefits? Certainly not the consumer/ordinary Kenyan! If this approach has
> worked for Airtel in India (is the population nearly a billion?), why not
> for Kenya?
>
>
>
> Best rgrds,
>
> Shem
>
>
>  ------------------------------
> *From:* Leonard Mware <mleonardo at yahoo.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=mleonardo@yahoo.com>
> >
> *To:* shemochuodho at yahoo.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=shemochuodho@yahoo.com>
> *Cc:* KICTAnet ICT Policy Discussions <kictanet at lists.kictanet.or.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=kictanet@lists.kictanet.or.ke>
> >
> *Sent:* Wed, 19 January, 2011 14:33:22
> *Subject:* Re: [kictanet] Are we letting the PS get away with this too?
>
>
>   Listers,
>
>  Two issues are emerging:
>
> 1. Operators not able to 'recoup' investment hence possible layoffs, stock
> market problems etc
> 2. Taxman losses
>
> First, let’s imagine tomorrow the minimum charges are set to 2/- and Airtel
> moves up. Assume I am a new entrant in the market with
> cheaper-easy-to-deploy technology. Bear in mind that technology is evolving
> fast and new multiplexing and radio wave propagation techniques are also
> advancing. If my technology allows me to set up a GSM network and I can
> confidently 'recoup' my investment at 0.5/- why should I be forced to charge
> 2/-?
>
> My view is that such a scenario will give rise to a government created
> cartel that will stifle competition, innovation and advancement.
>
> Secondly, who is going to set the base rate? Government? I wait to see how
> the government can juggle the mathematics of coming up with ‘recouping
> period’ and satisfy taxman, investors in stock market and operators at same
> time.
>
> The only option, in my view, is for the government to think of higher
> taxation because that’s where they have leverage and the leave the fight on
> tariff to operators and market place. The other option is for the government
> to set up its own National Mobile Operator (NMO) in the line of National Oil
> Corporation of Kenya (NOCK) to help stabilize market ;)
>
> As for stock market; ups and downs are part of the game.. it is called in
> Kiswahili playing *kamari and *any investor should know what happens in a
> casino!
>
> BTW, is there a documented precedence in any developing country?
>
> Leonard
>
>
>
> --- On *Wed, 1/19/11, bitange at jambo.co.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=bitange@jambo.co.ke>
> <bitange at jambo.co.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=bitange@jambo.co.ke>
> >* wrote:
>
>
> From: bitange at jambo.co.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=bitange@jambo.co.ke><
> bitange at jambo.co.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=bitange@jambo.co.ke>
> >
> Subject: Re: [kictanet] Are we letting the PS get away with this too?
> To: mleonardo at yahoo.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=mleonardo@yahoo.com>
> Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=kictanet@lists.kictanet.or.ke>
> >
> Date: Wednesday, January 19, 2011, 12:43 PM
>
> Liko,
> In developed Markets where both data and voice have matured, you can
> afford drastic fall in price.  When you get reports from the public, one
> must always be cautious.  Take for example when someone reports that there
> is a likelihood of cross subsidy which can potentially affect the market.
> Should we be locking ourselves in the room and pray that nothing happens?
>
> It is therefore not abnormal for the Government to be cautious especially
> when the public writes to complain of a similar situation elsewhere.  We
> have not faulted any operator but it is our responsibility to ensure that
> there is fair play.
>
> Imagine a situation where all the operators report losses at the end of
> the year.  You will begin to see retrenchments, the stock market fall
> would trigger a rise both with the exchange rate and the interest rates
> effectively the consumer will end up paying somehow.  I will not be
> suprised that it will be this same forum that will ask what the Government
> was doing to let things get this worse.
>
> Therefore, it does not matter whether you you cricise the Government now
> or later.  Either way we face the criticism.
>
> Ndemo.
>
>
>
>
> > Guys.
> >
> > How about we just let the prices go down till the govt has to set
> > prices ? Or till the Govt supports MNO's (like posta and telkom for a
> > loooooong time)
> >
> > Seriously, the same peeps who were complaining about call costs 3
> > years are worried about the telcos collapsing.
> >
> > This is the same language we heard when  ISP's we asked to reduce
> > bandwidth prices ...
> >
> >  Unsustainable :)
> >
> >
> >
> >
> >
> > On 1/18/11, John Kieti <jkieti at gmail.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=jkieti@gmail.com>>
> wrote:
> >> 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<http://us.mc1619.mail.yahoo.com/mc/compose?to=jwalu@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<http://us.mc1619.mail.yahoo.com/mc/compose?to=harry@africanedevelopment.org>
> >*
> >>> wrote:
> >>>
> >>>
> >>> From: Harry Hare <harry at africanedevelopment.org<http://us.mc1619.mail.yahoo.com/mc/compose?to=harry@africanedevelopment.org>
> >
> >>> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away
> >>> with
> >>> this too?
> >>> To: "Walubengo J" <jwalu at yahoo.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=jwalu@yahoo.com>
> >
> >>>
> >>> Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=kictanet@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://us.mc1619.mail.yahoo.com/mc/compose?to=jwalu@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://us.mc1619.mail.yahoo.com/mc/compose?to=harry@africanedevelopment.org>
> <http://mc/compose?to=harry@africanedevelopment.org>
> >>> >
> >>>
> >>> Cc: KICTAnet ICT Policy Discussions
> >>> <kictanet at lists.kictanet.or.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=kictanet@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://us.mc1619.mail.yahoo.com/mc/compose?to=odhiambo@gmail.com>
> <http://mc/compose?to=odhiambo@gmail.com>
> >>> >* wrote:
> >>>
> >>>
> >>> From: Odhiambo Washington
> >>> <odhiambo at gmail.com<http://us.mc1619.mail.yahoo.com/mc/compose?to=odhiambo@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://us.mc1619.mail.yahoo.com/mc/compose?to=jwalu@yahoo.com><
> http://mc/compose?to=jwalu@yahoo.com>
> >>>
> >>> Cc: "KICTAnet ICT Policy Discussions"
> >>> <kictanet at lists.kictanet.or.ke<http://us.mc1619.mail.yahoo.com/mc/compose?to=kictanet@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<http://us.mc1619.mail.yahoo.com/mc/compose?to=otieno.barrack@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!!
> >>>
> >>>
> >>> -----Inline Attachment Follows-----
> >>>
> >>> _______________________________________________
> >>>
> >>>
> >>
> >>
> >> --
> >> My Blog - www.gmeltdown.com
> >> '''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''
> >> Keep on doing what you know is right ...
> >>
> >
> > --
>
>
>
>
> __._,_.___
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