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

Wed Feb 22 13:53:45 EAT 2017

Well Kanini being restrained and dominating are good things given in equal
measure - pun intended!!

Research has shown that several factors influence a company’s ability to
retain market leadership, among them technological innovation, changes in
market structure, short product life cycles, capital strength and
promotional prowess. However, one critical factor has largely been ignored:
the psychological forces that drive decisions consumers make and,
specifically, the degree to which people feel they have choices. Once
people have learned a company’s unique technology interface, they become
more efficient using that interface and are often reluctant to switch to
competing products that require new skills or allow for only limited
transfer of current skills. As companies such as Microsoft have
demonstrated with its Windows operating system and Office software, early
movers with dominant market shares are in an ideal position to provide
customers with interface-specific experience that creates this type of
competitive advantage.

Studies have shown that once consumers learn to use a particular interface,
they are reluctant to switch.

Psychological reactance works like this: As people learn to use a
particular electronic interface associated with information search or
online shopping, for example, they often become locked in and develop
extremely high levels of loyalty even when otherwise equivalent competitors
are available; the cost of switching outweighs the benefit of using another
product. However, research indicates that the depth of loyalty weakens when
consumers feel that their freedom to choose is restricted. Specifically, as
people feel that their choice is constrained and that one interface
dominates the market, they react against the constraint by turning away
from the market leader’s offering, thereby subjecting themselves to the
associated costs of switching.

This also the reason why Microsoft, invested $150 million in Apple in 1997
to ensure its survival (and thereby giving consumers a real choice in
operating systems), this may have taken an important step toward
maintaining its dominance in its core PC markets - well Safcom ball is in
your court..

 A complex set of factors affects the choices that consumers make in
rapidly evolving markets such as mobile apps, social networks and other
emerging electronic interfaces. Aggressive players respond by focusing on
product development, branding and rapidly gaining critical mass. research
suggests that an important driver of consumer loyalty is the extent to
which individuals feel that they have a choice in the interface they use,
and that psychological reactance can have substantial effects on both
consumer preferences and market shares.

 Behavioural analytics is becoming a key cog in understanding markets -
this was used extensively used by Ted Cruz's campaign and later Trump, this
will be an interesting phase we are getting into.

E Njoroge Mwangi
Technology| FINTECH | Big Data

Cell +44 7539372742
Skype: Erick.mwangi

On Wed, Feb 22, 2017 at 9:54 AM, kanini mutemi via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> Not to be the forbearing wife in an abusive relationship (they run through
> my bundles too fast😡
> )
>
> Obtaining a dominant position isn't unlawful where the dominant position
> has been achieved genuinely through hardwork, superiority of products and
> services and an interplay of supply and demand. What is unlawful (See
> Section 24 of the Competition Act) is abuse of the dominant position. Our
> debate on whether or not Safaricom has a dominant position is futile. What
> we should interrogate is whether 1. the dominant position (assuming indeed
> the numbers affirm their dominance) was achieved unlawfully and 2. there
> have been instances of abuse of such position such as product tying (as the
> writer claims) and restrictive agreements. If the answer to this is yes
> then by all means let's have a conversation on equitable remedy and please,
> make those fines hefty. Again, we casually talk about unfair competition
> but in which market? There is a need to define the markets that Safaricom
> (and M-Pesa) operate in and see real figures on market share in these
> markets.
>
> It is very tempting to approach this topic emotionally and I think that's
> the trap the trial judge in US v Microsoft fell in when he ordered that
> Microsoft be split to two. Well in that case there were instances of abuse,
> I digress. Legislative (see Midiwo's Bill) and regulatory efforts may sound
> like a good idea now but what happens when our home grown companies finally
> make it? Will we subject them to similar vilification? I get the angle on
> consumer protection but is it really the consumer we are protecting or are
> we just mad that one company made it while others still struggle? I'd like
> us to graduate the discussion to whether a lot of what Safaricom does
> amounts to abuse of dominant position. For example- the new product by
> PharmAccess, M-Tiba. You're telling me that for me to get services from one
> product (M-Tiba) I have to subscribe for another product (Safaricom). Am I
> the only one for whom this raises red flags?
>
> Tarehe Jumatano, Feb 22, 2017 saa 12:22 Twahir Hussein Kassim via kictanet
> <kictanet at lists.kictanet.or.ke> aliandika:
>
>> Interesting debate…
>>
>>
>>
>> I would agree with Ali on nurturing the *ndogo-ndogos* (read zukus,
>> jamiis etc) that are upcoming. However I would rather  let the *bwana
>> kubwa* – Safcom be,  the market has a way to trim *bwana kubwa* to size
>> – Nokia is a good example.
>>
>>
>>
>>
>>
>> *From: *Walubengo J via kictanet <kictanet at lists.kictanet.or.ke>
>> *Sent: *Wednesday, February 22, 2017 11:29 AM
>> *To: *twahuq at gmail.com
>> *Cc: *Walubengo J <jwalu at yahoo.com>
>>
>>
>> *Subject: *Re: [kictanet]Consumer protection a means of cutting
>> Safaricom’s dominance
>>
>>
>>
>> @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 Hussein*
>>
>> *Principal*
>>
>> *Hussein & Associates*
>>
>> +254 0713 601113 <+254%20713%20601113>
>>
>>
>>
>> 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 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/Competitio
>> n--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 <+254%20713%20601113>
>>
>>
>>
>> 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-m
>> eans-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
>>
>> www.kictanet.or.ke
>>
>>
>>
>> "Change only happens when ordinary people get involved, get engaged and
>>
>> come
>>
>> together to demand it. I am asking you to believe. Not in my ability to
>>
>> bring about change – but in yours"---Barrack Obama.
>>
>>
>>
>>
>>
>>
>>
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>>
>> for people and institutions interested and involved in ICT policy and
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>> regulation. The network aims to act as a catalyst for reform in the ICT
>>
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>>
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>>
>>
>> KICTANetiquette : Adhere to the same standards of acceptable behaviors
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>>
>> --
>> Barrack O. Otieno
>> +254721325277 <+254%20721%20325277>
>> +254733206359 <+254%20733%20206359>
>> Skype: barrack.otieno
>> PGP ID: 0x2611D86A
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>>
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>> sector in support of the national aim of ICT enabled growth and development.
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