<html><body bgcolor="#FFFFFF"><div><br></div><div></div><blockquote type="cite"><div><div>Good discussion. Please allow my personal comment. There are many ways of looking at the high level intervention better qualified as "meddling". The simple analogy is this: when there is insecurity, HE the President appeals to police to restore calm like it has happened in Mombasa. He doesn't write letters, through proxies or directly, to the Commissioner. But since this is a case of well-oiled and influential shenanigans,like those behind KAAs Sh55bn saga, order is lost and often others either do not consult him, mislead him or simply misuse his title and name. </div><div>The President has no official personal advisor on communication issues. So those close to him become "experts" in everything often for self interest. But there are questions that are not being answered in this debate for my own appraisal, I will be happy to be filled in;</div><div><br></div><div>(a) Where is the CCK board to defend Sec 5B of the Kenya Information and Communication Act in its independence "from any person or body"?</div><div>(b) Is the solution to market dominance by one MNO about bailouts (cash, MTR reductions, MNP etc) for others or leveling the business environment and triggering competition? What happened to innovations and diversifying in the telcos sector? Or is it the end of times?</div><div>(c) In any race, does make it sense to create hurdles for the front runner to enable the one at the tail-end to catch up? What is competition - does it mean everyone must have gold or all miss it?</div><div>(d) Between "insane" profits and serial losses, what is good for Kenya?</div><div>(e) Between cheap(er) tariffs for eventual bad service and say current tariffs at better quality of signals for voice and data - what will be better? And how can we get the best tariffs with a corresponding good quality and one that is sustainable?</div><div>(f) How much will the telcos sector "contribute" to the electioneering and political campaigns both directly and indirectly and are some MNOs cutting back their investments?</div><div>(g) assuming CCK accepts the "directive" as it did last time, how will the development affect it's own reputation and the "wanjiku"? Who will be the "winner" and "loser" if any? What remedy? </div><div>(h) Is "negotiated regulation or compliance" hurting or aiding competitiveness </div><div><br></div><div><br>On Aug 29, 2012, at 7:32 PM, Walubengo J <<a href="mailto:jwalu@yahoo.com"><a href="mailto:jwalu@yahoo.com">jwalu@yahoo.com</a></a>> wrote:<br><br></div><div></div><blockquote type="cite"><div><table cellspacing="0" cellpadding="0" border="0"><tbody><tr><td valign="top" style="font: inherit;">Eng. Kariuki,<br><br>This piece of data you privately send to me is very good to know and with your permission and for public good I share the same on the list. You explain through parables that the Average Revenues per User are expected to fall as the Operator network grows and therefore this drop should not be construed to mean of poor Returns. <br><br>That piece of data is useful in my work and maybe useful to others and so I hereby share. Enjoy :-). <br><br>walu.<br><br>--- On <b>Wed, 8/29/12, John Kariuki <i><<a href="mailto:ngethe.kariuki2007@yahoo.co.uk"><a href="mailto:ngethe.kariuki2007@yahoo.co.uk">ngethe.kariuki2007@yahoo.co.uk</a></a>></i></b> wrote:<br><blockquote style="border-left: 2px solid rgb(16, 16, 255); margin-left: 5px; padding-left: 5px;"><br>From: John Kariuki <<a href="mailto:ngethe.kariuki2007@yahoo.co.uk"><a href="mailto:ngethe.kariuki2007@yahoo.co.uk">ngethe.kariuki2007@yahoo.co.uk</a></a>><br>Subject: Re: [kictanet] Kibaki, Raila meddling stalls CCK actions<br>To: "Walubengo J"
<<a href="mailto:jwalu@yahoo.com"><a href="mailto:jwalu@yahoo.com">jwalu@yahoo.com</a></a>><br>Date: Wednesday, August 29, 2012, 6:41 PM<br><br><div id="yiv377469996"><div><div style="color: rgb(0, 0, 0); background-color: rgb(255, 255, 255); font-family: times new roman,new york,times,serif; font-size: 12pt;"><div style=""><span style="">Walu,</span></div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style="">This os offline.</span></div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style="">There is nothing strange with falling ARPU.</span></div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style="">Why - You started with Chairmen, the MDs, then GMs,then Managers,then Engineerd,then Secretries,the Clerks.</span></div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style="">I could go on.</span></div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style=""></span> </div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style="">As you continue,you reached my Shamba boy.</span></div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style=""></span> </div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style="">How do you expect ARPU to increase when you are reaching the poore segments of society.</span></div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style="">And even from old KPTC as the network got larger, we noticed more money but less ARPU. After all cost of getting a new customer gets lower as you get a large network.</span></div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style=""></span> </div>
