KICA Amendments: Control of anti-competitive practices by telecommunication operators

It is impossible to split telecommunications businesses in the digital economy. If a telco sells connectivity to a farm or a farmer, is it an agricultural company? Sells to a bank, is it a finance company? Maybe not. Then what if it adds some services to that connectivity… what service counts as additional businesses? And what if it is a partner’s service? Telcos’ have the unique capability to reach every single person in this country, they should be encouraged to do that rather than hindered. Right now e-health, e-agri etc are still really under-developed in this country. They need more support and stronger players to push in that space… leaving it to start-ups on their own will not succeed.

Besides, what if the telco just creates a separate company 100% owned (and controlled and managed) by itself, then what is the point of that – it is just a department of the telco.

Surely if there is already a framework in place for licenses in any industry, and if a telco gets into that business it would need to apply for that license anyway; for example if the telco started selling medicines online, then it (or its partner) would need the relevant license, and I don’t think anyone would argue with that.

From: kictanet [mailto:kictanet-bounces+adam.lane=huawei.com@lists.kictanet.or.ke] On Behalf Of Ali Hussein via kictanet
Sent: Friday, October 25, 2019 6:29 AM
To: Adam Lane <adam.lane@huawei.com>
Cc: Ali Hussein <ali@hussein.me.ke>; KICTAnet ICT Policy Discussions <kictanet@lists.kictanet.or.ke>
Subject: Re: [kictanet] KICA Amendments: Control of anti-competitive practices by telecommunication operators

Exactly!
Ali Hussein

+254 0713 601113

Twitter: @AliHKassim

Skype: abu-jomo

LinkedIn: ke.linkedin.com/in/alihkassim

“We are what we repeatedly do. Excellence, therefore, is not an act but a habit.” ~ Aristotle

Sent from my iPad

On 25 Oct 2019, at 6:22 AM, Barrack Otieno <otieno.barrack@gmail.com<mailto:otieno.barrack@gmail.com>> wrote:

Dear Ali,

Many thanks for your insightfull responses. This is where we need expert guidance, what i know is that you don’t start taxing a baby at birth, you nurture them until they start boasting of their own balance sheet then you strike. I think we are trying to solve the wrong problem with the wrong approach. I use mpesa to buy airtime for my Telkom line. Not sure if that is competition or coopetition. I bet what makes the later tick is responsibility, reliability and resilience. Basically what the Customer wants. The other players should first up their game and then talk about dominance. Secondly do we really have a digital market worth breaking up or are we walking in imagination. Do we even have a local definition of the digital economy? Every sector that is taxed needs budgetary facilitation and support from government. I bet that would be a good starting point.

On Fri, 25 Oct 2019, 6:06 am Ali Hussein, <ali@hussein.me.ke<mailto:ali@hussein.me.ke>> wrote:
@Barrack

To quote your mosquito and hammer analogy.

Most people don’t know that from a technological perspective Mpesa was actually inferior to the other players in the ecosystem. Airtel Money and now T-Kash. What Safaricom did and continue to do is simple:-

They executed and continue to execute better than everyone else. Including the banks.

Let me give you some examples.

1. There will be no Fintech to speak of today in Kenya without Mpesa. Fact.
2. Mobile Banking is almost 100% based on Mpesa.
3. The Banks that have the lion’s share of mobile lending (Not Tala, not Branch), but KCB and NCBA have that pivotal position because of their partnership with Safaricom.
4. Yet still more than 80% of transactions in this country is still in cash. Instead of everyone and his grandmother crying foul that Safaricom is dominant why not go for the 80% that still operate cash? We have a scarcity mentality, is what we have.

Let me go back to the issue of breaking up Mpesa.

I ask, is that really the best option? Us Africans have one serious problem. We think too small. In terms of our little countries and villages. My humble remedy to this ‘false’ dominance:-

1. Assist Safaricom to become globally dominant. The remittance market worldwide moves $600 billion every year. Peer to peer. The kind of business that Mpesa has excelled in. What is Mpesa’s global market share in remittances? Less than 1%! What really are we talking about??

