Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war. With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers. But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels. walu. --- On Tue, 1/18/11, Harry Hare <[email protected]> wrote: From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]> Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM Walu good analogy with Netscape and MS IE. HoweverDid the Internet die with the death of Netscape? Did the Internet numbers stay constant with the death of Netscape?Did Microsoft marketshare drop?Did innovation on the internet stop?Guys, let get real, this is business…natural selection comes into play. Kindest Regards Harry HareDirectoreDevelopment House : : 604 Limuru Road Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044 Training : : Research: :Consultancy: : Publishing From: John Walubengo <[email protected]> Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]> Cc: KICTAnet ICT Policy Discussions <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? Here are my thoughts. The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished. Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation. That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run. walu. --- On Tue, 1/18/11, Odhiambo Washington <[email protected]> wrote: From: Odhiambo Washington <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 1:22 PM On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]> wrote: You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone. Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry?Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease! -- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!! -----Inline Attachment Follows----- _______________________________________________ kictanet mailing list [email protected] http://lists.kictanet.or.ke/mailman/listinfo/kictanet This message was sent to: [email protected] Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/jwalu%40yahoo.com _______________________________________________ kictanet mailing list [email protected] http://lists.kictanet.or.ke/mailman/listinfo/kictanet This message was sent to: [email protected] Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/harry%40africanedevelop...
Hi Walu and other esteemed Kenyans, This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share. The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts. Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism. Best regards On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
-----Inline Attachment Follows-----
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-- My Blog - www.gmeltdown.com ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' Keep on doing what you know is right ...
Guys. How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time) Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing. This is the same language we heard when ISP's we asked to reduce bandwidth prices ... Unsustainable :) On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
-----Inline Attachment Follows-----
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-- My Blog - www.gmeltdown.com ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' Keep on doing what you know is right ...
-- Sent from my mobile device
I understand where Dr. Ndemo is coming from being the PS. But as a consumer ... I will 'eat' while it last. Why should I spend a sleepless night thinking about telcos collapsing unless I am an investor? The collapse (if it does happen though I doubt it can happen) may just as well give rise to new and more innovative competitors to Airtel! Market forces should dictate, as for milk cows, maybe they have reached the top of the curve and its time to go down. As for the taxman .. think, think, think! ;) --- On Tue, 1/18/11, Agosta Liko <[email protected]> wrote: From: Agosta Liko <[email protected]> Subject: Re: [kictanet] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 6:29 PM Guys. How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time) Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing. This is the same language we heard when ISP's we asked to reduce bandwidth prices ... Unsustainable :) On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
-----Inline Attachment Follows-----
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-- My Blog - www.gmeltdown.com ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' Keep on doing what you know is right ...
-- Sent from my mobile device _______________________________________________ kictanet mailing list [email protected] http://lists.kictanet.or.ke/mailman/listinfo/kictanet This message was sent to: [email protected] Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/mleonardo%40yahoo.com
During the previous Airtel price change to 3/- per minute, Safaricom stated that they will not fight a price war on voice because the future is in data. How is it that when Airtel make another change in voice "on-net" tariff, Safaricom is crying foul? The recent quality survey by CCK giving Airtel a lead over Safaricom could be the trigger, with Airtel trying to take advantage of this new position and Safaricom fearing to face the consequences of inferior quality service. Let each player come out with their strategy and fight it out at the market place. Meanwhile, as consumers, lets enjoy as market forces sort out the telco strategies. Regards, Jotham --- On Tue, 1/18/11, Leonard Mware <[email protected]> wrote: From: Leonard Mware <[email protected]> Subject: Re: [kictanet] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 11:32 AM I understand where Dr. Ndemo is coming from being the PS. But as a consumer ... I will 'eat' while it last. Why should I spend a sleepless night thinking about telcos collapsing unless I am an investor? The collapse (if it does happen though I doubt it can happen) may just as well give rise to new and more innovative competitors to Airtel! Market forces should dictate, as for milk cows, maybe they have reached the top of the curve and its time to go down. As for the taxman .. think, think, think! ;) --- On Tue, 1/18/11, Agosta Liko <[email protected]> wrote: From: Agosta Liko <[email protected]> Subject: Re: [kictanet] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 6:29 PM Guys. How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time) Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing. This is the same language we heard when ISP's we asked to reduce bandwidth prices ... Unsustainable :) On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
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-- My Blog - www.gmeltdown.com ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' Keep on doing what you know is right ...
