[kictanet] "Talk to Safaricom" Responses to Day 2 Questions

[Timothy- Coach- Oriedo]

Thank you Steve for the Granular responses.

Its enlightening and am learning new information including the
safaricom.co.ke page being a freemium service. Which is an encouraging
observation especially considering the issue of net neutrality and
universal access of basic Internet services.
Its indeed possible to provide free Internet services to segments of our
communities for a valid cause.

Good day.




Timothy Oriedo

about.me/Timoriedo



On 15 Feb 2017 7:46 pm, "Walubengo J via kictanet" <
kictanet at lists.kictanet.or.ke> wrote:

Thnx Steve,

As comprehensive as usual.  Listers, feel free to chambua/ask for further
clarifications.

walu.


------------------------------
*From:* Stephen Chege via kictanet <kictanet at lists.kictanet.or.ke>
*To:* jwalu at yahoo.com
*Cc:* Stephen Chege <SChege at Safaricom.co.ke>
*Sent:* Wednesday, February 15, 2017 5:56 PM
*Subject:* [kictanet] "Talk to Safaricom" Responses to Day 2 Questions

Dear all

Below are the responses to Day 2 Questions.

We are picking up the supplementary questions and will respond to them.

regards

Steve

*Talk-2-Safaricom, Day 2 (Tuesday 7th Feb)- Competition Issues*
*Guideline*: Share your perspective as to whether or not Safaricom is
dominant in the following sub-sectors and whether some intervention is
required from the regulator.

The current data from CA
<http://www.ca.go.ke/images/downloads/STATISTICS/Sector%20Statistics%20Report%20Q1%202016-2017.pdf>
(Q1, 2016-17) could be a useful guideline for the dominance debate. It
gives Safcom the following market share -
a)      Mobile Subscribers (69% of all subscribers, closest rival17.5%) ‘;
b)      Voice Traffic (76% of voice traffic, closest rival 13.8%)
c)      Data/Internet Subsector, (63.2% of mobile internet subscriptions,
closest rival 21%)
d)      Mobile Money Transactions ( 81% of all mobile money transactions,
closes rival 16%)



I am sure we cannot ask or blame Safaricom for what it may consider a
successful state of affairs :-)  So please share your perspective as
to whether or not Safaricom is dominant in the following sub-sectors
and whether or not some intervention is required from the regulator in
as far as making the market more competitive.


Floor is open.
*Questions+Comments from Discussions:*
*Ali Hussein*

*@Walu  What strategic purpose would splitting Safaricom have on their
business? I'm fundamentally opposed to government imposed splits.
Let's look at one of the most famous splits:-  Standard Oil in the US.
It was split into 34 companies by the justice department. The most
prominent of these were Exxon, Mobil and Chevron. Many years later
through 'Mergers and Acquisitions' the original company is now more or
less back as ExxonMobil, whose CEO has incidentally been appointed by
The Donald to be Secretary of State.
**https://en.m.wikipedia.org/wiki/Standard_Oil
<https://en.m.wikipedia.org/wiki/Standard_Oil>**  Having said that I
think Mpesa remaining in Safaricom is stunting it's growth. But then
that's their prerogative not anybody else's. I keep on saying that
someone out there is quietly plotting to eat Safaricom's lunch. If
they snooze.*


Ali, Walu we cannot speculate as to what action will be proposed against
Safaricom. However we take the very strong view that competition in our
sector should not be viewed only from the perspective of the so called
smaller players.  Questions should be asked how the situation came to be
given that two of the current players were licensed at practically the same
time. Specifically, the issue of investment in infrastructure should be
examined in detail. Regulatory intervention should not be used to reward
failure to invest. Also Ali correctly states, we also have to keep
investing and innovating or else we shall soon be someone’s lunch.
Also, the World Bank’s Global Economic Prospects Report
<http://pubdocs.worldbank.org/en/842861463605615468/Global-Economic-Prospects-June-2016-Divergences-and-risks.pdf>
(2016) notes, if Kenya’s economy wants to continue to grow at a ‘robust’
pace, empowering the mobile and technology sectors is critical as they
provide the critical infrastructure needed for growth.