2. Put in place policies to ensure that Safaricom contributes a percentage into a Sovereign Fund to fund and activate a FinTech Ecosystem that is second to none in the world – Open Banking, APIs ecosystem, seed funding etc. instead of cutting off the goose that lays the golden eggs nurture her and let her produce more geese that lay golden eggs.

3. Mpesa is a defacto NeoBank (a bank that is a 100% digital and reaches customers using mobile and computer networks only and don’t require physical branches). Mpesa is forced to partner with banks because of outdated financial policies and regulations that need to be kicked in the butt and brought into the 22nd Century, kicking and screaming!

4. Create an Open Banking/Open Mobile environment where players are literally forced to share their networks via APIs so that players can compete on an even playing field. Let players charge for their rails if they must. Within reasonable parameters. In fact, Safaricom’s Daraja Platform already does this well.

This, in my humble opinion, will be the best way to ‘tame’ dominance. Market Failures and breaking up companies is an excuse for lazy policy makers and regulators to correct a ‘mistake’ that customers want. Abuse of ‘dominance’ won’t have happened int the first place if policy makers and regulators didn’t suffer from a disease I call #StateCapture. A malaise that is brought about by not seeing the bigger picture.

We don’t have a problem of dominance. We have a problem of laziness. Let’s cure that!

Ali Hussein

+254 0713 601113

Twitter: @AliHKassim

Skype: abu-jomo

LinkedIn: ke.linkedin.com/in/alihkassim

“We are what we repeatedly do. Excellence, therefore, is not an act but a habit.” ~ Aristotle

Sent from my iPad

On 24 Oct 2019, at 11:55 PM, Barrack Otieno via kictanet <kictanet@lists.kictanet.or.ke<mailto:kictanet@lists.kictanet.or.ke>> wrote:

I think as the business and the sector matures separation will be key. Convergence also makes it hard to measure the digital economy from a product or service perspective.

Regards

On Thu, 24 Oct 2019, 11:51 pm Mwendwa Kivuva, <Kivuva@transworldafrica.com<mailto:Kivuva@transworldafrica.com>> wrote:
Thanks Barrack.

To your question, the main aim of this bill as indicated in the document is to “aid in the control of anti-competitive practices by large telecommunication industries in the sector.”

Just for context, I saw the acting CEO of Safaricom in the news today challenging the dominance and competition issue.

He said that Safaricom’s other main non-telecommunication business, M-pesa, could never have been successful without being bundled with voice and data. He said that the first 5 years of M-pesa was never successful. It was subsidized by voice and data. He also said he does not see the point of separating M-pesa to punish Safaricom for investing heavily to make the business successful.

On Thursday, 24 October 2019, Barrack Otieno <otieno.barrack@gmail.com<mailto:otieno.barrack@gmail.com>> wrote:
Dear Kivuva,

I am confused on this one though it makes sense to distill the components of converged networks. In a way, it will provide better premises for measuring the digital economy. I am ok with this clause. It needs further clarity and meat.

Regards

Regards

On Thu, 24 Oct 2019, 9:32 am Mwendwa Kivuva via kictanet, <kictanet@lists.kictanet.or.ke<mailto:kictanet@lists.kictanet.or.ke>> wrote:
This is a continuation of the debate to amend the Kenya Information and Communications Act (KICA).

Comments and thoughts are welcomed for yesterday’s debate moderated by Mercy Mutemi on the regulation of social media and blogging. We can continue contributing through that thread.

Today, we discuss the amendments to KCIA published on March 15th, 2019, recommended by Hon Elisha Odhiambo, MP, seeking to add a new section 25A on splitting telecommunications businesses, and section 34A on the compensation of telecommunications consumers on call drops, and section 84J prescribing how the Universal Service Fund (USF) should be used.

The new Section 25A requires telecommunications operators to
– Obtain a license for additional business.
– Legally split the telecommunications business from additional business.
– Provide separate accounts and reports in respect of all business carried out.
– Require Communications Authority to report compliance annually to Parliament.

The reasons given for this bill are to allow telecommunications companies to engage in other businesses, and also aid in the control of anti-competitive practices by large industries in the sector.

What are your thoughts on this amendment? Do we have any specific recommendations we can pass to Parliament through the public participation process?

Warm Regard
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