[kictanet] [preliminary analysis] After Access report launch

Tue May 21 14:45:42 EAT 2019

Interesting analysis. Awaiting more.

Thanks

On Sat, 18 May 2019, 21:39 Patrick A. M. Maina via kictanet, <
kictanet at lists.kictanet.or.ke> wrote:

> Hi Barrack,
>
> I'm still studying it but can share my initial thoughts... I had a quick
> look at GSMA's mobile economy report 2019 (link #5 below) and it pegs
> Kenya's internet penetration number at* ~24%* up from 16% based on
> lagging indicators (2014-2017). It also says 3G coverage was *85%* as at
> 2017 with 4G reaching more than a third of the population (~16.7 Million
> people assuming ~50M total).
>
> The GSMA report is alluding to a *high supply - low demand situation* (high
> network coverage and low internet uptake) which is congruent with Research
> ICT Africa's findings.
>
> The data (and economic theory - see link #1 below) is telling us not to
> focus on supply side but to develop the demand side - because supply is
> abundant - but there is something that is impeding demand.
>
> This means looking at whether internet pricing (a factor of value
> perception) or internet quality (or both) are impeding penetration. It's
> hard to argue that QoS is a significant factor with 85% 3G coverage -
> because 3G internet is pretty good (even for compressed video 240-480p
> which is adequate for budget phones).
>
> The more credible explanation for low demand is affordability - and this
> has been alluded in several studies - including Research ICT Africa's
> study. *Majority* of Kenyans are poor - yet mobile service pricing is
> inequitably skewed in favor of the urban middle-class or higher who
> comprise < 12% of our 26.8Million (~57%) labor force, say ~3.2 million
> people filing tax returns as a rough indicator (see link #3 for Kenya's
> demographic profile).
>
> So ~88% of the work-capable population gets to pay a significantly higher
> premium per MB, as well as for voice and SMS.
>
> The poorer you are the heavier you are penalized. A 6MB for 3/- offer
> bundle with 24hr validity works out to 2MB per shilling. But if you can
> afford to pay 50/- for an hour you get ~40MB per shilling. *The poor
> person pays 20 times more for the same commodity than the wealthier person.*
> This is penalizing poverty - and quite ruthless, considering the essential
> nature of the services.
>
> Economic theory says that when supply is high and the pricing is
> uncompetitive in a market characterized by low disposable incomes, it can
> be expected that the demand would be low (unless some coercive factors
> exist e.g. for utilities like Kenya Power). The data supports this.
>
> The data is also challenging the procurement driven narrative that
> internet coverage is driven by technical gaps (coverage and capacity),
> rather than underlying economic issues (lack of quality jobs and stifled
> opportunities). So what should be examined instead is the relationship
> between disposable income, bundle pricing and internet uptake.
>
> Although one service provider in Kenya is making super profits, and has
> been growing in double digits, the broader economy does not reflect their
> vibrancy (the disparity is so wide,* it is like the company exists in
> another dimension or on another planet*) - which is a compelling
> indicator of serious market dysfunction e.g. unfair competition, excessive
> market power by one player, economically risky dominance and/or predatory
> practices (see link #4).
>
> When market dysfunction persists for long it can be an indication of
> regulatory capture or excessively high economic dependency, such that
> regulator is afraid to interfere - which severely degrades economic
> resilience via single point of failure scenario, and allows the problem to
> baloon to catastrophic levels over time (see link #2).
>
> More telling is the fact that we don't have a "number two" in terms of
> profits. So the demand/supply data is supporting the oft posited assertion
> that there is an unfair competitive landscape and monopolistic practices in
> the Telecomms sector (e.g. customer lock-in via network effects thus high
> switching costs / stifled innovations when the leader wants to get involved
> in everything - from taxi services to selling vegetables online etc).
>
> What the data is telling us is that initiatives like the National