<div style="background-color: transparent; font-style: normal; font-family: times new roman,new york,times,serif; color: rgb(0, 0, 0); font-size: 16px;"><span style="">JN<var id="yiv377469996yui-ie-cursor"></var></span></div>
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<div style="border: 1px solid rgb(204, 204, 204); padding: 0px; line-height: 0pt; margin: 5px 0px; height: 0px; font-size: 0px;" class="yiv377469996hr"></div><b><span style="font-weight: bold;">From:</span></b> Walubengo J <<a href="mailto:jwalu@yahoo.com"><a href="mailto:jwalu@yahoo.com">jwalu@yahoo.com</a></a>><br><b><span style="font-weight: bold;">To:</span></b> <a href="mailto:ngethe.kariuki2007@yahoo.co.uk"><a href="mailto:ngethe.kariuki2007@yahoo.co.uk">ngethe.kariuki2007@yahoo.co.uk</a></a> <br><b><span style="font-weight: bold;">Cc:</span></b> KICTAnet ICT Policy Discussions <<a href="mailto:kictanet@lists.kictanet.or.ke"><a href="mailto:kictanet@lists.kictanet.or.ke">kictanet@lists.kictanet.or.ke</a></a>> <br><b><span style="font-weight: bold;">Sent:</span></b> Wednesday, 29 August 2012, 18:17<br><b><span style="font-weight: bold;">Subject:</span></b> Re: [kictanet] Kibaki, Raila meddling stalls CCK actions<br></font></div>
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<td valign="top">I hear you Kivuva. <br><br>Safcom has indeed made some tidy returns. But these returns can evaporate to zero if a wrong regulatory intervention is applied. Actually the elephant in the room is that Safcom has grown to a be a dominant operator (legalese for exhibiting monopolistic behaviour) and we should address that issue appropriately. <br><br>The books say Mobile Number Portability would cure the problem - but it did not for Kenya. Am not sure tweaking with the interconnection rates further would solve the problem either. It may instead drop every Operator's Returns towards Zero...and there is some evidence of this happening if you have been tracking the CCK quarterly reports - the Average Revenue per User/Customer accrued by the Operators has been dropping consistently...and may theoretically reach a point where staying in that line of business is not longer attractive.<br><br>In short, am not saying status quo is fine -
indeed our internet access costs as a % of our average incomes, 50% - is way too high and is internationally considered unaffordable. However, one must carefully consider long term implications of (regulatory) decisions made to the market. Yes, the Regulator must intervene - the debate is really about what is the best intervention in the face of market failure?<br> <br>walu. <br><br>--- On <b>Wed, 8/29/12, Kivuva <i><<a href="mailto:Kivuva@transworldafrica.com"><a href="mailto:Kivuva@transworldafrica.com">Kivuva@transworldafrica.com</a></a>></i></b> wrote:<br>
<blockquote style="border-left: 2px solid rgb(16, 16, 255); padding-left: 5px; margin-left: 5px;"><br>From: Kivuva <<a href="mailto:Kivuva@transworldafrica.com"><a href="mailto:Kivuva@transworldafrica.com">Kivuva@transworldafrica.com</a></a>><br>Subject: Re: [kictanet] Kibaki, Raila meddling stalls CCK actions<br>To: <a href="mailto:jwalu@yahoo.com"></a><a href="mailto:jwalu@yahoo.com"><a href="mailto:jwalu@yahoo.com">jwalu@yahoo.com</a></a><br>Cc: "KICTAnet ICT Policy Discussions" <<a href="mailto:kictanet@lists.kictanet.or.ke"><a href="mailto:kictanet@lists.kictanet.or.ke">kictanet@lists.kictanet.or.ke</a></a>><br>Date: Wednesday, August 29, 2012, 5:54 PM<br><br>
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<div class="yiv377469996gmail_quote">On 29 August 2012 16:13, Walubengo J <span dir="ltr"><<a rel="nofollow"></a><a href="mailto:jwalu@yahoo.com"><a href="mailto:jwalu@yahoo.com">jwalu@yahoo.com</a></a>></span> wrote:
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<td valign="top">@Edith,<br><br>Ave been working on some academic model whose preliminary data seems to support Mr. Presidents interventions i.e. the Telco market must project significant Returns for the investor to continue playing. Competition is good but cut-throat competition leaves the industry (Operators, Govt and Users) worse off than before. Think about it - would you like FREE internet that is so congested that you cannot send an email? Or would you rather pay something extra for the reasonable use of the medium?<br></td></tr></tbody></table></blockquote>
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<div>I beg to differ with you Walu. Safaricom has been making insane profits for the past ten years. INSANE profits at the expense of a consumer. You cannot make 10Billion profit in such a small market then start whining on how the market is tough and prices are depressed, and competition is high. Safaricom ended its 2012 financial year with a NET profit to <b>Sh12.63 billion</b> . If that is not OBSCENELY SIGNIFICANT profit, what is?</div>
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<div>I read that the government doesn't want to loose the significant DIVIDENTS it gets from Safaricom that's why it's intervening through CCK.</div>
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<div>For Telkom Kenya, they have to be more innovative and receptive to change if they are to survive. Actually, the government should dispose the remaining 49% stake and stop wasting taxpayers money in bailing the organisation every fiscal year.</div>
