[kictanet] Telcos CEOs on the spot in push to declare Safaricom dominant

Phares Kariuki phares.kariuki at gmail.com
Wed Aug 1 15:36:25 EAT 2018


Aren't there other areas where Safaricom didn't have an advantage? e.g.
FTTH, Enterprise Connectivity etc? Why the fixation on voice/payments?

On Tue, Jul 31, 2018 at 9:31 PM, Victor Kapiyo via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> Let me just place the relevant provisions of the Competition Act (No. 16
> of 2014) on the table:
>
> In Kenya, being dominant is not illegal. It is the abuse of the dominant
> position which is regulated as per the provisions below. The Act deals with
> dominance in two forms i.e. in terms of market share or market power. There
> is a presumption of dominance once an undertaking controls 50% of the
> market (s.23), or if its share is below 40%, where the entity has market
> power. Market power is defined as the power of a firm to control prices,
> to exclude competition or to behave to an appreciable extent, independently
> of its competitors, customers or suppliers.
>
> 23. Criteria for determining dominant position
> (1) For purposes of this section, “dominant undertaking” means an
> undertaking which—
> (a) produces, supplies, distributes or otherwise controls not less than
> one-half of the total goods of any description which are produced, supplied
> or distributed in Kenya or any substantial part thereof; or
> (b) provides or otherwise controls not less than one-half of the services
> which are rendered in Kenya or any substantial part thereof.
> (2) Notwithstanding subsection (1), an undertaking shall also be deemed to
> be dominant for the purposes of this Act where the undertaking—
> (a) though not dominant, controls at least forty per cent but not more
> than fifty per cent of the market share unless it can show that it does not
> have market power; or
> (b) controls less than forty per cent of the market share but has market
> power.
>
> The Act proceeds to define some of the instances where abuse can be seen
> to have occurred under s.24 below. The list is not exhaustive.
>
> 24. Abuse of dominant position and buyer power
> (1) Any conduct which amounts to the abuse of a dominant position in a
> market in Kenya, or a substantial part of Kenya, is prohibited.
> (2) Without prejudice to the generality of subsection (1), abuse of a
> dominant position includes—
> (a) directly or indirectly imposing unfair purchase or selling prices or
> other unfair trading conditions;
> (b) limiting or restricting production, market outlets or market access,
> investment, distribution, technical development or technological progress
> through predatory or other practices;
> (c) applying dissimilar conditions to equivalent transactions with other
> trading parties;
> (d) making the conclusion of contracts subject to acceptance by other
> parties of supplementary conditions which by their nature or according to
> commercial usage have no connection with the subject-matter of the
> contracts; and
> (e) abuse of an intellectual property right.
>
> It will be interesting to see how this law develops to clarify these
> questions especially in the ICT sector. It must be noted though, that there
> are undertakings that continue to engage in restrictive trade practices
> within the sector. I think discussions on dominance should focus on abuse
> and restrictive trade practices, regardless of the entity in the sector.
> Being dominant is no offence. Sometimes small players in order to gain
> market share engage in restrictive trade practices.
>
> The CAK is developing a number of regulations to clarify provisions and
> provide for relevant procedures under the Act. Once these are done, there
> should be greater clarity in the sector. It will over time need to
> develop the competence, courage and muscle in the scale of the EU
> Competition Commissioner, who recently slapped Google and Qualcomm with EUR
> 2.42 billion and EUR 997 million fines respectively for abusing their
> dominance.
>
>
> *Victor Kapiyo*
> Partner | *Lawmark Partners LLP*
> *Suite No. 8, Centro House, Westlands, Nairobi | **Web: www.lawmark.co.ke
> <http://www.lawmark.co.ke> *
> ====================================================
>
> *“Your attitude, not your aptitude, will determine your altitude” Zig
> Ziglar*
>
>
> On Tue, 31 Jul 2018 at 19:59, Walubengo J via kictanet <
> kictanet at lists.kictanet.or.ke> wrote:
>
>> @Andrew,
>>
>> Very true. Do not punish the dominant player, as long as they are NOT
>> abusing their dominance. Agreed.
>>
>> Imagine this country where the dominant player is NOT guilty of abusing
>> the dominance. He is innocently working hard, plays clean, innovates
>> regularly and thus retains dominance year in year out - without  hurting
>> anyone.