*Barrack Otieno*

*Many thanks for your email, i applaud Safaricom for its aggressive
and smart approach that has made it a leader. My question will be
focused on connecting the unconnected.  *

*Is there an effort to tailor make the customer service platform to
include other local languages say, Luhya, Luo or Maa?, i think this
will encourage more citizens who traditionally dont speak English and
or Swahili to embrace telecommunications and or related services. *



Good question Barrack, - we undertake a lot of investment in people and
systems to ensure that all our customers are able to get service from our
Call Centre in their preferred language. We have local dialect speakers in
our Customer Centres and our Retail touch points who can serve all Kenyans
in the event that they are not conversant with Kiswahili or English. So
this is well covered. In fact our concern now is Chinese speakers! We have
noted a significant number of calls from these customers.



*2) What is Safaricoms experience with Mshwari - payments , defaults
in light of the challenging economic times ?, i am sure this will be
an indicator of the health of the economy. *



M-Shwari is a CBA product that is delivered via the Safaricom platform.
According to CBA, less than 2% of borrowers default on their repayments.
M-Shwari leverages the ubiquity of mobile devices, Safaricom’s M-PESA and
partnership with CBA to enable Kenyans operate and maintain a bank account
through their mobile device. This service is quite successful, and in every
single minute our two partners (CBA and KCB) process two loans every second
on both their M-Shwari and KCB-M-PESA products.



*Secondly i am curious to know the mechanism that is in place to
refund people who might have money on Mpesa or Mshwari and pass on yet
their relatives don't claim the money. *



Our policy is that the M-PESA and M-Shwari balances are maintained in the
individual’s accounts until they are claimed by their personal
representatives or executors of their Will. To make a claim, such
representatives or executors are required to present Letters of
Administration or a Grant of Probate issued by a Court and complete the
relevant claim forms available at any of our retail shops countrywide. The
money is then paid to them. If this money is not claimed within two years,
then the law requires us to remit the balances in those accounts to the
Unclaimed Financial Assets Authority.



*3) On the data front , can we have a status update of the Safaricom
Fibre to the Home Project?, which areas have been covered?, which
areas have not been covered, any challenges the company has faced from
the citizens, county governments and regulators.  Regards*

We have just launched this project which complements our strategy to
provide our customers end-to-end connectivity whether they are on-the-go or
at home. So far we have fibre installed next to 20,000 homes to date
meaning it will be easy to connect these residential areas to high speed
fixed data. This is an ongoing effort which we see as our next strategic
area for development.
A lot of the concerns from citizens is the troublesome excavation works
where the fibre is buried. We deal with these by ensuring our contractors
restore the excavated areas back to the previous condition. With County
Governments the concern is around Way Leaves. A number of us in this forum
were involved in the drafting of the Critical Infrastructure Bill which,
among other issues, sought to address the issues of delays in obtaining Way
Leaves and in general ensuring that ICT infrastructure (including fibre
optic cable) is deemed as utility and exempted from delays in approvals. I
hope that Bill eventually passes into law.

*Victor Kapiyo*
*Safaricom has over the years benefited from its current position, raking
in billions in profits for its shareholders. As a public listed company,
what has the company done so far to confer some of these benefits to the
public, whether as part of its CSR, investments or approaches in business
operations etc.?  Regards, *
As a business, we have taken a conscious decision that our purpose is not
solely to build value for our shareholders- which is an important part of
what we do. We have at the centre of all the business we undertake a
commitment to Transform Lives. We do this beyond the traditional realm of
voice, data and mobile money services through partnerships in health,
agriculture, the music and the arts space, backing and providing thought
leadership for innovation, leading a corporate push to adopt the SDGs as
well as projects such as the National Surveillance, Communication and
Control System for the National Police Service to enhance security or the
23,000 primary schools which will benefit from free internet connectivity
from Safaricom.

