Declare dominance, but don’t punish success

Since Safaricom’s inception in the year 2000, we have made remarkable gains that are today connecting millions of people to people, to knowledge and to opportunities.

The success we enjoy is the result of being a purpose-driven, insights-led, customer-obsessed business with a robust strategy that we execute with great precision.

This strategy has served us well, and is the reason close to 30 million subscribers have chosen to be on our network, 20.5 million of them active M-Pesa users.

By global standards, we are not a big company, but we appreciate that in the Kenyan context, we are rather large. However, our size should not be used as an argument to punish our success.

ABUSE OF DOMINANCE

It’s no secret that the competition has been quite vocal in its push for parliamentary and regulatory intervention to have Safaricom shackled in our ability to deliver innovative and competitive solutions for our customers.

This is why my first public appearance upon returning from medical leave was before the National Assembly’s ICT Committee to defend our position on the issue of dominance, following appearances by other industry players.

This appearance offered us a chance to reiterate our position: that dominance in itself is not a bad thing. It is the abuse of dominance that should be of concern.

If we go by the definition of a dominant operator being one with over 50 percent market share, then we are in fact dominant in a number of market segments, and this should be clearly positioned.

BLAZE KENYA

To be clear, Safaricom is not opposed to a declaration of dominance: What we are concerned about are some proposed interventions, which are anti-consumer and clearly targeted at punishing our success despite the absence of proof of abuse of dominance.

Such interventions include: the prohibition of individually tailored loyalty schemes and promotions, which would curtail our ability to deliver innovative products, services and promotions such as Tunukiwa, Stori Ibambe and Maisha Ni M-Pesa Tu – something that all operators around the world do.

By this reasoning, even our youth-focused initiative, BLAZE, would be scrapped and sacrificed to appease competitors.

This would certainly not serve any meaningful competitive purpose.

Rather, it would only deny Kenyan youth the mentorship, networking, one-on-one training and skills development opportunities provided by the BLAZE proposition.

INNOVATION

By hindering our ability to innovate, such an intervention would also be punishing our 30 million customers by denying them the opportunity to enjoy cheaper calling rates and participate in promotions, while those on other networks would be able to do so.

Another of the interventions is that Safaricom should not be allowed to introduce any products or services unless they are replicable by other operators.

What this suggests is that we should share our innovations and strategies with competitors beforehand, for them to demonstrate whether they can replicate them, before Safaricom is permitted to offer this to Kenyans.

How does this protect the consumer or encourage innovation? The third intervention we have taken issue with is the proposal to enforce compulsory sharing of infrastructure.

The Communications Authority (CA) obligates all its licensees to invest in their networks, even in parts of the country that are not considered profitable.

INFRASTRUCTURE

Safaricom has strived to do this by setting aside approximately Sh30 billion each year, which is how we came to have the widest network in the country.

To date, Safaricom has more than double the number of base stations than our competitors have combined.

It is worth noting that when Safaricom renewed its licence in 2014, CA required us to construct at least 592 new base stations in marginal and geographically difficult areas of Kenya.

Oddly, six months later, when one of our competitors was seeking renewal of its licence, the regulator asked it to construct a mere 71 sites.

Surprisingly, the same regulator now wants to find Safaricom dominant in this market segment.

Globally, ICT companies succeed on the basis of two pillars; investment and innovation. Without these they play second fiddle to others or are overtaken by their competitors.

ANTI-CONSUMER

This should be the case in Kenya. Policymakers and regulators should ensure that licensees actually undertake the required investment when they are allocated public resources.

Innovation must be safeguarded and bear reward for the innovator for use by the public.

Such an innovator should not be forced to share innovation with third parties under the guise of competition. This does not reward innovation: it stifles innovation, and harms the consumer.

Regulating Safaricom retail prices above those of our competitors is anti-consumer and will only benefit other operators; forcing Safaricom to share innovation with our competitors will stifle the culture of innovation to the detriment of public; forced sharing of infrastructure is a reward to non-investing operators, and is a disincentive to investment.

The regulator should focus on finding opportunities to enable all operators serve customers better.

The writer is the CEO, Safaricom