[kictanet] IEA position on CA's Analysys Mason Dominance Report

Thu Apr 12 22:02:55 EAT 2018

M-PESA is accessible to Safaricom sim card owners. If you’re on
airtel/telkom etc, you don’t access the full range of MPESA services. You
can receive money (which you have to withdraw ASAP) but that’s about it.
(The last time I checked that was the position).

Telkom now has T-Kash. To access the mobile money facility you have to buy
a Telkom sim card.

Airtel money the same.

Product A- sim card to be used for communication. Needs airtime obtained
from the provider.

Product B- Mobile money- send money using the mobile phone.

For you to get Product B you have to obtain Product A.

Could this be considered tying?

On Sat, 7 Apr 2018 at 09:38, Walubengo J via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> @Eng,
>
> As usual, you raise very valid points below on this important public
> policy matter.
>
> My view is that price controls are applicable -BUT - they are increasingly
> being overtaken by the realities of internet-driven technologies.
>
> They are for example still very relevant and applicable in the case of
> fixed line & (GSM) interconnection rates (how much operators pay each other
> to terminate calls).
>
> However, at a retail level, where internet based technologies are
> redefining distance & price, traditional price controls would be severely
> challenged.
>
> Think of Airtel giving its subscribers  free internet access to Facebook
> <http://africa.airtel.com/wps/wcm/connect/africarevamp/africa/home/media/press-releases/airtel+africa+and+facebook+launch+free+basic+services+in+17+african+countries>,
> while Safaricom does not.
>
> Should the regulator intervene and stop Airtel from doing what 'looks
> like' undercutting the market, or should the regulator force Safaricom to
> also give free access to Facebook service since compared to Airtel 'it
> looks' like they are overcharging the market in that niche content segment?
> What is the greater public good in this case?
>
> Fundamental to the decision the regulator would take, is the question of
> how much is the 'right' price to charge for accessing such content?
>
> Using the cost+ tariff approach becomes murky because the costs related to
> delivering an internet driven service/product to a customer tends to be
> scattered across several different actors and does not neatly sit under one
> players domain. This property makes it harder for the regulator to
> appropriate cost of delivery, in order to effect the cost+tariff approach.
>
> Even if regulator somehow managed to calculate the costs, the Operator may
> still opt NOT to charge the consumer and instead pass those costs to
> Advertisers - which is the classic business model for most of these content
> providers.
>
> Since all teclom products are moving to the internet platform, my advice
> to the regulator is that they must begin to  develop new regulatory tools
> for the emerging internet realities since the traditional regulatory tools
> are going to be increasingly inadequate.
>
> I put my thoughts on the same on the Nation Blog
> <https://www.nation.co.ke/oped/blogs/dot9/walubengo/2274560-4370398-lfc3lt/index.html>
> and would be keen to hear yours or other listers views on the same.
>
> WALUBENGO: Can we regulate telecoms market without price
>
> Using price controls to manage an increasingly internet-driven industry is
> no longer tenable.
>
> <https://www.nation.co.ke/oped/blogs/dot9/walubengo/2274560-4370398-lfc3lt/index.html>
>
>
>
> walu.
>
>
>
>
>
>
>
>
>
>
>
> On Friday, April 6, 2018, 9:27:58 PM GMT+3, John Kariuki via kictanet <
> kictanet at lists.kictanet.or.ke> wrote:
>
>
> Dear Onesmus,Listers,
> Let me give a few comments on the article by the "Standard".
>
> 1. "Pay Higher Costs."
>      There is nothing new about this.In 1997,the then KPTC, a monopoly,
> was forced to raise its tariff for local calls in order to ensure level
> playing field for the then new entrants including Safaricom. It was then
> called "cost- based pricing" and "tariff re-balancing". In other words KPTC
> was required to have cost-plus tariff because being dominant then and also
> being vertically and horizontally integrated it was likely to make it very
> difficult for new entrants to compete by such tactics lice
> cross-subsidization.It was also required to carry out "Accounts Separation"
> so that no "Market Segment" subsidized the other.
>
> 2."Price Controls not Effective"
>     Unlike other sectors,the telecommunications sector in most countries
> has been a monopoly- at one time called "Natural Monopoly".It has a very
> short history of effective competition.One result of lack of effective
> competition is presence of dominant players.Without price regulation public
> will suffer.
> 3.Sharing of Towers.
>   This is public policy issue.Indeed international best practice and
> especially due to negative environmental impact of proliferation of towers
> .In any case land is a limited resource and there are limited number of
> good sites for radio towers. In fact all operators should be required to
> share-it is our country they are polluting and this should be minimized as
> much as possible.
>
> 4. Promotions and loyal schemes:
>
> These need to be properly regulated as they are tools cleverly used
> globally by dominant operators to undermine competition to the long term