Under our Corporate Responsibility program, we have helped over 1.2 million
Kenyans receive health services, put 800,000 students in decent classrooms,
and supported 1.25 million Kenyans through disaster response. We have
provided over 300,000 people with access safe and clean water, and have
economically empowered over 250,000 people. You may see more of our
projects here: www.safaricom.co.ke/foundation and I invite any one of you
to let us know if they are any areas that we should cover more. We truly
believe in building our relevance beyond the bottom line to create a
sustainable organisation that adds value for all Kenyans.

*Grace Bomu*

*I will ask a question on behalf of my teenager friend, "If Safcom
makes so much profit,  why can't it lower data costs?*

Hi Grace, please see my earlier response to Sidney on this matter.



*Odhiambo Washington*
*On dominance on the above (except (c), I cannot blame Safaricom or even
try to mention dominance. It's something they have worked for. However,
they also need to use this gigantic position to ensure coverage everywhere
while lowering tariffs on voice, data and mostly Money Transfer fees.
Talking of coverage, I have severally tweeted Safaricom about the lack of
network coverage along the road from Kapiti Area all the way to that
turn-off to Nanyuki. I think the place is called Marwa. *
*I am wondering whether they take the feedback seriously or it's just that
they don't expect much revenue from travelers on that section of the
journey to Nyeri/Nanyuki. And what about to Ole Polos (asking for Barrack!)
??  *

Washington, we take all customer feedback seriously. It may take us some
time to rectify some problems but we do act upon the complaints. As
mentioned yesterday, our team is getting in touch with you to pinpoint
these problem areas.

A deep analysis will tell you that Safaricom charges for money transfer are
very expensive. The trick is in the amounts you transfer - and they take
advantage of the fact that most clients will want to do a transfer at once,
instead of in bits, which I don't think is fair. The cost of sending 2,500
whether at once or in 1,000, 1000, 500 should be the same. Afterall it's
all _digital_ money, not some individuals carrying the cash to
destinations/final users :-)

As mentioned before, we believe that our charges are competitive and
reflect the convenience of transferring your money securely and
efficiently. It is also important to note that there is a network cost
element to each portion of your transaction, which is why the fees cannot
be standardised in the manner you suggest.

On money transfer and especially with regard to customer (or is it
consumer?) protection, I still think Safaricom is capable of doing more
with regard to those transactions where someone ends up sending to the
wrong number. Much as they have introduced number lookups from the contacts
stored on the SIM card, I believe number lookups from the contacts stored
on the phone shouldn't be such an uphill task. Do they have plans for this?
Our second generation M-PESA system has enabled the service known as
Hakikisha, which allows you to confirm the recipient details prior to the
transaction being completed, using the customer’s officially registered
details. Furthermore, we have made it very simple to initiate a reversal in
the event is erroneously sent to the wrong recipient.

Nonetheless I can confirm that we are working on an M-PESA App which will,
among other things, be able to seamlessly retrieve recipient details
directly from the contacts in your phonebook further minimising chances of
error. The App is currently being Piloted.

*Being almost the world's pioneer of mobile money transfer, can they also
pioneer a legal mechanism to deal with/mitigate cases where people have
sent money to the wrong numbers by mistake? That is one area that remains
wanting.  *
When a customer calls us and lets us know that the money was sent to the
wrong number, we can usually reverse it if the money has not been
withdrawn. However if the money has been withdrawn they are in essence
raising a legal dispute. Our role as a telecoms provider is limited to
service provision and therefore we are not empowered to take on the
investigative elements of such a legal dispute.
What we can do is to provide network tools that can assist with minimising
the chance of error – which is why introduced services like Hakikisha and
engage in continuous customer education around this issue.

*At the moment, their 15sec option to mitigate that isn't quite intuitive.
The "Cancel' option actually means 'go ahead and do the transfer', but most
people have confused it with what "Cancel" in any other realm means. They
should re-engineer the option to have the meaning/options expected by
users..(Oh, was I supposed to give feedback or ask questions?) Besides,
they should increase the time to 30secs, and also sponsor a media campaign
to enlighten their clients. *
Washington, this solution is flash-enabled, so whether the button says
‘Ignore’ while others say ‘Cancel’ depends purely on the type of handset
the user owns. The simple rule of thumb is that any response is required in
order to stop the transactions, not responding means the transactions will
proceed. Currently the timeout period is 25 seconds, which some users say
is too long!