-- Sent from my mobile device _______________________________________________ kictanet mailing list [email protected] http://lists.kictanet.or.ke/mailman/listinfo/kictanet This message was sent to: [email protected] Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/mleonardo%40yahoo.com -----Inline Attachment Follows----- _______________________________________________ kictanet mailing list [email protected] http://lists.kictanet.or.ke/mailman/listinfo/kictanet This message was sent to: [email protected] Unsubscribe or change your options at http://lists.kictanet.or.ke/mailman/options/kictanet/jokilimo%40yahoo.com
Liko, In developed Markets where both data and voice have matured, you can afford drastic fall in price. When you get reports from the public, one must always be cautious. Take for example when someone reports that there is a likelihood of cross subsidy which can potentially affect the market. Should we be locking ourselves in the room and pray that nothing happens? It is therefore not abnormal for the Government to be cautious especially when the public writes to complain of a similar situation elsewhere. We have not faulted any operator but it is our responsibility to ensure that there is fair play. Imagine a situation where all the operators report losses at the end of the year. You will begin to see retrenchments, the stock market fall would trigger a rise both with the exchange rate and the interest rates effectively the consumer will end up paying somehow. I will not be suprised that it will be this same forum that will ask what the Government was doing to let things get this worse. Therefore, it does not matter whether you you cricise the Government now or later. Either way we face the criticism. Ndemo.
Guys.
How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time)
Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing.
This is the same language we heard when ISP's we asked to reduce bandwidth prices ...
Unsustainable :)
On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
-----Inline Attachment Follows-----
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-- My Blog - www.gmeltdown.com ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' Keep on doing what you know is right ...
-- Sent from my mobile device
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Listers, Two issues are emerging: 1. Operators not able to 'recoup' investment hence possible layoffs, stock market problems etc 2. Taxman losses First, let’s imagine tomorrow the minimum charges are set to 2/- and Airtel moves up. Assume I am a new entrant in the market with cheaper-easy-to-deploy technology. Bear in mind that technology is evolving fast and new multiplexing and radio wave propagation techniques are also advancing. If my technology allows me to set up a GSM network and I can confidently 'recoup' my investment at 0.5/- why should I be forced to charge 2/-? My view is that such a scenario will give rise to a government created cartel that will stifle competition, innovation and advancement. Secondly, who is going to set the base rate? Government? I wait to see how the government can juggle the mathematics of coming up with ‘recouping period’ and satisfy taxman, investors in stock market and operators at same time. The only option, in my view, is for the government to think of higher taxation because that’s where they have leverage and the leave the fight on tariff to operators and market place. The other option is for the government to set up its own National Mobile Operator (NMO) in the line of National Oil Corporation of Kenya (NOCK) to help stabilize market ;) As for stock market; ups and downs are part of the game.. it is called in Kiswahili playing kamari and any investor should know what happens in a casino! BTW, is there a documented precedence in any developing country? Leonard --- On Wed, 1/19/11, [email protected] <[email protected]> wrote: From: [email protected] <[email protected]> Subject: Re: [kictanet] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Wednesday, January 19, 2011, 12:43 PM Liko, In developed Markets where both data and voice have matured, you can afford drastic fall in price. When you get reports from the public, one must always be cautious. Take for example when someone reports that there is a likelihood of cross subsidy which can potentially affect the market. Should we be locking ourselves in the room and pray that nothing happens? It is therefore not abnormal for the Government to be cautious especially when the public writes to complain of a similar situation elsewhere. We have not faulted any operator but it is our responsibility to ensure that there is fair play. Imagine a situation where all the operators report losses at the end of the year. You will begin to see retrenchments, the stock market fall would trigger a rise both with the exchange rate and the interest rates effectively the consumer will end up paying somehow. I will not be suprised that it will be this same forum that will ask what the Government was doing to let things get this worse. Therefore, it does not matter whether you you cricise the Government now or later. Either way we face the criticism. Ndemo.
Guys.
How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time)
Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing.
This is the same language we heard when ISP's we asked to reduce bandwidth prices ...
