CAPÍTULO 2. Aplicaciones y métodos de evaluación de potenciales en sistemas de trigeneración
2.11 Experiencias en el Diseño de Instalaciones
The popularity of a product influences its adoption. This is done by promoting awareness about the usefulness of the service to potential users. Safaricom was and continues to be the dominant MNO in Kenya and at the time of M-Pesa’s launch202
Safaricom had a market share of 80 per cent.203 This dominance enabled it to
advantageously position itself against its competitors when it launched M-Pesa, mainly due to its existing subscribed users which provided a ready market for the company to quickly reach and capture a wider market base for its service.204
Safaricom holds the largest market share, which in the voice sector of the telecoms market and based on its subscriber base and 81 per cent205 by revenue, was
above the threshold for presumption of dominance.206 Safaricom had at the outset, and
continues to have, an enduring significant market power in both mobile voice and SMS services which has enabled it to behave, to a significant extent, independently of its competitors, customers and ultimately consumers. Safaricom’s hegemony and associated
201 CGAP-GSMA Mobile Money Market Sizing Quoted CGAP (2009b) [http://www.gsma.com/mobilefordevelopment/wpcontent/uploads/2012/06/mmu_quarterly_update.p df]
202 William Jack and Tavneet Suri, ‘The Economics of M-Pesa’ MIT NBER Working Paper 16721 2011 <http://www.mit.edu/~tavneet/M-PESA_Update.pdf> accessed 3 September 2014.
203 Safaricom, ‘M-Pesa Statistics’ <http://www.safaricom.co.ke/images/Downloads/Personal/M- PESA/m-pesa_statistics_-_2.pdf> accessed 3 September 2014.
204 Kevin Donovan, ‘Mobile Money in the Developing World: The Impact of M-PESA on Development, Freedom, and Domination’ (Masters Thesis, Georgetown University 2011).
205 Nojiyeza Simphiwe, and Jocelyn Muthoka, ‘Barriers to Entry of Kenya's Telecommunication Industry: is there a Market Slice for New Entrants?’Journal of Management & Administration(2013) 11(1) 136–196. 206 Mark Okuttah, ‘Safaricom: Telkom Targeted in New Power Rules’ (Business Daily, 17 August 2011) <http://mobile.businessdailyafrica.com/Corporate+News/Safaricom++Telkom+targeted+in+new+ma rket+power+rules/-/1144450/1220104/-/format/xhtml/item/2/-/56d3a5z/-> accessed 3 September 2014.
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competitiveness, superior tangible and intangible assets and managerial competencies,207
first mover advantage and provision of cross-network effects for commercial users, all contributed to its dominance.208
Sutherland argues that this monopoly and dominance in Kenya is a result of corruption in the telecommunications industry.209 Although problems of corruption in
telecommunications are an established global phenomenon,210 concerns have been
expressed over the unprecedented success of Safaricom as the various other telecommunications companies have lagged behind in their entry and market penetration. Part of its success is because Safaricom was formed to boost mobile telephony by bringing in foreign expertise and capital.211 Telkom Kenya212 acquired a 60 per cent
interest in Safaricom by contributing its Electronic Technical Assistance Centre (ETAC), its GSM network and its subscriber base, which was valued at US $30 million. It then lent Safaricom US $33 million as its portion of the US $55 million fee that Safaricom paid for its Kenyan cellular licence. Vodafone Kenya Limited acquired a 40 per cent interest in Safaricom by contributing US $20 million in cash.
It later lent Safaricom US $22 million as its portion of the fee paid by the company for its initial licence.213 Other operators did not experience such a smooth entry into the
Kenyan market. This means that Safaricom is not likely to be dislodged from its dominant position for many years. Efforts to reduce its market share have been unsuccessful due to there being no suggestion of creating a competitive market. The complexities of issuing
207 Nojiyeza Simphiwe and Jocelyn Muthoka, ‘Barriers to Entry of Kenya's Telecommunication Industry: is there a Market Slice for New Entrants?’Journal of Management & Administration(2013) 11(1) 136–196. 208 Ibid.
209 Ewan Sutherland, ‘A Short Note on Corruption in Telecommunications in Kenya’ (January 2012) <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1996429> accessed 3 September 2014.
210 Ewan Sutherland, ‘Corruption in Telecommunications: Problems and Remedies’ (2012) 14(1) info 4. <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1937556> accessed 3 September 2014.
211 Ibid.
212 At that time, Kenya Post and Telecommunication Corporation.
213 Safaricom, ‘Prospectus’ (14 March 2008, revised 28 March 2008) <http://www.scribd.com/doc/7088318/Safaricom-Prospectus> accessed 3 September 2014.
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operating licences214 to other players and the sagas behind the privatisations and their
related investments, which ought to have eroded the position of Safaricom, have not yet done so.215 Safaricom dominates the market share amongst the other four operators in
Kenya’s telecommunications industry.216 Investigations into claims of unfair advantage
and its dealings in the issuing of licences to its rivals appear to have been sidestepped as a result of the culture of impunity and lack of accountability. 217
Safaricom’s competitors in the banking sector had offered, at the beginning in 2007, their services only in the country’s major centre. However, compared to M-Pesa the services were not as efficient. Safaricom had invested heavily in its mobile service provision and had proven itself to be reliable in its service delivery, which in turn customers had to adjust to and adopt with the three elements that their mobile services offered.218 As the telecommunications industry is a public utility, public ownership
requires strong government controls, which form a component of the industry’s operations. After the liberalisation of the telecommunications sector in Kenya, the state monopoly of the KPTC shifted from the government to a private sector oligopoly. This shows that there was a shift from structuralism to neo-liberalism.219
Despite privatisation and the introduction of competition policies and laws, Safaricom, the incumbent, is still able to dominate the telecommunications markets while
214 Concern has been expressed by the Kenyan Parliament and the Kenyan Chapter of Transparency International (TI) over a mysterious ‘investor’ in Safaricom, while the Africa Centre for Open Governance (AfriCOG) has raised similar issues over an investor in Kenya Telkom which avoided the framework of the Privatisation Act.
215Sutherland E, 'A Short Note On Corruption in Telecommunications in Kenya' [2012] Available at SSRN 1996429
216 Nojiyeza Simphiwe and Jocelyn Muthoka, ‘Barriers to Entry of Kenya's Telecommunication Industry: is there a Market Slice for New Entrants?’Journal of Management & Administration(2013) 11(1) 136–196. 217 Including Airtel, Kenya Telkom (France Telecom Group) and Yu (Essar Telecom).
218 Ignacio Mas and Amolo Ng’weno, ‘Three Keys to M-PESA’s Success: Branding, Channel Management and Pricing’ (2014) 4(4) Journal of Payments Strategy & Systems 352.
219 The active role of the state in driving economic development (freeing market forces from government control, reducing taxes, divesting state-owned enterprises, deregulation of telecommunication, weakening of the state’s redistributive functions). Sonny Nwankwo, ‘Assessing the Marketing Environment in Sub- Saharan Africa: Opportunities and Threats Analysis’ (2000) 18 Marketing Intelligence & Planning 144.
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enjoying significant advantages through skewed competition and unfair business practices.220 This highlights the fact that after a seven-year oligopoly, market liberalisation,
market distortions and the competitive environment continue to be skewed in favour of Safaricom compared to other entrants.221 This fact goes beyond the scope of the thesis
but is pertinent to mention.