*Walu J*

*I just have one question for Safcom with respect to Competition. Are
they willing to: *

*a) Be split into several independent units? As in make the Mobile
money business (MPESA) a separate and autonomous unit from their Voice
and Data side of business?  *

We believe that the decision to split or not to split should lie with
the company. All I will say is that our current model has worked very
well for us so far.



*b)  Open up MPESA service such that if I vuka(migrate) to competition
e.g Airtel, I do not lose the MPESA facility? Obviously this would be
an affront to their 'stronghold' but sometimes it may spice up the
market a bit.  This maybe necessary considering that their market
share lead has not changed much over the last 10years.  Which may
point to a market failure or maybe they are just clever than everyone
else :-). *

That is a big ask Walu but again the decision to implement such an
initiative should lie with us. Innovation is the fuel that powers
success in business. If this is taken away and commoditised through
Regulatory intervention this will send all the wrong signals.



*Timothy Oriedo*

*My question on today's topic.  Are Frenemy and Coopetion terms alien
to Safaricom's strategy?  *

*I observe aggressive canibalization forward,  backward,  laterally
and upwards. With previous moves of backward integration to own
infrastructure distribution - laying out of own fibre capacity
reducing lease to capacity and forward integration of remodelling the
airtime / scratchcards product distribution structure of their
dealerships making it less lucrative for them to operate.   Laterally
through launch of peripheral services that would rather belong to
their business partners email.e.g mobile money-banking, the big
box-media etc.  *

*Isn't it unfair to compete with your suppliers and clients in the
name of value chain innovation ?  *



Wow! There are many loaded statements here, most of which are not
entirely factual.  Be that as it may, we compete fairly and we are
interested in operating in an environment where other operators thrive
because we believe there is significant opportunity for us all.

Timothy trust me when I say we want to Transform Lives. It is at the
centre of all we do – I have personally seen business plans set aside
because they were not transformative for our customer.

Even as we invest in our own fibre network, we are working with a
number of local companies to implement the service – the same goes for
any other element of our business including airtime distribution,
which is done primarily through over 250,000 dealers country-wide.

At a broader level, our cross-industry partnerships such as those we
have with M-KOPA, KARA
<http://www.capitalfm.co.ke/business/2017/02/safaricom-partners-kara-boost-neighborhood-security/>
or Mulley’s Supermarket <https://www.youtube.com/watch?v=5YlczoCpvYI>
– allow us to merge our collective strengths to provide unique
products for the market.



Lastly apart from mpesa transaction of less than 100 Bob,  Please Call
Me and checking for airtime balance which is the other Freemium
service that safaricom is know for?

The way to look at these so called ‘Freemium’ services is their reach
and value to the person using them. To a college student who wants to
communicate but doesn’t have any airtime a ‘Please Call Me Text” is
not a small thing. You can imagine this for M-PESA customer who needs
to send Kshs. 100. I can confirm that transaction numbers in this
category have grown by more than 130% since we waived the charges.
These may appear to be just two services but their reach is enormous
given the number of customers who use them.



Other ‘Freemiums’ include access to our website – any time you land on
the site there is no charge and of course our Customer Care.


*Sydney Ochieng*

*Safaricom has been rumored to harass agents who want to run
competitors' mobile money solutions, has this practice stopped? What
is Safaricom doing to stop its agents from doing this?*

Sidney, as you correctly state, that is a rumour. We opened up our
M-PESA agency network in 2015 (we have now grown that network to over
124,000) – which means that our agents are free to provide services
for other operators. You just need to walk around CBD and other towns
in Kenya to see the multiple branding attesting to this.


------------------------------
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The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for
people and institutions interested and involved in ICT policy and
regulation. The network aims to act as a catalyst for reform in the ICT
sector in support of the national aim of ICT enabled growth and development.

KICTANetiquette : Adhere to the same standards of acceptable behaviors
online that you follow in real life: respect people's times and bandwidth,
share knowledge, don't flame or abuse or personalize, respect privacy, do
not spam, do not market your wares or qualifications.
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