Just checking my old notes for context on how we came to where
we are - and how we can get out!!
Kencell was awarded a licence to operate on 23/1/2000 while
Safaricom under Vodafone management took over on 20/7/2000. Both operators
launched their operations on 24/8/2000 ( Kencell) and 21/10/2000 ( Safaricom)
and by dec 2000 , Kencell had 39300 customers while Safaricom was far behind at
29100 customers . Safaricom was the smallest player in the market! Indeed the
situation did not change immediately and by march 2001 kencell was still
leading at 126000 against Safaricom’s 93700. At the time, Telkom had seemingly
unassailable lead of 300000 controlling 60% market share with Safaricom
trailing the pack. By June however, things starting changing with the last
overtaking both by the end of year and positions reversed - it seems forever.
Note that at the time , TKL could not change its tariffs without authority
from CCK as the incumbent dominant player not to ‘kill’ the nascent
players. The cellular operators needed only to file their tariffs with CCK
While Safaricom took off behind Kencell by 3 months it had
17000 customers on its list inherited from TKL, it also had some goodies by
virtue of its closeness to TKL – interconnection, access to tkl property
to build cellsites etc. these however cannot account for its growth today. It is
a question of strategies both companies took –one focused on the high
value niche market emphasising post-paid requiring PIN certificates those
days , the other focused on the mass market with tools like per second
billing, no charge on customer number etc. branding , level of investment and
consistent brand . these were a major differentiator and all have
contributed to make the difference we see today. While we are very price conscious
, there are many other elements built around of the network we chose and
affect the decision of choice . last year for example the networks invested
41% of their revenues for network expansion. This is a massive investment and
certainly biggest investor must expert to get the most out of its investment.
the new operators tried to fight on price alone but certainly that did
not dent the market shares and in a market where 99% of the market is pre
paid and can vote with their legs and churn with least effort with or without
MNP.
So, are regulatory tools based on tariffs adequate to reign-in
market dominance as proposed in the regulations? NO. it cannot account for the
investment, strategies , innovation and risk taken by the dominant player. Equally
, it does not jerk up the smallest players either. Strategies define who
dominates or lose . The incumbent cellular operators in Tanzania and Ghana
collapsed when new operators came to the market , MTN Uganda on its launch
registered more customers on day one than the incumbent Celtel. We need tools
that really jerk up those behind to really exploit the national resource (
spectrum etc ) they are holding
It’s true that dominant players can easily use their might
to squeeze smaller ones out of the market with disastrous long term
consequences to the consumer and the market . Tariffs is not the only tool
available to an operator. We should not forget the wide range of services operators
launch to increase stickiness to its services . The government and by
extension CCK has a duty to protect the consumers and having chosen competition
as a foundation to customer protection and choice in the National ICT
Policy , it must safeguard the competition process. A starting point is clear
boundary that defines when competition fuses into abuse and at a higher level
when market failure affects competition.
Cheers
MM
From:
kictanet-bounces+mureithi=summitstrategies.co.ke@lists.kictanet.or.ke
[mailto:kictanet-bounces+mureithi=summitstrategies.co.ke@lists.kictanet.or.ke] On
Behalf Of Andrea Bohnstedt
Sent: 07 May 2010 18:28
To: mureithi@summitstrategies.co.ke
Cc: KICTAnet ICT Policy Discussions
Subject: Re: [kictanet] {Disarmed} RE: {Disarmed} Re: Call for opinions
- CCK vs Safaricom
I think there are several interesting points here:
Obviously it's not ideal for
the market and customers to have such limited competition, but then a) the
regulation lacks a crucial element, and b) the competition seem to have been
quite adept at shooting themselves in the foot. Is it fair to punish Safaricom
for that?
Andrea
On 7 May 2010 18:04, Pius Walela <PWalela@strathmore.edu> wrote:
Recent developments in the mobile telephony sector
are of concern . I opine that for a true
capitalist society to manifest the market should be subject
to forces of demand and supply to create conducive conditions
for the market to thrive and in extension to ensure its
longevity. However Oligopolistic and monopolistic tendencies
in the market ought to be constrained
to cushion feeble players and potential new entrants
from eventual or outright failure, as such
regulation is essential however these regulations
have to be moderated.
From: kictanet-bounces+pwalela=strathmore.edu@lists.kictanet.or.ke
[mailto:kictanet-bounces+pwalela=strathmore.edu@lists.kictanet.or.ke] On
Behalf Of Andrea Bohnstedt
Sent: Friday, May 07, 2010 5:57 PM
To: Pius Walela
Cc: KICTAnet ICT Policy Discussions
Subject: {Disarmed} Re: [kictanet] Call for opinions - CCK vs Safaricom
Amusing little factoid:
In 2004, when Celtel acquired Kencell:
'Kencell, with about 1.2 million subscribers, has recently lost market share to
rival Safaricom, a joint venture of Kenya's state-owned Telkom Kenya and
Britain's Vodafone. Safaricom's subscribers have grown to 1.8 million,
increasing its share to 60% from about 50%.
So Celtel/Zain managed to work their way down from 50% to 14% or so over the
past six years. Must have been quite a slippery playing field.
(http://www.regulateonline.org/2003/intelecon/2004/May/A-Kenya-040525.htm)
On 7 May 2010 17:38, Walubengo J <jwalu@yahoo.com> wrote:
|
MM,
Kui For a local context from an
economic perspective , read the attached Regards Muriuki Mureithi From: kictanet-bounces+mureithi=summitstrategies.co.ke@lists.kictanet.or.ke
[mailto:kictanet-bounces+mureithi=summitstrategies.co.ke@lists.kictanet.or.ke] On
Behalf Of John Kariuki
_______________________________________________ |
_______________________________________________
kictanet mailing list
kictanet@lists.kictanet.or.ke
http://lists.kictanet.or.ke/mailman/listinfo/kictanet
This message was sent to: andrea.bohnstedt@ratio-magazine.com
Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/andrea.bohnstedt%40ratio-magazine.com
--
Andrea Bohnstedt
Publisher
+254 720 960 322
www.ratio-magazine.com
Strathmore University provides all-round education in an atmosphere
of freedom and responsibility.
This email and any files transmitted with it are intended solely for use by the
recipient(s) to whom it is addressed and may contain confidential information.
If you have received this email in error please notify the sender immediately
and permanently delete this email and/or any files attached to it from your
computer. Please note that any views or opinions presented in this email are
solely those of the author and do not necessarily represent those of Strathmore
University. The University accepts no liability whatsoever for any loss or
damages incurred, or suffered, resulting, or arising, from the use of this
email and/or its attachments. The University warrants neither the integrity of
the e-mail nor its freedom from errors, viruses, interception or any other form
of interference.
………………………………………………………………….
Website: www.strathmore.edu
--
Andrea Bohnstedt
Publisher
+254 720 960 322
www.ratio-magazine.com