>>
>> How will that address the fact that when that innocent dominant player
>> sneezes,
>>
>> 1) 67 % of mobile subscribers will not make a voice call.
>> 2) close to 70% of Kenyans will not connect on the internet.
>> 3) 81% of mobile money subscribers will not transact (basically the
>> economy can come to a halt)
>> (Ref Q3 2017/18 CA Report @ http://www.ca.go.ke/images/
>> downloads/STATISTICS/Sector%20Statistics%20Report%20Q3%202017-18%20.pdf
>>
>> Listers, this debate should never be about Safaricom per se, nor its
>> competition.  It is about what options Kenya as a nation has, in the
>> unlikely event  that Safaricom goes down - which we must admit is rare, but
>> we still must plan for such events.
>>
>> One option is to work extra hard to ensure that Safcom never goes down.
>> The other option is to ensure that if it does, the Statistics above are
>> contained within a 'manageable size' of the market.  My take is that we
>> should try and  do both.
>>
>> If the above principle is agreed. The rest, as they say will be details.
>>
>> walu.
>>
>>
>> On Tuesday, July 31, 2018, 12:45:44 PM GMT+3, Andrew Alston via kictanet <
>> kictanet at lists.kictanet.or.ke> wrote:
>>
>>
>> I have another take on this – in terms of dominance and monopolies
>>
>>
>>
>> Firstly – let me start by saying that I don’t have a problem with what I
>> would call de-facto monopolies – that being, a monopoly that is a monopoly
>> purely by virtue of being the primary (or only significant) player in the
>> space – and I’m far from convinced that declaring such a player dominant
>> and then trying to deliberately degrade their dominance is the way to go.
>>
>>
>>
>> That being said – which such dominant players and potentially monopolies
>> may exist – the key to dealing with them is to ensure that the regulatory
>> environment exists to allow for the emergence of competition.  Basically –
>> if a player is either dominant or a monopoly – it must be constrained from
>> behaving in a manner that would supress the emergence of true competition
>> that is created by the free market (I.E I believe that there should be
>> strict limitations on anti-competitive practices that should be strongly
>> and vigorously enforced).  This however is different from saying, a player
>> is dominant or a monopoly, and hence we must split them up or force them
>> into actions which actively CREATE the competition – they are very
>> different things.
>>
>>
>>
>> A classic example of this is the situation we find ourselves in with
>> AFRINIC – They are a de-facto monopoly on the continent being the only RIR
>> – and this would not be a problem if they a.) allowed their customers to
>> transfer out to another RIR off continent or b.) the ICP-2 regulations
>> allowed for the foundation of a second RIR – since (b) isn’t there, and
>> since AFRINIC point blank refuses to implement (a) using the excuse that
>> “the community hasn’t passed such” – I would argue they are behaving in a
>> manner that is anti-competitive and should be subject to sanction under
>> anti-trust regulations.
>>
>> However – in the same vein – I would not advocate that AFRINIC be forced
>> to create a competitor – they are free to keep their monopoly on continent
>> so long as they allow their customers to up and go elsewhere should they
>> choose to do so.
>>
>>
>>
>> The same thing applies to any dominant player – ensure they are not using
>> that dominance to supress competition and remove the ability for
>> competition to rise – and I have no problem with it.  However, allowing
>> them to remain dominant while adopting anti-competitive practices – that is
>> another story all together.
>>
>>
>>
>> So the question we need to ask ourselves is – are we seeing
>> anti-competitive practices and practices designed to enforce dominance – if
>> yes – we have a problem – if no – let the free market take care of the
>> issue.
>>
>>
>>
>> Just my thought
>>
>>
>>
>> Andrew
>>
>>
>>
>>
>>
>>
>>
>>
>>
>> *From:* kictanet <kictanet-bounces+andrew.alston=liquidtelecom.com@
>> lists.kictanet.or.ke> *On Behalf Of *Ali Hussein via kictanet
>> *Sent:* 31 July 2018 10:37
>> *To:* Andrew Alston <Andrew.Alston at liquidtelecom.com>
>> *Cc:* Ali Hussein <ali at hussein.me.ke>; Admin CampusCiti via kictanet <
>> kictanet at lists.kictanet.or.ke>
>> *Subject:* Re: [kictanet] Telcos CEOs on the spot in push to declare
>> Safaricom dominant
>>
>>
>>
>> @Walu
>>
>>
>>
>> Your statement below sort of negates all that you have said, nah? :-)
>>
>>
>>
>> *Infact MPESA is BOTH a platform and a product at the same time. They
>> just chose to play by product rules when it is convenient to shield them
>> from platform responsibilities.*
>>
>>
>>
>> We can continue this conversation further over a biryani lunch.. (And
>> Steve Chege is welcome to join us) :-)
>>
>>
>>
>> Regards
>>
>>
>> *Ali Hussein*
>>
>> *Principal*
>>
>> *AHK & Associates*
>>
>>
>>
>> Tel: +254 713 601113
>>
>> Twitter: @AliHKassim
>>
>> Skype: abu-jomo
>>
>> LinkedIn: http://ke.linkedin.com/in/alihkassim
>>
>>
>>
>> 13th Floor , Delta Towers, Oracle Wing,
>>
>> Chiromo Road, Westlands,
>>
>> Nairobi, Kenya.
