WALUBENGO: The consequences of declaring Safaricom a dominant player - Daily Nation

The consequences of declaring Safaricom a dominant player

Wednesday February 28 2018

By JOHN WALUBENGO
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Last week the international telecoms consultant hired by the communications regulator finally launched its report on competition in Kenya’s telecoms sector.

The huge report told us what everyone already knew – that Safaricom is a dominant player in the voice, data and mobile money markets.

However, without being too mean, one must acknowledge and appreciate the scientific approach that the consultant used to arrive at what was in everybody’s mind.

The systematic approach is useful because it can be reused by the regulator in determining who else gets declared as dominant player going into the future.

Better still, the same systematic approach can be used to determine whether Safaricom can be bumped off the “dominance list” and when.

BLOW IN THE TEETH

Being declared a “dominant player” by the regulator has some consequences that aim to enhance the long-term viability of a competitive market. Additionally, it also has the short-term effect of giving the dominant player a straight blow in their teeth.

Essentially, dominant players cannot unilaterally dictate their tariffs or prices and must do so through consultation with the regulator.

The dominant player will also be forced to share its capital-intensive infrastructure, such as transmission masts at a rate to be determined in consultation with the regulator.

The dominant player will also be forced to provide the competitors “open-access” to resources deemed to be a bottleneck or obstacle to fair competition.

The globally acclaimed M-Pesa software comes to mind – Safaricom has build, widely deployed and milked M-Pesa to a point where any competitor stands no chance in the Kenyan mobile money market.

WALLET-TO-WALLET TRANSFERS

To give potential competitors any chance in the mobile money market, the consultant recommends that M-Pesa be opened up to allow for wallet-to-wallet transfers.

This is commonly known as mobile money interoperability.

This means that if an Airtel or Telkom mobile money subscriber sends money to a Safaricom mobile money subscriber, that amount is reflected directly in the M-Pesa Wallet and vice versa.

Essentially this means that subscribers can cash out their mobile money without having to go to the original sender’s mobile money agent. This is expected to reduce the “lock-down” effect that Safaricom enjoys with regard to its M-Pesa service.

Another recommendation from the consultant relates to infrastructure sharing.

In counties and constituencies where Safaricom is present but competition is not, Safaricom will be forced to host competitors’ equipment on its transmission towers at a negotiated and regulator-approved rate.

SHARED INFRASTRUCTURE

Most of these counties are in northeastern Kenya.

This shared-infrastructure recommendation would give competitors a soft entry into these counties while increasing options to the respective consumers.

Additionally, the consultant recommended “national roaming” in those counties.

This means that an Airtel or Telkom subscriber in northeastern Kenya will be automatically connected to the nearest telecommunication mast – irrespective of who owns the mast. This would be a better experience compared with getting a “no-network” message.

All these interventions are interesting and theoretically supposed to lead to greater competition in the sector. However, only time will tell how effective these new measures would be in terms of finding the ever elusive solution to the dominance question.

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