I hear you Kivuva.

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.

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.

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?

walu.

--- On Wed, 8/29/12, Kivuva <Kivuva@transworldafrica.com> wrote:

From: Kivuva <Kivuva@transworldafrica.com>
Subject: Re: [kictanet] Kibaki, Raila meddling stalls CCK actions
To: jwalu@yahoo.com
Cc: "KICTAnet ICT Policy Discussions" <kictanet@lists.kictanet.or.ke>
Date: Wednesday, August 29, 2012, 5:54 PM

On 29 August 2012 16:13, Walubengo J <jwalu@yahoo.com> wrote:

@Edith,

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?

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 Sh12.63 billion . If that is not OBSCENELY SIGNIFICANT profit, what is?

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.

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.

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).

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.

walu.

--- On Wed, 8/29/12, Edith Adera <eadera@idrc.or.ke> wrote:

From: Edith Adera <eadera@idrc.or.ke>
Subject: Re: [kictanet] Kibaki, Raila meddling stalls CCK actions
To: jwalu@yahoo.com
Cc: "KICTAnet ICT Policy Discussions" <kictanet@lists.kictanet.or.ke>
Date: Wednesday, August 29, 2012, 1:06 PM

Any reactions from Bwana Ndemo, who seems to have received one of the letters?

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?

As stakeholders, should we accept "regulatory capture" in this industry?

Edith

From: kictanet [kictanet-bounces+eadera=idrc.or.ke@lists.kictanet.or.ke] On Behalf Of Grace Githaiga [ggithaiga@hotmail.com]
Sent: Wednesday, August 29, 2012 12:36 AM
To: Edith Adera
Cc: KICTAnet ICT Policy Discussions
Subject: [kictanet] Kibaki, Raila meddling stalls CCK actions

IN SUMMARY

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).
MTR is the price that operators pay each other for calls terminating in their networks from outside and ultimately determines call costs.
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.
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.
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.

http://www.businessdailyafrica.com/Kibaki+Raila+meddling+stalls+CCK+actions+/-/539546/1489216/-/bay1qg/-/index.html

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