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<td valign="top"><br>Going back to Mr. Prime ministers interventions - of protecting frequencies allegedly irregularly acquired by others. My model has not factored in frequencies yet - But I think CCK may have a bigger impact on the market by recovering frequencies held up by the Military (there's a band that ITU declared for public use but previous reports indicated our Military seems to hoard this band - not sure if this has changed).<br><br>As to whether the President's and/or the Prime Ministers interventions are legal? It is debatable. However, I think the current legislative framework - Kenya Comm Amendment Act 2009 - provides for the government in power to direct the Regulator - BUT through Policy frameworks - rather than through specific or selected directives arising from which CEO had dinner with the President/Prime minister the previous night.<br><br>walu.<br><br> <br><br>--- On <b>Wed, 8/29/12, Edith Adera <i><<a rel="nofollow"></a><a href="mailto:eadera@idrc.or.ke"><a href="mailto:eadera@idrc.or.ke">eadera@idrc.or.ke</a></a>></i></b> wrote:<br>
<blockquote style="border-left: 2px solid rgb(16, 16, 255); padding-left: 5px; margin-left: 5px;"><br>From: Edith Adera <<a rel="nofollow"></a><a href="mailto:eadera@idrc.or.ke"><a href="mailto:eadera@idrc.or.ke">eadera@idrc.or.ke</a></a>><br>Subject: Re: [kictanet] Kibaki, Raila meddling stalls CCK actions<br>To: <a rel="nofollow"></a><a href="mailto:jwalu@yahoo.com"><a href="mailto:jwalu@yahoo.com">jwalu@yahoo.com</a></a><br>Cc: "KICTAnet ICT Policy Discussions" <<a rel="nofollow"></a><a href="mailto:kictanet@lists.kictanet.or.ke"><a href="mailto:kictanet@lists.kictanet.or.ke">kictanet@lists.kictanet.or.ke</a></a>><br>Date: Wednesday, August 29, 2012, 1:06 PM
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<div dir="ltr"><font color="#000000" face="Tahoma">Any reactions from Bwana Ndemo, who seems to have received one of the letters?</font></div>
<div dir="ltr"><font face="tahoma"></font> </div>
<div dir="ltr"><font face="tahoma">Is this also the reason why Airtel changed their rates to subscribers from 1 shilling (permanent!! - the word has earned new meaning) back to ksh 3 per minute? No one answered this question when I asked a while back. Airtel, why the change?</font></div>
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<div dir="ltr"><font face="tahoma">As stakeholders, should we accept "regulatory capture" in this industry?</font></div>
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<div dir="ltr"><font face="tahoma">Edith</font> </div>
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<div style="border: 1px solid rgb(204, 204, 204); padding: 0px; line-height: 0pt; margin: 5px 0px; height: 0px; font-size: 0px;" class="yiv377469996hr"></div><font face="Tahoma"><b>From:</b> kictanet [kictanet-bounces+eadera=<a rel="nofollow"></a><a href="mailto:idrc.or.ke@lists.kictanet.or.ke"><a href="mailto:idrc.or.ke@lists.kictanet.or.ke">idrc.or.ke@lists.kictanet.or.ke</a></a>] On Behalf Of Grace Githaiga [<a rel="nofollow"></a><a href="mailto:ggithaiga@hotmail.com"><a href="mailto:ggithaiga@hotmail.com">ggithaiga@hotmail.com</a></a>]<br><b>Sent:</b> Wednesday, August 29, 2012 12:36 AM<br><b>To:</b> Edith Adera<br><b>Cc:</b> KICTAnet ICT Policy Discussions<br><b>Subject:</b> [kictanet] Kibaki, Raila meddling stalls CCK actions<br></font></div>
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<div style="line-height: 1.5em; text-transform: uppercase; padding-left: 13px; font-family: Tahoma,Geneva,sans-serif; margin-bottom: 5px; color: rgb(51, 51, 51); font-weight: bold;"><font size="3">IN SUMMARY</font></div>
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<li style="padding: 0px; line-height: 1.5em; margin: 0px 0px 0px 1.5em;"><font size="3">The President’s intervention, which amounts to political meddling in the work of an independent state organ, has for the second time in as many years stopped the industry regulator, the Communications Commission of Kenya (CCK), from lowering the Mobile Termination Rate (MTR).</font> </li>
<li style="padding: 0px; line-height: 1.5em; margin: 0px 0px 0px 1.5em;"><font size="3">MTR is the price that operators pay each other for calls terminating in their networks from outside and ultimately determines call costs.</font> </li>
<li style="padding: 0px; line-height: 1.5em; margin: 0px 0px 0px 1.5em;"><font size="3">Mr Kibaki, who has been acting on behalf of Safaricom and Telkom Kenya, issued the directive in a letter to Information permanent secretary Bitange Ndemo, stating that there should be no change in the MTR until a fresh study of the same is carried out.</font> </li>
<li style="padding: 0px; line-height: 1.5em; margin: 0px 0px 0px 1.5em;"><font size="3">Prime Minister Raila Odinga, jumped into the CCK’s regulatory mandate with a similar directive on behalf of yet another big business – Royal Media Services.</font> </li>
<li style="padding: 0px; line-height: 1.5em; margin: 0px 0px 0px 1.5em;"><font size="3">Mr Odinga wrote to the CCK director-general asking him to withdraw the notice he had published of intention to revoke frequencies that the media house is accused of acquiring irregularly.</font></li></ul>
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