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

Wed Feb 22 14:41:21 EAT 2017

Very interesting analysis Erick and Kanini.

Regards
On Feb 22, 2017 1:54 PM, "Erick Mwangi via kictanet" <
kictanet at lists.kictanet.or.ke> wrote:

> 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 <+44%207539%20372742>
> 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-/539550-2
>>> 707286-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.
>>>
>>>
>>>
>>>
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