Unsustainable :)
On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
-----Inline Attachment Follows-----
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I have always wondered why one of the major mobile companies is treated with kids-gloves. The current case of SMS price-wars reinforces this concern. I would have thought that after passing the new katiba with Bill of Rights embedded (which includes consumer protection), everyone especially government, would celebrate when Airtel (I hold no brief) lowered SMS charges to KSh 1. This was even after their earlier push for interconnect rate to be pegged to KSh 0.2 was rejected, and instead GoK/CCK (with strong influence from Safaricom) settled on KSh 0.6. While one needs to look at the maths to know whether 0.2 or 0.6 should have been a more justified rate, Airtel has done us one more favour: which all Kenyans of goodwill should support. They have pegged their SMS costs to KSh 1.0, capping ‘other overheads + profit’ to KSh 0.4. I wouldn’t expect Airtel, a global reputable company to do this if the fundamentals were not right – unless it was a fly-by-night company! They confirm what a number of us have worried all along about: that mobile companies are over-reaping profits, most of which is repatriated to shareholders out of the country. My 3 main concerns:- 1) Why would the same people who rejoiced/indeed occasioned retrenchment when nearly 18,000 Kenyans were retrenched on privatizing Telkom Kenya now be so worried about Safaricom retrenching to the extent that they would deny Kenyans an opportunity to reap the benefits of competition, innovation and creativity? 2) CCK is supposed to be independent. Why should the government (read Ministry) always interfere in their decisions? 3) When we are being told “we’ll lose so much revenue in tax collection”, why aren’t we in the same vein being told “but in the process, we’ll reduce capital flight by way of (foreign) investment repatriation by so much”, and even more importantly that “through lower phone tariffs, Kenyan consumers will have saved so much/economy will have grown by so much as a result of cheaper phone costs.”? Indeed some of the observations herein rooting against lower SMS costs remind me of my earlier (pupilage) days at the then KP&TC. For a while, a number of us advocated ‘lower costs, higher volumes’ (something that lately has become better known as ‘bottom billion’). The same way that it was dismissed then appears to me as the same way the ‘mobile price wars’ are being dismissed now by some. Haven’t Equity and Safaricom itself (actually, mobile companies) proven over time that this works? To be honest, every time I am home I shudder about using Safaricom. For voice, I long stopped using my Safaricom number except to receive – heko to Airtel, Yu and others. For Internet, even when I do bundles, Safaricom is still VERY expensive. Instead of government helping (as demanded by the constitution), they are helping to keep the prices up. In the end who really benefits? Certainly not the consumer/ordinary Kenyan! If this approach has worked for Airtel in India (is the population nearly a billion?), why not for Kenya? Best rgrds, Shem ________________________________ From: Leonard Mware <[email protected]> To: [email protected] Cc: KICTAnet ICT Policy Discussions <[email protected]> Sent: Wed, 19 January, 2011 14:33:22 Subject: Re: [kictanet] Are we letting the PS get away with this too? Listers, Two issues are emerging: 1. Operators not able to 'recoup' investment hence possible layoffs, stock market problems etc 2. Taxman losses First, let’s imagine tomorrow the minimum charges are set to 2/- and Airtel moves up. Assume I am a new entrant in the market with cheaper-easy-to-deploy technology. Bear in mind that technology is evolving fast and new multiplexing and radio wave propagation techniques are also advancing. If my technology allows me to set up a GSM network and I can confidently 'recoup' my investment at 0.5/- why should I be forced to charge 2/-? My view is that such a scenario will give rise to a government created cartel that will stifle competition, innovation and advancement. Secondly, who is going to set the base rate? Government? I wait to see how the government can juggle the mathematics of coming up with ‘recouping period’ and satisfy taxman, investors in stock market and operators at same time. The only option, in my view, is for the government to think of higher taxation because that’s where they have leverage and the leave the fight on tariff to operators and market place. The other option is for the government to set up its own National Mobile Operator (NMO) in the line of National Oil Corporation of Kenya (NOCK) to help stabilize market ;) As for stock market; ups and downs are part of the game.. it is called in Kiswahili playing kamari and any investor should know what happens in a casino! BTW, is there a documented precedence in any developing country? Leonard --- On Wed, 1/19/11, [email protected] <[email protected]> wrote:
From: [email protected] <[email protected]> Subject: Re: [kictanet] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Wednesday, January 19, 2011, 12:43 PM
Liko, In developed Markets where both data and voice have matured, you can afford drastic fall in price. When you get reports from the public, one must always be cautious. Take for example when someone reports that there is a likelihood of cross subsidy which can potentially affect the market. Should we be locking ourselves in the room and pray that nothing happens?
It is therefore not abnormal for the Government to be cautious especially when the public writes to complain of a similar situation elsewhere. We have not faulted any operator but it is our responsibility to ensure that there is fair play.
Imagine a situation where all the operators report losses at the end of the year. You will begin to see retrenchments, the stock market fall would trigger a rise both with the exchange rate and the interest rates effectively the consumer will end up paying somehow. I will not be suprised that it will be this same forum that will ask what the Government was doing to let things get this worse.
Therefore, it does not matter whether you you cricise the Government now or later. Either way we face the criticism.
Ndemo.
Guys.
How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time)
Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing.
This is the same language we heard when ISP's we asked to reduce bandwidth prices ...
Unsustainable :)
On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
-----Inline Attachment Follows-----
_______________________________________________
-- My Blog - www.gmeltdown.com ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' Keep on doing what you know is right ...
--
On Wed, Jan 19, 2011 at 3:57 PM, Shem Ochuodho <[email protected]>wrote:
I have always wondered why one of the major mobile companies is treated with kids-gloves. The current case of SMS price-wars reinforces this concern. I would have thought that after passing the new katiba with Bill of Rights embedded (which includes consumer protection), everyone especially government, would celebrate when Airtel (I hold no brief) lowered SMS charges to KSh 1. This was even after their earlier push for interconnect rate to be pegged to KSh 0.2 was rejected, and instead GoK/CCK (with strong influence from Safaricom) settled on KSh 0.6. While one needs to look at the maths to know whether 0.2 or 0.6 should have been a more justified rate, Airtel has done us one more favour: which all Kenyans of goodwill should support. They have pegged their SMS costs to KSh 1.0, capping ‘other overheads + profit’ to KSh 0.4. I wouldn’t expect Airtel, a global reputable company to do this if the fundamentals were not right – unless it was a fly-by-night company! They confirm what a number of us have worried all along about: that mobile companies are over-reaping profits, most of which is repatriated to shareholders out of the country.
