Is this price control dialogue coming too soon? Safaricom is not only the biggest ICT player but the most profitable company in the country. Does that not mean that it still has plenty of financial room to expand and improve its operations - price/service competition not withstanding? Airtel could say more about their loyalty to this market. The instability of the brand that they are taking over could be working against them and their low price strategy. The patchy hurriedly put together TV ad is not helping. regards, Wamuyu Quoting Francis.Hook@gmail.com:
We have to think of the internecine effects of unsustainable low prices across the market that affect : 1- the airtime seller (who used to make 5% on every shilling sold but now seems to make 5% on every 50cts) - many people rely on airtimes sales to either make a living or augment their revenues. 2 - The investors in operators (whether publicly listed, privately owned, etc) and the overall effect on our investment climate when recent entrants who had a business case and certain near and mid term ROI expectations, now find themselves back at the drawing board. 3 - The people employed directly and indirectly. 4 - The government who need taxes from operators to invest in infrastructure (roads, comms, elec), 5 - The people who will remain technologically marginalised because operators are hard pressed to expand infrastructure, 6 - The existing users who are becoming more sophisticated and demanding - will suffer quality of service/congestion/etc because operators cannot really invest in more bandwidth/network upgrades/network expansion, . 7 - Submarine cable operators (and investors who include various operators) - seeing how margins are really thin, operators cannot take up more capacity than they presently need - in some cases, operators do not really disclose the capacity the end user gets (contention ratios) and some dishonesty starts to creep in as operators find ways to make money
I know there have been arguments that the two shillings I save on each minute will be spent elsewhere - I agree. And overall it means the revenue I will divert to EABL, Total, Uchumi, Nakumatt, BAT, Mama Mboga, etc etc will still help other parts of the economy but in the near to mid term, stifle one part that stimulates all the other parts.
My two pesetas
On , james ratemo <jratemo@gmail.com> wrote:
It will be interesting to hear what CCK has to say about this.
As for me I think there could be some bullying going on in the industry. But again we should guard against price predation where some operators could bring the price so low, kick out or discourage potential 'other' competitors that would lead to a near monopolistic regime.
Yeah as Ndemo argues, we need the operators to rollout 3G extensively. As much as we need low prices we also need quality services. A balance must be struck to ensure satisfaction for customers and sustainability for investors.
Keep the debate rolling.
On Wed, Feb 16, 2011 at 11:58 AM, bitange@jambo.co.ke> wrote:
Edith,
Prices will eventually come down even below one shilling especially when
Subscriber base begins to exceed 100%. It is selfish for us now to
celebrate lower tarrifs when coverage is at 40%. We need to improve
coverage to at least 90%. There are pockets even in Nairobi where none of
the operators has covered. The quality of service is still wanting as new
technologies that put pressure on capex keep on emerging. We are not
seeing aggresive rollout of 3G which all of you agree that it is critical
to our last mile broadband.
For many years, Kenya's development has largely been minimalist,
depressing and expensive. In the past few years, we started moving from
such experiments and made serious interventions in the Telcoms and Road
sectors. Serious investors are now considering Kenya as a good investment
destination. Other consideration include return on investment not only
for foreign investors but local investors too. Margins therefore become a
critical factor.
There is no where in the world where lower margins have kept pace with
technology. Any analyst will tell you that at the pace which prices are
coming down in Kenya, one operator is bound to die. Unfortunately, most
of the celebrating crowd will train their spears on government asking what
it was doing. Whichever way the government gets the flak. That is why I
make no apologies for taking a conservative stand.
Regards
Ndemo.
Listers,
The news I heard today made me wanna shadder!
A player with market power asking for price controls in the telecom
market? Are we progressing or retrogressing?
Telecom Economics dictates otherwise and this must NOT happen in a free
and competitive market! Our recent discussions on broadband access just
goes to confirm that we are not there yet. We have not yet reached the
most remote and isolated corners of this country....control MUST not be an
option!
The Kenyan consumer continues to be constrained by availability,
accessibility and affordability to fully realize the socio-economic
benefits of telecoms.
As a voice for the common consumer.....among a million other
voices......price control is NOT an option!
Edith
________________
Edith Ofwona Adera
Senior Program Specialist
ICT4D Program and Climate Change & Water Program
International Development Research Centre | Centre de recherches pour le
développement international
Regional Office for Eastern and Southern Africa
Tel: +254202713160 | Fax/Téléc: +254202711063 | Skype: edithadera
eadera@idrc.or.keeadera@idrc.or.ke> |
www.idrc.cahttp://www.idrc.ca/> | www.crdi.cahttp://www.crdi.ca/>
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