> Broadband Strategy should focus more on addressing demand side factors
> (e.g. deploying USF towards local content production, seed funding for
> startups and so on). Increasing supply at this time will be inefficient and
> wasteful (only a few will benefit at the expense of majority).
>
> Good evening.
>
> *Links / References:*
>
> 1. Market gap analysis
> http://www.consumerpsychologist.com/dist_Gap_Analysis.html
>
> 2. Regulatory Capture: A review
> https://www.jstor.org/stable/23606888?seq=1#metadata_info_tab_contents
>
> 3. Kenya Demographic Profile 2018
> https://www.indexmundi.com/kenya/demographics_profile.html
>
> 4. Market Failure
> https://en.wikipedia.org/wiki/Market_failure
>
> 5. GSMA Mobile economy 2019
> https://www.gsma.com/r/mobileeconomy/
>
> Brgds,
> Patrick.
>
> [Cross-domain Innovator | Independent Public Policy Analyst - Indigenous
> Innovations]
>
>
> On Saturday, May 18, 2019, 7:02:58 PM GMT+3, Barrack Otieno <
> otieno.barrack at gmail.com> wrote:
>
>
> Hi Patrick,
>
> Whats your position on the issue? Assuming you have done some analysis.
>
> Regards
>
> On Sat, 18 May 2019 14:33 Patrick A. M. Maina via kictanet, <
> kictanet at lists.kictanet.or.ke> wrote:
>
> Ali, interesting... so you are casting aspersions on a data driven study
> that you don't agree with, based on.. what? your own personal views and/or
> preferences?
>
> Without some kind of rational analysis of why X is better than Y, it looks
> like you are cherry picking, making convenient assumptions and jumping to
> wild conclusions. Why would you do that?
>
> On CA's report, you make a FACTUAL assertion (framed as a "universal
> truth") that the report is exaggerated, then you immediately cast doubt on
> your own factual claim (thereby demolishing its credibility) by asking CA
> to correct you? So were you stating a universal fact or a personal belief?
>
> Let's have a high quality discussion please.
>
> What exactly makes GSMA's report more believable?
>
> Good day & brgds,
> Patrick.
>
> Patrick A. M. Maina
>
> [Cross-domain Innovator | Independent Public Policy Analyst - Indigenous
> Innovations]
>
>
>
>
>
>
> On Saturday, May 18, 2019, 12:12:39 PM GMT+3, Ali Hussein via kictanet <
> kictanet at lists.kictanet.or.ke> wrote:
>
>
> There must be something seriously wrong with these statistics.  We know
> for a fact that CA Statistics are exaggerated (for example they use sim
> card connections as a unique identifier as opposed to say Identity Card) -
> And CA can jump in here and correct me if my assertions are wrong. However,
> even in the wildest dreams, I can't believe that our internet penetration
> rates are that low!! 26%? I'd rather go with the GMSA report which gives an
> indicative figure of around 70%.
>
> Maybe this report alludes to Broadband Penetration? That would be a lot
> more believable.
>
> Regards
>
> *Ali Hussein*
>
> *Principal*
>
> *AHK & Associates*
>
>
>
> Tel: +254 713 601113
>
> Twitter: @AliHKassim
>
> Skype: abu-jomo
>
> LinkedIn: http://ke.linkedin.com/in/alihkassim
> <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 Thu, May 16, 2019 at 7:40 PM Margaret Nyambura Ndung'u via kictanet <
> kictanet at lists.kictanet.or.ke> wrote:
>
> Listers, the  attached  after access report  by Research ICT Africa was
> launched today at the Stockholm Internet forum.   "A comparative analysis
> of demand-side view of mobile Internet from 10 African countries².
>
> As noted at the broadband meeting last Friday, available demand side data
> on Internet and mobile use in Kenya and many other countries is
> insufficient.  The report attempts to bridge that gap.
>
>
>
> Interesting statistics with Internet penetration in Kenya at 26% in line
> with ITU statistics.  Differences are noted in other countries highest
> being in Rwanda with an 11% difference (See table 3).
>
>
> Rgrds,
> Nyambura
>
>
>
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> sector in support of the national aim of ICT enabled growth and development.
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> 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.
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> online that you follow in real life: respect people's times and bandwidth,
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