> detriment of consumers.
>
> 5 Finally Onesmus on your comment on: *should CA license and “regulate””
> on competition” at the same time?*
> *Let me add*
>
>
> *   (a) Licensing is merely a tool uesd by CA for market entry. Aftrr
> market entry CA is a referee to ensure that rules are followed and has to
> cordinate regionally and globally to ensure the operators work harmoniously
> with minimum or no harmful interference with each other.It is an intense
> full time job.Regarding competition,CA is required by law to "PROMOTE" not
> merely"ENSURE" competition.This is because of the special nature of
> telecommunication market  characterized by huge barriers to entry
> including  high front- end costs such as license fees,spectrum fees
> ,network sete up etc. Let me give just one example: If motor dealers met to
> discuss pricing in a country,this would be considered "price
> fixing"punishable under Competition Law.Yet telecommunications operators
> often meet to fix prices-so called"Interconnection Agreements" without
> being seen to commit any offence!*
>
>
> Apologies for the lengthy comment!
>
> John Kariuki
>
>
>
> On Thursday, April 5, 2018, 1:47:58 PM GMT+3, Consumers Federation of
> Kenya (Cofek) via kictanet <kictanet at lists.kictanet.or.ke> wrote:
>
>
> *Dear All,*
>
>
>
> *Greetings from the Cofek team!*
>
>
>
> *We are requesting your kind response to the article below as carried by
> “The Standard” today. Your response would inform our view on the State of
> Consumer Protection Report on ICT sector in regard to this specific
> issue.We also hope that Mr Matano Ndaro, CA Director of Competition can
> also give us his take. *
>
>
>
> *By the way - should CA license and “regulate”” on competition” at the
> same time? Could it present a conflict of interest that the licensee of
> MNOs is also prescribing and enforcing competition? Kindly give us your
> feedback asap. *
>
>
>
> You could soon pay higher costs for mobile services if the Communications
> Authority of Kenya (CA) follows through with plans to introduce price
> controls in the sector, economists have warned.
>
> The Institute of Economic Affairs (IEA) said yesterday the recommendations
> by UK-based consultancy firm Analysys Mason, especially on price controls
> in its study on market dominance laid the basis for tariff hikes.
>
> "Price controls are not effective and inconsistent with 20 years of
> industry liberalisation and most national economic policy," said IEA
> Executive Director Kwame Owino during a media briefing on analysis of the
> CA report on competition in the telecommunications sector in the country in
> Nairobi.
>
> "Reintroduction of price controls would be a major policy reversal.” The
> study presented early this year by Analysys Mason concluded that Safaricom
> has dominant market share currently standing at 70 per cent and 80 per cent
> in the mobile communications and mobile money market respectively and
> called for regulatory interventions.
>
> Among the recommendations was for Safaricom to share part of its tower
> infrastructure with other service providers for a period of five years at
> tariffs prescribed by CA. "Our analysis shows this dominance has been
> achieved because of the risk that firms have taken to invest in tower
> infrastructure," said Mr Owino.
>
> "Firms have different appetites for investment and compelling one firm to
> share infrastructure they’ve invested in at fixed prices is not
> defensible on economic grounds."
>
> The report had initially recommended Safaricom share its tower
> infrastructure with Airtel and Telkom in 14 counties where
> telecommunications infrastructure is lacking that were then halved to
> seven.
>
> Forcing infrastructure sharing among providers has also been criticised as
> only useful in redistributing income among existing players but stopping
> short of bringing costs down or improving product experience for consumers.
>
>
> The IEA boss further explained that some of the recommendations in the
> report could see the CA overreach its mandate as a regulator, stifling
> innovation and product differentiation among operators.
>
> “There is no policy justification to restrict the freedom of firms to
> engage in lawful marketing in any format,” said Mr Owino. “This is the
> most unreasonable proposal with no benefit to aid market competition but
> would harm consumers.”
>
> Analysys Mason had recommended the CA enforce a policy to limit Safaricom
> from promotions and loyalty schemes that can be replicated by other
> operators.
>
>
>
> Kind regards,
>
>
>
>
>
> Onesmus Mutungi
>
> *Program Assistant *
>
> Consumers Federation of Kenya (Cofek)
>
> Rehema Place, Block F Suite 45
>
> P.O Box 28053-00200, City Square
>
> Tel. +2540202615496, 3861718
>
> Mobile: 0715555550, 0733180008
>
> Email  : hotline at cofek.co.ke
>
> Web   : www.cofek.co.ke
>
> COFEK *– Restoring Consumer Confidence and Pride*
>
> *SUBSCRIBE to #CofekBreakingNews  Send “Cofek On” to 40408*
>
> *[image: Description: 3rdTraining]*
>
>
>
>
>
>
>
>
>
>
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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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>
> 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.
>
-- 
*Mercy Mutemi, Advocate*.
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