My 3 main concerns:-
1) Why would the same people who rejoiced/indeed occasioned retrenchment when nearly 18,000 Kenyans were retrenched on privatizing Telkom Kenya now be so worried about Safaricom retrenching to the extent that they would deny Kenyans an opportunity to reap the benefits of competition, innovation and creativity?
2) CCK is supposed to be independent. Why should the government (read Ministry) always interfere in their decisions?
3) When we are being told “we’ll lose so much revenue in tax collection”, why aren’t we in the same vein being told “but in the process, we’ll reduce capital flight by way of (foreign) investment repatriation by so much”, and even more importantly that “through lower phone tariffs, Kenyan consumers will have saved so much/economy will have grown by so much as a result of cheaper phone costs.”?
Indeed some of the observations herein rooting against lower SMS costs remind me of my earlier (pupilage) days at the then KP&TC. For a while, a number of us advocated ‘lower costs, higher volumes’ (something that lately has become better known as ‘bottom billion’). The same way that it was dismissed then appears to me as the same way the ‘mobile price wars’ are being dismissed now by some. Haven’t Equity and Safaricom itself (actually, mobile companies) proven over time that this works?
To be honest, every time I am home I shudder about using Safaricom. For voice, I long stopped using my Safaricom number except to receive – heko to Airtel, Yu and others. For Internet, even when I do bundles, Safaricom is still VERY expensive. Instead of government helping (as demanded by the constitution), they are helping to keep the prices up. In the end who really benefits? Certainly not the consumer/ordinary Kenyan! If this approach has worked for Airtel in India (is the population nearly a billion?), why not for Kenya?
Best rgrds,
Shem
Just to add on to the debate, here is an analysis I have found interesting that I could not resist sharing: Article Source: *http://goo.gl/NUjFl* Price Wars: Rates Are Sustainable, The Government is Neither Fair nor Honest Posted by *Tech Mtaa* on January 19th, 2011 0 <http://www.google.com/buzz/post> Share<http://www.facebook.com/sharer.php?u=http%3A%2F%2Fwww.techmtaa.com%2F2011%2F01%2F19%2Fprice-wars-rates-are-sustainable-the-government-is-neither-fair-nor-honest%2F&t=Price%20Wars%3A%20Rates%20Are%20Sustainable%2C%20The%20Government%20is%20Neither%20Fair%20nor%20Honest%20%7C%20Tech%20Mtaa&src=sp> Once again the Government appears to be taking sides in the wars between Telecom companies. From ongoing media reports, it appears that the Government favours Safaricom over Airtel. This is not surprising in view of Government shareholding stake in Safaricom. It appears that the Government is at crossroads: Does it defend its investment in Safaricom and therefore use its might to stifle competition or does it take the noble route and do what is best for the consuming public. Businessmen are rational beings and it is hard to believe the spin that Airtel’s prices are not sustainable. Airtel consistently says that its business model involves a low cost structure which is achieved by outsourcing non-core functions to experts. The IBM outsourcing transaction was widely reported in the media. Since profits are a function of revenues and costs, it is not surprising to see where Airtel is headed. Airtel has gotten rid of its inefficiencies through outsourcing. It is also attracting customers to it network using sweeteners like the 1 bob on net price and the 3 bob across all networks. Reduced costs (through outsourcing) and high revenues (increased subscribers, increased traffic) = profit. The story that the current prices are not sustainable is therefore just a carefully woven spin by those who want prices to remain high so that they can continue to reap “supernormal” profits at the expense of the consuming public or to justify their failure as the case may be. Times[image: Times reviews]<http://www.blippr.com/music/songs/470044-Times>have changed and the consuming public is wiser and operating firms that are not efficient and want to pass those inefficiencies to consumers will not be able to do so and hence the hue and cry by Safaricom and Orange[image: Orange reviews] <http://www.blippr.com/music/songs/542470-Orange>. In the present circumstances they must review their business models to survive and typically these organizations are resisting change. The 1 bob promo is a welcome relief for Kenyans who are reeling from the after effects of spending on Christmas and the shock of the expenses required by kids going back to school. Airtel should be honored and not vilified as is the case. The Government is blaming Airtel for KRA’S failure to meet its revenue target. KRA is lucky to have such an easy scape goat. Does the government actually believe this? Where are the hard facts? Where is the evidence? Airtel should share the experience of India[image: India reviews]<http://www.blippr.com/music/songs/497408-India>. How has the low pricing structure in India impacted the economy of India? Most certainly, the impact has not been negative. The CCK a government body has been saying that the high cost of telecommunication services has been a hindrance to the uptake of telecommunication services. It has also said that the prevalence of telecommunication services would spur economic growth because communication is essential to business. Has the Government changed its stand? Does the Government not believe in a free market anymore? What Safaricom and Orange are actually asking for is protection from their competitors. Government should actually get out of these businesses while it still can and leave the market to those who can weather the storms of business. Now Safaricom is asking the Government to raise the interconnection rates so that prices can be adjusted upwards. And