WALUBENGO: There’s more than convenience in mobile money interoperability - Daily Nation

There’s more than convenience in mobile money interoperability

Tuesday January 23 2018

By JOHN WALUBENGO
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Finally, the Cabinet Secretary for ICT, announced that plans were at an advanced stage to usher in mobile money interoperability in Kenya. This means that one can be subscribed on one mobile network and be able to send mobile money directly into the rival’s network.

Imagine being on Safaricom’s M-Pesa wallet and sending mobile money directly into your friend’s Airtel Money wallet and vice versa. Mobile money interoperability has been long overdue and would bring more than convenience to subscribers.

More than a year ago, I suggested that mobile money interoperability is a better approach to dealing with Safaricom’s dominance position. So what took Kenya so long to get into the act?

The technology to operationalise mobile money interoperability is not new, with many countries, including Tanzania, having implemented it since 2015. So clearly there must be another reason for the long delay.

Perhaps one reason may be that the regulator was too obsessed with the idea of splitting up Safaricom into separate functional units as the only way out of the dominance quagmire.

ALTERNATIVE OPTIONS

Given that this seems to have failed, the regulator may be reviewing alternative options that would not disrupt the overall momentum that Safaricom has built — while still giving competitors another chance to catch up.

The first opportunity came five years ago in the form of something called number portability, which allowed subscribers to move from one mobile operator to another without losing their original telephone number identity.

This option has not been successful, with recent statistics showing that on a quarterly basis, only about three hundred subscribers out of the 40 million subscribers take advantage of the mobile number portability facility.

Whereas Airtel and Telkom mobile services tend to be cheaper than Safaricom’s, this has not dented Safaricom’s massive leadership in market share in the voice, data and mobile money categories.

There must be something that makes most subscribers to stick to Safaricom despite these price differentials. That something is most likely their flagship mobile money service — M-Pesa.

WIN-WIN SITUATION

It is assumed that by making M-Pesa interoperable with the rival mobile money services, subscribers may be in a better position to re-evaluate their relationship with Safaricom, in the context of their more expensive services.

The regulator therefore expects to see a spike in the number of subscribers making use of the mobile number portability facility as a new subscriber equilibrium is established between Safaricom and its struggling competitors.

Whereas this may come to pass, it is not lost to analysts that Safaricom still stands to gain from the usage fees that are likely to be imposed on the competitors — for each transaction that their subscribers push through to the rival M-Pesa wallets.

Which is the win-win situation anticipated.

By making the M-Pesa wallet interoperable with its rivals, Safaricom still makes its money, while its competitors get a chance to boost their subscriber base, given the more equitable competitive conditions arising in the market.

But it will not be automatic.

POTENTIAL PRICE WAR

Safaricom is obviously anticipating this and is likely to respond by dropping prices in order to retain the potential subscribers that may entertain ideas of migrating to rival providers.

With its massive arsenal of assets and capital, Safaricom can easily trigger a long-term price war that this market has never seen before. The price war would be designed to give the struggling competitors what is likely to be their final and fatal blow.

This is because competition is already operating at the telcos’ lowest price offering and cannot therefore respond accordingly by making further price reductions. Their prices are already rock-bottom and going further down can only lead to an obvious burst and closure.

Mobile money portability is indeed what the Kenyan ICT sector needs in order to move to the next level. However, the regulator must be wary of a potential price war that may in the long-term eliminate the remaining semblance of competition in the market.

Mr Walubengo is a lecturer at Multimedia University of Kenya, Faculty of Computing and IT. Email: [email protected], Twitter: @Jwalu