>>
>>
>> Any information of a personal nature expressed in this email are purely
>> mine and do not necessarily reflect the official positions of the
>> organizations that I work with.
>>
>>
>>
>> On Tue, Jul 31, 2018 at 10:15 AM, Walubengo J <jwalu at yahoo.com> wrote:
>>
>> @Ali,
>>
>>
>>
>> I agree with everything you say below except on the platform thing. MPESA
>> is a indeed a platform, even by your own definition that you shared below,
>> which states:
>>
>>
>>
>> Platforms are structures that allow multiple products to be built within
>> the same technical framework.
>>
>>
>>
>> I had my own definition from a leading researcher in the regulatory
>> space, J. Bauer, (https://pdfs.semanticscholar.org/2c72/
>> 106282dfe7b5a35e5981cf02fe656cc7a5d7.pdf)
>>
>>
>>
>> He defines a platform  as follows:
>>
>>
>>
>> “technological foundations upon which other products, services,and
>> systems are built”
>>
>>
>>
>> MPESA has provided  the foundation and APIs upon which banking,
>> eCommerce, Payment Gateways, etc have been built.  It is a platform,
>> irrespective of the fact that initially it was not designed as such.  Even
>> FB, Google, AWS, and many others were initially private entities but
>> organically grew into being platforms.
>>
>>
>>
>> Which really is the regulatory crux of the matter. The owners of these
>> emerging platforms still want to play by the old rules when their systems
>> were Products, conveniently ignoring the fact that they are actually now
>> Platforms.
>>
>>
>>
>> Infact MPESA is BOTH a platform and a product at the same time. They just
>> chose to play by product rules when it is convenient to shield them from
>> platform responsibilities.
>>
>>
>>
>> But it is an interesting and wide topic.  Maybe Safcom should sponsor a
>> 1week e-discussion to enable this to be ventilated.
>>
>>
>>
>> walu.
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>> On Monday, July 30, 2018, 8:11:40 PM GMT+3, Ali Hussein <
>> ali at hussein.me.ke> wrote:
>>
>>
>>
>>
>>
>> @Walu
>>
>>
>>
>> I was baiting you..and you fell for it.. LOL
>>
>> !
>>
>>
>>
>> Let me first address the issue of Mpesa and
>>
>> the
>>
>> allegations that it is a Platform. I recommend the book *Platform
>> Revolution
>> <https://www.amazon.com/Platform-Revolution-Networked-Transforming-Economyand-ebook/dp/B00ZAT8VS4>*
>> by Geoffrey Parker, Marshall Van Alsytne and Sangeet Paul Choudrey.
>>
>>
>>
>> According to Tech blogger Jonathan Clarks
>> <http://jonathanclarks.blogspot.de/2009/06/what-is-difference-between-platform-and.html>,
>> “Platforms are structures that allow multiple products to be built within
>> the same technical framework. Companies invest in platforms in the hope
>> that future products can be developed faster and cheaper, than if they
>> built them stand-alone. Today it is much more important to think of a
>> platform as a business framework. By this I mean a framework that allows
>> multiple business models to be built and supported. For instance, Amazon is
>> an online retail framework. Amazon started by selling books. Over time they
>> have expanded to selling all sorts of other things. Apple iTunes started by
>> selling tracks and now uses the same framework to sell videos.”
