[kictanet] Consumer protection a means of cutting Safaricom’s dominance

Wed Feb 22 11:28:11 EAT 2017

@Barrack,
Unlike columnist Jaindi, i dont have the benefit of the leaked dominance report.  So unable to confidently take a position on the report.
However, I partly agree with Ali that the market has changed since the KPTC days (of the 1990s). Safaricom, just like Airtel and others may have been telecommunication companies then, but today they are more of ICT companies than they are traditional telcos (read voice providers).  
The regulatory instruments and parameters for managing telcos in the 90s/early 2000s are therefore inadequate in dealing with todays dynamic ICT/Internet environment. There is need to have new regulatory instruments that can adequately interrogate todays ICT markets.
So once I get the dominance report, I would be keen to understand whether the Consultants recommendations are informed by a  telco-focused regulatory instruments or are based on the new ICT realities. So in answering @Barrack, it is difficult to tell whether splitting Safcom is good or not, unless we understand what were the methodologies used to arrive at such decisions.
So I hope Racheal/CA will give us the detailed official report sooner, rather than later.
walu.

      From: Ali Hussein via kictanet <kictanet at lists.kictanet.or.ke>
 To: jwalu at yahoo.com 
Cc: Ali Hussein <ali at hussein.me.ke>; KICTAnet ICT Policy Discussions <kictanet at lists.kictanet.or.ke>
 Sent: Wednesday, February 22, 2017 6:18 AM
 Subject: Re: [kictanet] Consumer protection a means of cutting Safaricom’s dominance

Barrack
Im one of those old enough to remember. :-)
However my take is this:-
The markets have evolved so much and the dynamics of innovation, the market place and the consumer changed so much that the the Heavy Hand of Regulation must now be tampered by the light touch of nurturing and encouraging innovation and the market players to act and behave in a responsible manner. Failure to which the Market will deal with them in a most ruthless manner. The market won't break you up. It will decimate you and leave you for the dead. Just ask Telkom Kenya, Posta, Nokia and other once 'Dominant' global players.
I think we are focusing on the wrong things. By all means, keep a leash on the lean, mean fighting machine that is Safaricom. But also nurture home grown players -The PesaPals, the Cellulant, the WayaWayas, the Anganis, the Zuku's and Jamiis to ensure that we build such a deep bench of players that this Dominance conversation will be placed where it belongs - in the dustbins of history.

Ali HusseinPrincipalHussein & Associates+254 0713 601113 
Twitter: @AliHKassimSkype: abu-jomoLinkedIn: http://ke.linkedin.com/in/alihkassim
"We are what we repeatedly do. Excellence, therefore, is not an act but a habit."  ~ Aristotle

Sent from my iPad
On 22 Feb 2017, at 5:27 AM, Barrack Otieno <otieno.barrack at gmail.com> wrote:

Hi colleagues,

I need an explanation like a two year old on this whole dominance
debate. Maybe Walu can help me here. Safaricom was a subsidiary of
Telkom Kenya focused on the mobile phone (GSM) Segment. Looking back
into the past and as a result of Liberization, the then giant Kenya
Posts and Telecommunications Corporation was split into , Telkom
Kenya, Communications Authority of Kenya (CCK then as the regulator
and Posta to handle the post office. We need to step back and
interrogate the real reasons as to why Progress of Telkom Kenya and
Posta has backfired in a maximum of ten bullet points. On the other
hand, we also need to figure out how Safaricom (a subsidiary of Telkom
Kenya which is now a public company bolted out of the stable and
became a success). My simple questions:

1. Will a split of Safaricom yield the desired effect?
2. Is it in the interest of Safaricom (the company or organization
that is a legally recognized person by the laws of the land to split
so as to suit the competition.
3. Can someone share case  studies of where this has worked before?

Walu or anyone as old as Kenya Posts and Telecommunication Corporation
please help.

Following...

On 2/22/17, Ali Hussein via kictanet <kictanet at lists.kictanet.or.ke> wrote:

@Mwendwa and all

it looks like that's what the consultant is suggesting.

Here are two other excerpts from the report that I find interesting:-

The most draconian of the prescriptions is the proposal to functionally

separate M-Pesa from Safaricom. This is tantamount to proposing a break-up

of Safaricom because in terms of growth revenues, M-Pesa is on track to

reach 50 per cent of the company’s net revenues. The consultants have also

proposed what they call “mandatory wallet-to wallet interoperability”, a

system where a consumer can keep cloud accounts across the platforms of

different mobile companies, making it possible to move and shift money

between accounts as one chooses.

