[kictanet] [mediaeditors] Safaricom's Super Profits

Sat May 18 17:19:36 EAT 2013

True that, Ali,

I also share your view in that ill-informed Regulatory intervention can cause more problems than what it expects to solve. For example, I would be uncomfortable with CCK slapping the internet market with Price controls similar to what we are seeing in the Energy sector.  This could be counterproductive since the investors in the telco industry may suddenly feel the sector is no longer attractive.

What I expect the Regulator to do instead is to enhance competition - which obviously exists only on paper - given Safaricom close to 75% market share. I recall the former Safcom CEO, MJ saying they should not be punished for working their way to the top of the industry but still dissect the implications of a dominant, almost monopolistic player to the overall economy.

Perfect competition is known to have the highest social dividend in that users can move freely between suppliers, suppliers compete on price and so must be extremely efficient in their operations by being innovative, the move to the untapped markets (the unconnected) etc. A monopoly tends to do the opposite and dictates pricing since it knows you are going nowhere...

Am really not sure what the Regulator should do to fix a market failure - which I think is what we have in the internet sector. But that is why we pay the DG and his Directors good money to tell us what they intend to do or are already doing to address this elephant in room.

walu.

________________________________
 From: Ali Hussein <ali at hussein.me.ke>
To: jwalu at yahoo.com 
Cc: KICTAnet - Media Editors Forum <mediaeditors at lists.kictanet.or.ke>; Christoph Stork <christoph.stork at googlemail.com>; Alison Gillwald <agillwald at researchictafrica.net>; KICTAnet ICT Policy Discussions <kictanet at lists.kictanet.or.ke> 
Sent: Saturday, May 18, 2013 2:41 PM
Subject: Re: [kictanet] [mediaeditors]  Safaricom's Super Profits

Edith and all

Super profits and all I think that Safaricom is reaping from a field where others are blind (the analogy bring that it is the one eyed king).

Safaricom is definitely extremely sensitive to product innovation and working towards engaging their customers more. However my suspicion is that they haven't even started scratching the surface. Quality issues aside if they really really started monetizing their most critical asset (real time customer information and habits) and started putting them to use they will easily double the super profits.

Safaricom is 'suffering' from the Network effect. Loosely defined is the lethargy and lack of incentive for customers like you and I to move to another network even as we complain about it's arrogance. They have been so successful in keeping you in their gilded garden that for you to move means that you are literally pushing yourself out of n ecosystem that works reasonably week.

I'm not sure whether this is a regulator issue as it is a Market issue. Or maybe a combination of both? That is a case study waiting to be written. The history of regulation is littered with Governments attempts and ultimate failure to break up monopolies created not out of Government action but by sheer entrepreneurial and management chops. Cases that come to mind include:-

1. The Anti Trust Laws of the late 1890s in the US that broke up Standard Oil into bits and pieces. It took less than 50 years for the offspring of that juggernaut to dominate again.

2. The attempted and almost successful break up of Microsoft by Government. It took the market to make Microsoft irrelevant. Google, Facebook, Amazon anyone?

3. Recent noi

Ali Hussein
CEO | 3mice interactive media Ltd
Principal | Telemedia Africa Ltd

+254 713 601113

"The future belongs to him who knows how to wait." - Russian Proverb
Sent from my iPad

On May 18, 2013, at 1:23 PM, otieno.barrack at gmail.com wrote:

+ 1 Walu,
>Speaking from an Internet Society perspective whose mission statement is the Internet for all, I think the Universal Access fund has to be used to create the right balance, I think too many Telcos are focusing on slicing Safaricoms Market share instead of venturing into the untapped and unprofitable market segments in the Bundu's, IMHO, therein lies the problem, we want to see whether the Universal Access fund board itasema, na itende.
>
>Best Regards
>Sent from my BlackBerry®
>
>-----Original Message-----
>From: Walubengo J <jwalu at yahoo.com>
>Sender: "kictanet"
><kictanet-bounces+otieno.barrack=gmail.com at lists.kictanet.or.ke>Date: Sat, 18 May 2013 03:16:11 
>To: <otieno.barrack at gmail.com>
>Reply-To: Walubengo J <jwalu at yahoo.com>
>Cc: KICTAnet - Media Editors Forum<mediaeditors at lists.kictanet.or.ke>; Christoph Stork<christoph.stork at googlemail.com>; Alison Gillwald<agillwald at researchictafrica.net>; KICTAnet ICT Policy Discussions<kictanet at lists.kictanet.or.ke>
>Subject: Re: [kictanet] [mediaeditors]  Safaricom's Super Profits
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