>>
>>
>>
>> So back to my issue of whether M-Pesa is a Platform. M-Pesa wasn't built
>> from the ground up to be a Platform. To claim that M-Pesa is a Platform is
>> like saying that a VW Kombi
>> <https://www.google.com/search?q=VW+KOMBI&rlz=1C5CHFA_enKE800KE800&tbm=isch&source=iu&ictx=1&fir=oebAUZqbFmXsSM%252Ch9Cx7Tj_4hnt2M%252C_&usg=__V7SZyrLUT-w4mOWCnPSbExol-8A%3D&sa=X&ved=2ahUKEwjf2O6docfcAhXCxoUKHZuTCXIQ_h0wFXoECAoQCA&biw=1280&bih=726#imgrc=oebAUZqbFmXsSM>is
>> a Toyota VX  <https://www.toyota.com/landcruiser/> just because some Jua
>> Kali mechanic decided to put a 5.7-Liter DOHC 32-Valve V8 with Dual
>> Independent Variable Valve Timing with intelligence (VVT-i); 381 hp @ 5600
>> rpm; 401 lb.-ft. @ 3600 rpm into the Kombi - #JustSaying.. :-) With all due
>> respect to Safaricom of course..
>>
>>
>>
>>
>>
>> Platforms are an amazing thing to behold. Apple IOS is a Platform. The
>> Amazon Ecosystem is a Platform. Google's Android is a Platform. Facebook is
>> a Platform. You get my point.
>>
>>
>>
>> We spend alot of time bashing Safaricom. And it is as it should be since
>> they are the Big Boys/Girls in our part of the wood
>>
>> s
>>
>> ..But Safaricom has so many problems..I wish we can exploit them instead
>> of wasting so much energy on them.. The world is full of companies that
>> Governments were unable to break up
>>
>> but the market took care of that.. The regulatory landscape is not
>> optimal for sure..and that can be worked on..But we also need to look
>> inwards..Barclays is already taking steps with Timiza, so is HF..And of
>> course there is Equity..The fact is this - We are all fighting for the 80%
>> of the 10% market Safaricom has in mobile money..#GoFigure
>>
>>
>>
>> I agree with you that the Regulator needs to get up to speed with the new
>> reality. However it's not that simple. Remember the tussle between the CA
>> (Communications Authority) and CAK (Competitions Authority of Kenya) on the
>> Market Study? Add to this mix the CMA (Capital Markets Authority) and CBK
>> (Central Bank of Kenya) to get an idea of how tough regulation is today. At
>> the height of the dominance conversation last year I attempted to make a
>> sense of it. See link below:-
>>
>>
>>
>>
>>
>> Dominance, Regulation and the New Strategic Imperatives
>> <https://www.linkedin.com/pulse/dominance-regulation-new-strategic-imperatives-ali-hussein-kassim/>
>>
>>
>>
>> Here's a fact that most of us don't want to come to terms with. As untidy
>> as free markets are, they are more efficient than Governments. Chairman
>> William Kisang of the House Committee on Communication, Information and
>> Innovation is my hero for seeing off this continuous rant on Dominance. Now
>> he must take it one step further and create a Super Regulator (It can be
>> that the different regulators and arms of government create a working
>> committee that meets regularly and share notes to ensure they are on the
>> same page when it comes to Innovation and New Business Models that
>> transcend industries.
>>
>>
>>
>>
>>
>> We must move forward. Safaricom's 'dominance' will be taken care of by
>> the Market. With a little help from a forward looking regulator of
>> course..I'm willing to bet my next year's salary on it. :-)
>>
>>
>>
>> Regards
>>
>>
>>
>> *Ali Hussein*
>>
>> *Principal*
>>
>> *AHK & Associates*
>>
>> +254 0713 601113
>>
>>
>>
>> Twitter: @AliHKassim
>>
>> Skype: abu-jomo
>>
>> LinkedIn: http://ke.linkedin. com/in/alihkassim
>> <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 30 Jul 2018, at 6:35 PM, Walubengo J <jwalu at yahoo.com> wrote:
>>
>> @Ali, am with Eng Kariuki on this one ;-)
>>
>>
>>
>> Indeed we are in the age of platforms (read MPESA as an example).  And
>> yes we can't blame Safcom for milking MPESA to the hilt (eg. most
>> government service mobile money payments have a preferred providers ;-).
>>
>>
>>
>> I would rather blame the regulator for not seeing this coming, and when
>> they finally saw it, they dilly dallied to intervene (remember 2year market
>> study?)  Furthermore, previous thinking that platforms are sacred corporate
>> jewels not to be touched or  that  all markets will eventually self-correct
>> have been proved wrong elsewhere with FB, Google, etc coming under heavy
>> 'regulatory fire' in the recent past.