I have said before and I'm happy to repeat this again. Separating M-Pesa

from Safaricom should not be forced on Safaricom. In my humble opinion

Safaricom should by now have done this voluntarily as a strategic imperative

to transform itself into the De-Facto National (Regional) Mobile Payment

System. I think the lost opportunity here can be seen by the KBA launching a

rival Mobile Platform called PesaLink.

The mandatory 'Wallet to Wallet' interoperability is an interesting angle

and needs to seriously be considered. This sort of compliments my point

above.

They have also recommended a system that they call “agent to agent

interoperability”, where agents will be able to support multiple mobile

money platforms using what is described in technical language as “a single

float”.

This is certainly interesting. In as much as this supports the notion of

'User or Customer Experience'  I think the Regulator and the Telcos should

work towards ensuring this becomes a reality. In essence this could be a

solution to the allegations that Safaricom discourages its agent network

from dealing with rival Telcos.

Lastly, I would largely concur with Jaindi Ksero's conclusion (sort of) that

the Consultant has displayed a lack of knowledge in the functioning of our

national payments system. I would however like to add one for the road:-

Are our Regulators (CA, CAK and CBK)  prepared to empower, grow and regulate

with a light touch the seemingly fluid Telco, Banking, Payments and Fintech

Spaces while ensuring that:-

a) They embrace innovation and new thinking while protecting National

Interests and consumers at the same time?

b) They work together without resorting to Turf Wars as evidenced in the

tiff between the CA and the CAK in 2015.

http://www.businessdailyafrica.com/Corporate-News/Competition--telecoms-watchdogs-to-seek-truce-over-Safaricom-/539550-2707286-lqu5sez/index.html

c) They consider creating a Joint Task Force to monitor, encourage and

empower players in the spaces mentioned to become Regional and Global

Players? I have often wondered aloud about the CBK's core mandate of

protecting Depositors' funds and wondered (again aloud) whether this mandate

is outdated and that it should be expanded to that of becoming an empowering

public entity that encourages research, innovation and entrepreneurship in

the burgeoning convergence of Banking, Telcos, Payments and Fintech Spaces.

d) Regulatory tools need to be rebooted and upgraded to reflect the times.

The current scenarios are such that one doesn't even know anymore which

industry one operates in.

This is a plea for the Regulation Mandates to drastically change and embrace

the now and the future.

Can the Future Czars step up?

Ali Hussein

Principal

Hussein & Associates

+254 0713 601113

Twitter: @AliHKassim

Skype: abu-jomo

LinkedIn: http://ke.linkedin.com/in/alihkassim

"We are what we repeatedly do. Excellence, therefore, is not an act but a

habit."  ~ Aristotle

Sent from my iPad

On 21 Feb 2017, at 11:12 PM, Mwendwa Kivuva via kictanet

<kictanet at lists.kictanet.or.ke> wrote:

So technically, we want to break up Safaricom so that these companies

can gain some traction  "Airtel, has made cumulative debt to date of

Sh51 billion, according to latest audited accounts for the financial

year 2015. Indeed, in the league of loss makers, only Kenya Airways,

with their Sh54 billion lost in the most recent years, compares to

Airtel. As a matter of fact, the numbers in the company’s annual

accounts show that Airtel is insolvent and only surviving on life

support from the parent company in India. Safaricom’s only other

rival, Orange Telkom, has gone through exceedingly difficult trading

and financial conditions over the past decade. This a firm that is

technically insolvent. It has gone through several episodes of

restructuring that have not materially changed its circumstances."

______________________

Mwendwa Kivuva, Nairobi, Kenya

twitter.com/lordmwesh

On 21 February 2017 at 23:48, Grace Githaiga via kictanet

<kictanet at lists.kictanet.or.ke> wrote:

Jaindi Kisero gives us a glimpse of the competition study in the

telecommunication sub-sector undertaken by Ms Analysys Mason on behalf

of

CA. See full article:

"I recently came across a report by the consulting group Analysys Mason

entitled "A telecommunication competition market study in Kenya".

Readers

will recall that these consultants were retained by the market regulator

–

the Communications Authority of Kenya – to conduct a study whose results

were to inform the crafting of a new framework for regulating abuse of

market dominance by the big players.

As expected, one of the key findings of this study is that Safaricom’s

market share in both the mobile communications and mobile money segments

far

exceed the thresholds where firms are typically presumed to be

dominant."

http://www.nation.co.ke/oped/Opinion/consumer-protection-a-means-of-cutting-safaricom-dominance/440808-3822560-jsmlpbz/index.html

Best regards

Githaiga, Grace

Co-Convenor

Kenya ICT Action Network (KICTANet)

Twitter:@ggithaiga

Tel: 254722701495

Skype: gracegithaiga

Alternate email: ggithaiga at hotmail.com

Linkedin: https://www.linkedin.com/in/gracegithaiga

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