the Government is listening? They are also asking that the Government sets a minimum price for telecommunication services so that Airtel can be gagged from surprising customers with goodies from time to time. If ever there was a retrogressive step, this is one. Government is meant to be a fair competition arbiter in the fight and not take sides as it has clearly done if the statements attributed to the PS Ministry of Information[image: Information reviews]<http://www.blippr.com/music/songs/476433-Information>and Communication[image: Communication reviews]<http://www.blippr.com/music/songs/376616-Communication>in the Nation[image: Nation reviews] <http://www.blippr.com/books/98097-Nation> are true. Kenyan’s can also clearly remember that the Government scuttled the Fair Competition Regulations (developed by the Minister after consultation with CCK) because Safaricom did not want to be regulated for its anti – competitive behavior. Perhaps if the Government had not taken sides at the time the market would not be experiencing the price wars. Monopolies are a bad thing whether they are owned by Government or by private investors. Competition[image: Competition reviews]<http://www.blippr.com/music/songs/407587-Competition>laws should be applied impartially and the aim should be to maximize consumer welfare and benefit. Right now the customer is king and is enjoying easy communication after years of bondage to high prices. The Government should not spoil the party by insisting that operators should not below a fixed floor. Where is Kenya[image: Kenya reviews] <http://www.blippr.com/music/albums/476431-Kenya> headed? nce again the Government appears to be taking sides in the wars between Telecom companies.
From ongoing media reports, it appears that the Government favours Safaricom over Airtel. This is not surprising in view of Government shareholding stake in Safaricom. It appears that the Government is at crossroads: Does it defend its investment in Safaricom and therefore use its might to stifle competition or does it take the noble route and do what is best for the consuming public.
Businessmen are rational beings and it is hard to believe the spin that Airtel’s prices are not sustainable. Airtel consistently says that its business model involves a low cost structure which is achieved by outsourcing non-core functions to experts. The IBM outsourcing transaction was widely reported in the media. Since profits are a function of revenues and costs, it is not surprising to see where Airtel is headed. Airtel has gotten rid of its inefficiencies through outsourcing. It is also attracting customers to it network using sweeteners like the 1 bob on net price and the 3 bob across all networks. Reduced costs (through outsourcing) and high revenues (increased subscribers, increased traffic) = profit. The story that the current prices are not sustainable is therefore just a carefully woven spin by those who want prices to remain high so that they can continue to reap “supernormal” profits at the expense of the consuming public or to justify their failure as the case may be. Times have changed and the consuming public is wiser and operating firms that are not efficient and want to pass those inefficiencies to consumers will not be able to do so and hence the hue and cry by Safaricom and Orange. In the present circumstances they must review their business models to survive and typically these organizations are resisting change. The 1 bob promo is a welcome relief for Kenyans who are reeling from the after effects of spending on Christmas and the shock of the expenses required by kids going back to school. Airtel should be honored and not vilified as is the case. The Government is blaming Airtel for KRA’S failure to meet its revenue target. KRA is lucky to have such an easy scape goat. Does the government actually believe this? Where are the hard facts? Where is the evidence? Airtel should share the experience of India. How has the low pricing structure in India impacted the economy of India? Most certainly, the impact has not been negative. The CCK a government body has been saying that the high cost of telecommunication services has been a hindrance to the uptake of telecommunication services. It has also said that the prevalence of telecommunication services would spur economic growth because communication is essential to business. Has the Government changed its stand? Does the Government not believe in a free market anymore? What Safaricom and Orange are actually asking for is protection from their competitors. Government should actually get out of these businesses while it still can and leave the market to those who can weather the storms of business. Now Safaricom is asking the Government to raise the interconnection rates so that prices can be adjusted upwards. And the Government is listening? They are also asking that the Government sets a minimum price for telecommunication services so that Airtel can be gagged from surprising customers with goodies from time to time. If ever there was a retrogressive step, this is one. Government is meant to be a fair competition arbiter in the fight and not take sides as it has clearly done if the statements attributed to the PS Ministry of Information and Communication in the Nation are true. Kenyan’s can also clearly remember that the Government scuttled the Fair Competition Regulations (developed by the Minister after consultation with CCK) because Safaricom did not want to be regulated for its anti – competitive behavior. Perhaps if the Government had not taken sides at the time the market would not be experiencing the price wars. Monopolies are a bad thing whether they are owned by Government or by private investors. Competition laws should be applied impartially and the aim should be to maximize consumer welfare and benefit. Right now the customer is king and is enjoying easy communication after years of bondage to high prices. The Government should not spoil the party by insisting that operators should not below a fixed floor. Where is Kenya headed? -- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