>>
>>
>>
>> I dont claim to have the answer to Safcom dominance, but I can claim very
>> strongly that the market forces will never self-correct the dominant
>> position that Safcom continues to enjoy.
>>
>>
>>
>> Is dominance  a good thing? Yes, for Safcom.  Is it a bad thing?  Yes,
>> for a country that may realize that they cannot transmit election results
>> simply because the competing providers dont have presence in some areas
>> under their zones. Or that you can't access internet or send mobile money
>> coz Safcom network sneezed for an hour or two as it happened a week ago.
>>
>>
>>
>> I have said this before, the dominance conversation must be rise above
>> competition issues and begin to be interrogated at the level of national
>> security.  If Safcom beats competition to pulp, it is good for its
>> shareholders (me with my very small shares  included), BUT it is bad thing
>> for the country that may discover they have no commensurate alternatives.
>>
>>
>>
>> That said, I dont believe baby sitting competition to beat Safcom is the
>> answer either.
>>
>>
>>
>> Only a new innovation, perhaps the next 'MPESA on a Blockchain' sort of
>> thing will be able to give  Safcom the challenge it deserves.
>>
>>
>>
>> walu.
>>
>>
>>
>> On Monday, July 30, 2018, 6:00:10 PM GMT+3, Admin CampusCiti via kictanet
>> <kictanet at lists.kictanet.or.ke > wrote:
>>
>>
>>
>>
>>
>> John
>>
>>
>>
>> Fortunately I’m not a graduate of Telecommunications Law.. So I can see
>> clearly.. #JustSaying..
>>
>>
>>
>> I have always advocated for a review of the Framework on competition in
>> not just the Telco sector but most sectors. The Age of Platforms Is here my
>> brother. And we ignore it or focus on old school models of competition at
>> our own risk. The Government is a very inefficient way to correct market
>> conditions. Look at what is happening the world over.
>>
>>
>>
>> Why don’t we go ahead and also declare Uber dominant? Let’s engage on
>> this issue and not shoot from the hip. Chairman Kisang is my hero. He must
>> have been smoking the right thing that morning. :-)
>>
>> *Ali Hussein*
>>
>>
>>
>> +254 0713 601113
>>
>>
>>
>> Twitter: @AliHKassim
>>
>> Skype: abu-jomo
>>
>> LinkedIn: http://ke.linkedin. com/in/alihkassim
>> <http://ke.linkedin.com/in/alihkassim>
>>
>> Blog: www.alyhussein.com
>>
>>
>>
>> "Discovery consists in seeing what everyone else has seen and thinking
>> what no one else has thought".  ~ Albert Szent-Györgyi
>>
>>
>>
>> Sent from my iPad
>>
>>
>> On 30 Jul 2018, at 5:37 PM, John Kariuki via kictanet <
>> kictanet at lists.kictanet.or.ke > wrote:
>>
>> Listers, Ali.
>>
>> It is a fact that  "In certain telecommunications market segments in
>> Kenya, SAFARICOM is dominant. Any graduate of telecommunications law will
>> confirm that. It has nothing to do with punishing success or innovation. It
>> is a matter of telecommunications and competition laws. If it was in UK or
>> EU I have no doubt that the issue would not have dragged this long.
>> Remember we also have the 'small problem' of Data Protection which has
>> dragged for at least 10 years. Just to repeat what one consultant told my
>> then bosses many years ago and I quote  "The fact that you refuse to see a
>> problem does not mean that it does not exist". If only we had listened!
>>
>>
>>
>> Sent from Yahoo Mail on Android
>> <https://go.onelink.me/107872968?pid=InProduct&c=Global_Internal_YGrowth_AndroidEmailSig__AndroidUsers&af_wl=ym&af_sub1=Internal&af_sub2=Global_YGrowth&af_sub3=EmailSignature>
>>
>>
>>
>> On Mon, Jul 30, 2018 at 14:37, Barrack Otieno via kictanet
>>
>> <kictanet at lists.kictanet.or.ke > wrote:
>>
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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
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>
> _______________________________________________
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> kictanet at lists.kictanet.or.ke
> https://lists.kictanet.or.ke/mailman/listinfo/kictanet
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> Unsubscribe or change your options at https://lists.kictanet.or.ke/
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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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