<html><head></head><body><div style="font-family:Helvetica Neue, Helvetica, Arial, sans-serif;font-size:13px;"><div><div>Dear Onesmus,Listers,</div><div>Let me give a few comments on the article by the "Standard".</div><div><br></div><div>1. "Pay Higher Costs."</div><div> 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.</div><div><br></div><div>2."Price Controls not Effective"</div><div> 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.</div><div>3.Sharing of Towers.</div><div> 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.<br></div><div><br></div><div>4. Promotions and loyal schemes:</div><div> </div><div>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.<br></div><div><br></div><div>5 Finally Onesmus on your comment on: <span><i style="font-family: "Helvetica Neue", Helvetica, Arial, sans-serif;"><span style="font-family: "Bookman Old Style", serif;">should CA license and “regulate”” on competition” at the same time?</span></i></span></div><div><span><i style="font-family: "Helvetica Neue", Helvetica, Arial, sans-serif;"><span style="font-family: "Bookman Old Style", serif;">Let me add</span></i></span></div><div><span><i style="font-family: "Helvetica Neue", Helvetica, Arial, sans-serif;"><span style="font-family: "Bookman Old Style", serif;"> </span></i></span></div><div><span><i style=""><font face="Bookman Old Style, serif"> (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!</font><br></i></span></div><div><span><i style="font-family: "Helvetica Neue", Helvetica, Arial, sans-serif;"><span style="font-family: "Bookman Old Style", serif;"> <br></span></i></span></div><div class="ydped8d8699signature"><div>Apologies for the lengthy comment!</div><div style="font-size:13px;background-color:transparent;font-style:normal;font-family:arial, helvetica, clean, sans-serif;"><br></div><div style="font-size:13px;background-color:transparent;font-style:normal;font-family:arial, helvetica, clean, sans-serif;"><font color="#0060bf">John Kariuki</font></div><div style="color:rgb(0, 96, 191);font-size:13px;background-color:transparent;font-style:normal;font-family:arial, helvetica, clean, sans-serif;"><br></div></div></div>
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On Thursday, April 5, 2018, 1:47:58 PM GMT+3, Consumers Federation of Kenya (Cofek) via kictanet <kictanet@lists.kictanet.or.ke> wrote:
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<div><div id="ydp413e62a5yiv8617972923"><div><div class="ydp413e62a5yiv8617972923WordSection1"><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";">Dear All,</span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";"> </span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";">Greetings from the Cofek team!</span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";"> </span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";">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. </span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";"> </span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";">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. </span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";"> </span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">You could soon <span style="background:yellow;">pay higher costs for mobile services if the Communications Authority of Kenya (CA) follows through with plans to introduce price controls in the sector</span>, economists have warned. </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">The Institute of Economic Affairs (IEA) said yesterday the recommendations by UK-based consultancy firm Analysys Mason, especially <span style="background:yellow;">on price controls in its study on market dominance laid the basis for tariff hikes.</span> </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">"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. </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";background:yellow;">"Reintroduction of price controls would be a major policy reversal.”</span><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";"> 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 <span style="background:yellow;">and called for regulatory interventions</span>. </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">Among the recommendations was for <span style="background:yellow;">Safaricom to share part of its tower infrastructure with other service providers for a period of five years at tariffs prescribed by CA</span>. "Our analysis shows this dominance has been achieved because of the risk that firms have taken to invest in tower infrastructure," said Mr Owino. </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">"Firms have different appetites for investment and compelling one firm to share infrastructure they’ve invested in at fixed <span style="background:yellow;">prices is not defensible on economic grounds."</span> </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">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. </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">Forcing infrastructure sharing among providers has also been criticised as only useful in redistributing income among existing players but <span style="background:yellow;">stopping short of bringing costs down or improving product experience for consumers.</span> </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">The IEA boss further explained that some of the recommendations in the report <span style="background:yellow;">could see the CA overreach its mandate as a regulator, stifling innovation and product differentiation</span> among operators. </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">“There is <span style="background:yellow;">no policy justification to restrict the freedom of firms to engage in lawful marketing in any format,” said Mr Owino.</span> “This is the most unreasonable proposal with no benefit to aid market competition but would harm consumers.” </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";">Analysys Mason had recommended the <span style="background:yellow;">CA enforce a policy to limit Safaricom from promotions and loyalty schemes that can be replicated by other operators.</span></span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman", "serif";"> </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">Kind regards,</span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";"> </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";"> </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">Onesmus Mutungi</span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><b><u><span style="font-family:"Bookman Old Style", "serif";">Program Assistant </span></u></b></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">Consumers Federation of Kenya (Cofek)</span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">Rehema Place, Block F Suite 45<b></b></span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">P.O Box 28053-00200, City Square</span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">Tel. +2540202615496, 3861718</span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">Mobile: 0715555550, 0733180008</span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">Email : <a href="mailto:hotline@cofek.co.ke" rel="nofollow" target="_blank"><span style="color:blue;">hotline@cofek.co.ke</span></a> </span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">Web : <a href="http://www.cofek.co.ke/" rel="nofollow" target="_blank"><span style="color:blue;">www.cofek.co.ke</span></a></span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old Style", "serif";">COFEK <i>– Restoring Consumer Confidence and Pride</i></span></p><p class="ydp413e62a5yiv8617972923MsoNormal"><b><span style="font-family:"Bookman Old Style", "serif";">SUBSCRIBE <i>to #CofekBreakingNews </i>Send “Cofek On” to 40408</span></b></p><p class="ydp413e62a5yiv8617972923MsoNormal"><i><span style="font-family:"Bookman Old Style", "serif";"><img border="0" width="377" height="308" id="ydp413e62a5yiv8617972923Picture_x0020_1" src="cid:PdZYZ6DA0RBbe8KtFzdX" alt="Description: 3rdTraining"></span></i></p><p class="ydp413e62a5yiv8617972923MsoNormal"><span style="font-family:"Bookman Old 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