Pricing will remain one of the most attractive cake floated to the public by service providers. This is what Airtel is doing. A system dynamic simulation needs to be conducted by the regulator taking into consideration key factors including, pricing, quality, access, tax, etc in order to set limits to which any of the parameters can be adjusted. without which we are in for a big supprise. cartails will start emerging targeting to lock out others, just the way matatu routes owners do for new entrants into the business. CCK should tell us what its doing. Is this another lack of capacity related problem? I am ready to give a hand! Dr Muliaro Wafula ________________________________ From: "[email protected]" <[email protected]> To: [email protected] Cc: KICTAnet ICT Policy Discussions <[email protected]> Sent: Wed, January 19, 2011 1:43:04 PM Subject: Re: [kictanet] Are we letting the PS get away with this too? Liko, In developed Markets where both data and voice have matured, you can afford drastic fall in price. When you get reports from the public, one must always be cautious. Take for example when someone reports that there is a likelihood of cross subsidy which can potentially affect the market. Should we be locking ourselves in the room and pray that nothing happens? It is therefore not abnormal for the Government to be cautious especially when the public writes to complain of a similar situation elsewhere. We have not faulted any operator but it is our responsibility to ensure that there is fair play. Imagine a situation where all the operators report losses at the end of the year. You will begin to see retrenchments, the stock market fall would trigger a rise both with the exchange rate and the interest rates effectively the consumer will end up paying somehow. I will not be suprised that it will be this same forum that will ask what the Government was doing to let things get this worse. Therefore, it does not matter whether you you cricise the Government now or later. Either way we face the criticism. Ndemo.
Guys.
How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time)
Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing.
This is the same language we heard when ISP's we asked to reduce bandwidth prices ...
Unsustainable :)
On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
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Guys.
How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time)
Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing.
This is the same language we heard when ISP's we asked to reduce bandwidth prices ...
Unsustainable :)
On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare
Director
* eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means
(by
buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and
True Dr. Wafula, A system dynamics model would well demonstrate the impact of this move from Airtel and be able to indicate the impacts on other sub-systems in the mobile ecosystem. But even Jaindi K in his today's commentry (cant get it online, not sure why) agrees this move is not a good idea and puts the cost of making a call at Ksh 1sh 70cts. So from his figure (CCK should confirm) Airtel is running this service at loss for reasons that consumers will very well come to know - 2, 3, 5yrs to come. walu. --- On Wed, 1/19/11, joseph wafula <[email protected]> wrote: From: joseph wafula <[email protected]> Subject: Re: [kictanet] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Wednesday, January 19, 2011, 2:45 PM Pricing will remain one of the most attractive cake floated to the public by service providers. This is what Airtel is doing. A system dynamic simulation needs to be conducted by the regulator taking into consideration key factors including, pricing, quality, access, tax, etc in order to set limits to which any of the parameters can be adjusted. without which we are in for a big supprise. cartails will start emerging targeting to lock out others, just the way matatu routes owners do for new entrants into the business. CCK should tell us what its doing. Is this another lack of capacity related problem? I am ready to give a hand! Dr Muliaro Wafula From: "[email protected]" <[email protected]> To: [email protected] Cc: KICTAnet ICT Policy Discussions <[email protected]> Sent: Wed, January 19, 2011 1:43:04 PM Subject: Re: [kictanet] Are we letting the PS get away with this too? Liko, In developed Markets where both data and voice have matured, you can afford drastic fall in price. When you get reports from the public, one must always be cautious. Take for example when someone reports that there is a likelihood of cross subsidy which can potentially affect the market. Should we be locking ourselves in the room and pray that nothing happens? It is therefore not abnormal for the Government to be cautious especially when the public writes to complain of a similar situation elsewhere. We have not faulted any operator but it is our responsibility to ensure that there is fair play. Imagine a situation where all the operators report losses at the end of the year. You will begin to see retrenchments, the stock market fall would trigger a rise both with the exchange rate and the interest rates effectively the consumer will end up paying somehow. I will not be suprised that it will be this same forum that will ask what the Government was doing to let things get this worse. Therefore, it does not matter whether you you cricise the Government now or later. Either way we face the criticism. Ndemo. the other half will be with "Others". Net growth
for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Damn!!
