Discourage monopolistic tendencies in ICT sector

The early 1980s were watershed years for the telecommunications industry in the United States of America. In 1982, the largest telecom, AT&T or (Bell Corporation) as it was known then, broke into smaller local telcos.

The smaller companies were christened baby Bells, after they retained the name of the umbrella company and continued to provide long-distance call service.

The anti-trust lawsuit by the US Department of Justice that led to the breakage of the original firm, was essentially aimed at curtailing the monopolistic tendencies that AT&T had sunk into.

This company was the sole provider of telecommunication services in the whole of the US, in addition to owning the company that made telephone headsets. In monopolistic examples, this was the nearest a firm could get-to an almost complete stranglehold on a sector.

Despite being lauded for world-acclaimed services like money transfer service, M-Pesa, Safaricom, the largest telecommunication company in the region has a firm grip on the neck of the sector, and it is not about to let go.

It has such a tight control on telecommunications that companies like yuMobile, Orange and Airtel Kenya have complained of not making any returns on investment. Under these circumstances, not many companies would think of making forays into this sector.

I believe there are certain remedies that are available to the sector's regulator, Communications Authority of Kenya (CA) that can be used to even out matters.

There are a number of initiatives that can be used that will not disadvantage the market leader or other players in the sector because everyone's contribution is necessary to grow the sector for the sake of the country and its people.

Last week, it was reported in the media that Airtel Kenya had written to the industry regulator, the CA to exert some form of regulatory control in the market to stop it growing into a monopoly.

Last year, the company made a profit of Sh23 billion after tax from a turnover of Shs125 billion, the largest of any corporate in the country's history. At the same time, erstwhile rival Airtel wallowed in losses of over Sh5 billion. Since Yu and Orange do not make their results public, we can presume they were sailing in the same ship as that of Airtel, which is Kenya's second largest mobile company in terms of subscriber numbers.

The market leader commands 68 per cent market share in terms of voice subscription while that of data is at an overwhelming 71 per cent. Short text messaging (SMS) is almost the exclusive domain of Safaricom with 96 per cent of the market in its grip by end of 2014, as reported by the industry regulator, CA in its report for the last quarter.

In terms of absolute numbers, Safaricom had almost 22 million subscribers while the closest contender, Airtel commanded slightly more than 5 million, a multiple of almost 4.5 times. Telkom and Yu Mobile (Essar) had 2.7 million and 2.5 million respectively.

These figures show that Safaricom has without a doubt cornered the market. To be polite about it, others say dominant, but as Airtel stated in its letter to the industry regulator, in effect it has become a monopoly.

The question that must be bothering the regulator is what course of action to take.

I presume top on their mind is the fact that Safaricom is a big taxpayer and needs to be handled well.

What is certain however is that there is need for CA to intervene in the sector for the sake of Kenyans and other players in the industry. Fortunately, there are precedent-setting actions that have been set elsewhere on the continent by regulators and which we can borrow from.

In Senegal, Orange, which had a 62 per cent market share was declared a dominant operator and necessary regulatory measures instituted. Airtel was in 2013 declared a dominant player in Niger, Chad and Congo where its market share stood at 61.4, percent, 53 percent and 38 percent respectively. The regulator acted on these operators to level the playing field.

The regulator in Kenya can institute a number of measures to level the playing field. These may range from regulating inter-connectivity charges, easing barriers of entry, regulating tariff setting to making it necessary for players to share certain assets and infrastructure that will not compromise their operations.

This will be good for the sector and subscribers.