[kictanet] Lower tariffs lower speed

Thu Jul 28 12:26:48 EAT 2011

@Ouma,

there's always a catch with this internet pricing thing.  Remember, 
Operators have fixed overheads (e.g. Pre-purchased International 
bandwidth over the submarine cables, committed over periods of  10-15yrs
 + Annual Operational Costs). This means, Operators have already sunk in
 money and must recoup+ a fair profit.

The interesting question has always been :- what is the best method of 
recovering the investment (ROI) without exploiting the users?

Option 1:- the bottom of the pyramid approach.

Reduce Internet Price to bare minimum - thus widening the customer base - and subsequently meeting your overheads + profit.

Option 2:- the top of the pyramid approach
Charge highly to a 
select(few) group of (affluent?) consumers. You still meet your expenses
 + profit (possibly in a  lesser complex/costly way e.g. no need of 
hiring a large group of customer service)

What are the risks for both these options (from an Operator point of view)?

Option 1: 

Dropping internet prices, may not necessarily expand your customer base.
 The commodity here is internet not Ugali (bread). How many Kenyans have
 a sustainable reason to get online beyond the FaceBook generation? Put 
differently, why would a Kenyan in rural Kenya (70% of us still live 
there) want even an email address? Instead what would happen, is that 
your already existing small internet users will harvest the benefit 
without increasing the Operators Revenues (hence the rush to  fix such 
guys with a bandwidth cup to 128K?)

Option 2:

Charging high prices to quickly recoup your investment works only in a 
monopolistic environment.  So not an option in the Kenyan market. The 
Airtel, Orange et. al.are waiting for such blunders in order to eat 
Safcom's  breakfast, lunch and dinner.

Optimum Solution?

I do not know. But am sure it can be found.

walu.

--- On Tue, 7/26/11, Michael Ouma <benomnta at yahoo.com> wrote:

From: Michael Ouma <benomnta at yahoo.com>
Subject: Re: [kictanet] Lower tariffs lower speed
To: jwalu at yahoo.com
Cc: "Kictanet" <kictanet at lists.kictanet.or.ke>
Date: Tuesday, July 26, 2011, 3:01 PM

Here's the response from Safarim via Twitter on this issue:

  SafaricomLtd
  Safaricom Limited

              @

      @MichaelOuma Hi, for the unlimited offer the speeds are upto 128kbps, other bundle speeds are on 3G as before, follow bit.ly/g6PDbx MG
     Michael Ouma
Journalist
Kenya
Tel:+254-725-537823

"Do not go where the path may lead, but go instead where there is no path and leave a trail," - Ralph Waldo Emerson
From: Grace Githaiga <ggithaiga at hotmail.com>
To: benomnta at yahoo.com
Cc: kictanet at lists.kictanet.or.ke
Sent: Tuesday, July 26, 2011 2:15 PM
Subject: Re: [kictanet] Lower tariffs lower
 speed

Robert

I noticed the reduction immediately the tarrifs went down. Maybe thats the catch. We get a reduction in tarrifs and also on speed! A response from safcom would be in order. 

Rgds

Grace

-----------------------------------------------------------------------------------
If you have the strength to survive, you have the power to succeed. Life is all about choices we make depending upon the situation we are in. Go forth and rule the World!

Date: Tue, 26 Jul 2011 09:04:16 +0100
From: robertyawe at yahoo.co.uk
Subject: Re: [kictanet] Lower tariffs lower speed
CC: kictanet at lists.kictanet.or.ke
To: ggithaiga at hotmail.com

#yiv33654581  .yiv33654581ExternalClass DIV
{}

Hi,

I am experiencing slow access between local site which would rule out the Seacom issue.

Regards
 Robert Yawe
KAY System Technologies Ltd
Phoenix House, 6th Floor
P O Box 55806 Nairobi, 00200
Kenya

Tel: +254722511225, +254202010696

 privacy, do not spam, do not market your wares or qualifications. 		 	   		   

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