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-- Sent from my mobile device
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Last year in India I met an IT professor, Ashok Jhunjhunwala. Professor at IIT Madras. He's on the Board of Tata Communications, govt advisor, and on and on. Brilliant man, one of the pioneers of the Indian ICT sector. Couple of lines from my notes summarizing his comments: "how can you make money at 1 cent/minute? Indian mobile operators can: that is the Indian market. And once you can provide services at 1 cent/minute, of course you will go to markets where the cost is 10 cents/minute and kill them. This can be applied to many areas." He wasn't just talking about India's mobile market, but that was the example. Indian businesses cut costs to the bone while also providing quality. It's how they have been so successful. He was suggesting that if Indian business can transfer these business practises/models to other markets they'll clean up. I don't know how India's mobile prices compare KES to rupee, might be worth someone from CCK or the PS' office taking a look at Indian mobile market to see what Airtel's and other operators prices and services are like. My guess is Airtel may be dropping prices to levels similar to those it offers in India. Perhaps for the moment they are burning money to pick up subscribers, but in the longer term they might really know how to offer service at that price and still make profit. Adam
Those who say it cannot be done should not interrupt those who are doing it.
Walu, 2,3 5yrs I hope to be using a different technology not current version of GSM and then (sigh!) all dinosaurs will be extinct (talk about jobs how I miss KPTC and the large work force!). Hopefully, the dynamic model will be really dynamic then, not a one size fit all model. Leonard --- On Wed, 1/19/11, Walubengo J <[email protected]> wrote: From: Walubengo J <[email protected]> Subject: Re: [kictanet] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Wednesday, January 19, 2011, 2:46 PM True Dr. Wafula, A system dynamics model would well demonstrate the impact of this move from Airtel and be able to indicate the impacts on other sub-systems in the mobile ecosystem. But even Jaindi K in his today's commentry (cant get it online, not sure why) agrees this move is not a good idea and puts the cost of making a call at Ksh 1sh 70cts. So from his figure (CCK should confirm) Airtel is running this service at loss for reasons that consumers will very well come to know - 2, 3, 5yrs to come. walu. --- On Wed, 1/19/11, joseph wafula <[email protected]> wrote: From: joseph wafula <[email protected]> Subject: Re: [kictanet] Are we letting the PS get away with this too? To: [email protected] Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Wednesday, January 19, 2011, 2:45 PM Pricing will remain one of the most attractive cake floated to the public by service providers. This is what Airtel is doing. A system dynamic simulation needs to be conducted by the regulator taking into consideration key factors including, pricing, quality, access, tax, etc in order to set limits to which any of the parameters can be adjusted. without which we are in for a big supprise. cartails will start emerging targeting to lock out others, just the way matatu routes owners do for new entrants into the business. CCK should tell us what its doing. Is this another lack of capacity related problem? I am ready to give a hand! Dr Muliaro Wafula From: "[email protected]" <[email protected]> To: [email protected] Cc: KICTAnet ICT Policy Discussions <[email protected]> Sent: Wed, January 19, 2011 1:43:04 PM Subject: Re: [kictanet] Are we letting the PS get away with this too? Liko, In developed Markets where both data and voice have matured, you can afford drastic fall in price. When you get reports from the public, one must always be cautious. Take for example when someone reports that there is a likelihood of cross subsidy which can potentially affect the market. Should we be locking ourselves in the room and pray that nothing happens? It is therefore not abnormal for the Government to be cautious especially when the public writes to complain of a similar situation elsewhere. We have not faulted any operator but it is our responsibility to ensure that there is fair play. Imagine a situation where all the operators report losses at the end of the year. You will begin to see retrenchments, the stock market fall would trigger a rise both with the exchange rate and the interest rates effectively the consumer will end up paying somehow. I will not be suprised that it will be this same forum that will ask what the Government was doing to let things get this worse. Therefore, it does not matter whether you you cricise the Government now or later. Either way we face the criticism. Ndemo.
Guys.
How about we just let the prices go down till the govt has to set prices ? Or till the Govt supports MNO's (like posta and telkom for a loooooong time)
Seriously, the same peeps who were complaining about call costs 3 years are worried about the telcos collapsing.
This is the same language we heard when ISP's we asked to reduce bandwidth prices ...
Unsustainable :)
On 1/18/11, John Kieti <[email protected]> wrote:
Hi Walu and other esteemed Kenyans,
This debate is interesting. As mentioned earlier by someone, the debate would be more enlightening if the cost structure of these MNOs had been in the public domain. But all is not lost; there are some basic parameters already in the public domain ie. (1) Safaricom's dominant position of about 77% market share and (2) Airtel's low price strategy including their 1 bob on-net offer in an attempt to eat into Safaricom's market share. It appears a little premature then to raise a concern of Anti-Trust against a non-dominant player, when they have not even achieved a half of the dominant player's market share.
The current cost structure and profit margins for voice, SMS and all other product offerings is what we really need to understand before going into any conclusion on long term sustainability. It seems easy to see that brand loyalty and patriotic sentiments are strong everywhere this debate comes up but it might also help to see these harder facts.
Lastly, in today's dynamic economic environment, one has to either innovate or die - and our dear Safaricom has demonstrated substantial competence on this. It then appears that innovation is what will sustain growth of the industry - really not regulation and protectionism.
Best regards
On Tue, Jan 18, 2011 at 6:09 PM, Walubengo J <[email protected]> wrote:
Harry, tough questions you have and the answers may most likely neutralize my argument. But the bigger point is/was that certain type of competitive tactics can be counterproductive when looked at from a Macro perspective. Yes, you (Airtel) wins todays battle, but someone bigger than Safcom will lose the war.
With the Microsoft Case- European Courts ruled that their tactic was anti-competitive and they were forced to seperate their Browser from their OS, rather than sell as a bundle. But I think it was a case of too little too late. Did internet numbers go down? probably not since Internet numbers do depend on more factors other than just Browsers.
But for the mobile industry, their growth and expanse does depend on revenues. I can forcasts that VOICE Revenue generated from all players might be the same as last year because the voice industry may not grow - it will simply be shared out.. And after the price-wars are over and an equilibrium is established (maybe Airtel 50% others 50%) it will dawn on everyone that they incoming revenue streams is insufficient to deliver expansion or extend the services outside their current levels.
walu.
--- On *Tue, 1/18/11, Harry Hare <[email protected]>* wrote:
From: Harry Hare <[email protected]> Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: "Walubengo J" <[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]> Date: Tuesday, January 18, 2011, 5:22 PM
Walu good analogy with Netscape and MS IE. However
1. Did the Internet die with the death of Netscape? 2. Did the Internet numbers stay constant with the death of Netscape? 3. Did Microsoft marketshare drop? 4. Did innovation on the internet stop?
Guys, let get real, this is business…natural selection comes into play.
Kindest Regards
Harry Hare Director * eDevelopment House : : 604 Limuru Road * Old Muthaiga : : P O Box 49475 00100 Nairobi : : Kenya T +254 20 3741646/7 : : C +254 725 650044
Training : : Research: :Consultancy: : Publishing
From: John Walubengo <[email protected]<http://mc/[email protected]>
Date: Tue, 18 Jan 2011 05:35:58 -0800 (PST) To: Harry Hare <[email protected]<http://mc/[email protected]>
Cc: KICTAnet ICT Policy Discussions <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too?
Here are my thoughts.
The PS is right about predatory pricing never aimed at growing the Industry. For those who were "alive" at the beginning of the web-browser wars in early 1990s. Netscape was King. Then Microsoft came in and gave away its product Internet Explorer(IE) - for free. Everyone was happy - until they realized they were paying for the Microsoft IE through other means (by buying for the OS for example). But by then Netscape as a competitor was as dead as the Dodo. Microsoft Mission accomplished.
Folks, Airtel is not here because they love giving free things. I am not privy to their Strategy but it can be read by anyone. Their aim is not to grow/extend the Service, but rather to eat Safaricom's lunch. At a consumer level, nothing really wrong with that and infact it is Christmas time for consumers. BUT at a national level, what you have is that the 20million subscribers you currently have in the country, will remain 20million subscriber five years later. Only that half of them will be sitting on Airtel's network and the other half will be with "Others". Net growth for Kenya? =ZERO
Airtel's strategy wont kill the mobile industry, but believe you me, it will stiffle its growth in the long run, because the returns to the investors will not be sufficient to sustain operations, let alone extend the network or pay for innovation.
That said, as a consumer, Airtel's offer is truly irresistible and worth considering. But as a scholar, I do know, and agree that it is not good for the industry in the long run.
walu.
--- On *Tue, 1/18/11, Odhiambo Washington <[email protected]<http://mc/[email protected]>
* wrote:
From: Odhiambo Washington <[email protected]<http://mc/[email protected]>
Subject: Re: [kictanet] [Skunkworks] Are we letting the PS get away with this too? To: [email protected] <http://mc/[email protected]>
Cc: "KICTAnet ICT Policy Discussions" <[email protected]<http://mc/[email protected]>
Date: Tuesday, January 18, 2011, 1:22 PM
On Tue, Jan 18, 2011 at 1:18 PM, Barrack Otieno <[email protected]>wrote:
You have a point Brainiac, there are many factors in your argument which need to be tackled and as such we may need expert opinion on some issues, a corporate entity is treated as a person and as the saying goes one mans meat is another mans poison, what are the implications of certain moves on new market entrants? How will the other Telcos survive in the market?, this is where regulation comes in to ensure a piece of cake for everyone.
Before making this debate so complicated, is Airtel's move interpreted as a means towards crippling the mobile industry? Why is this position not being applied on the Internet Service Provision industry then? We always heard promises of "prices will come down" but when they do now, the govt is gonna lose revenue? Puleease!
-- Best regards, Odhiambo WASHINGTON, Nairobi,KE +254733744121/+254722743223 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Damn!!
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-- My Blog - www.gmeltdown.com ''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' Keep on doing what you know is right ...
-- Sent from my mobile device
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participants (11)
-
Adam Peake -
Agosta Liko -
bitange＠jambo.co.ke -
John Kieti -
joseph wafula -
Jotham Kilimo Mwale -
Leonard Mware -
Odhiambo Washington -
Shem Ochuodho -
Walubengo J -
waudo siganga