My good friend – Mbugua gave his 2 cents…OK!… 5 cents to adjust for inflation on the David and Goliath analogy surrounding the behavior of the giants in this country…
In any sector of any economy…the dominant player calls the shots. Kenya Airways can (and does) charge a premium for inland routes in Africa. Simply because there isn’t a viable competitor that can offer the number of connections and frequencies it offers to these destinations. By the same breadth, Safaricom finds it very profitable to keep its users in a walled garden where they can be milked in relative peace and serenity. Breaking the “Safaricom club” is probably the key case study for most marketing professionals now. 1st person to crack it can expect to cash in heavily…until the big green hulk counters.
2. Kenyans accept and embrace mediocrity. You see it in the leaders we elect, in the poor standards of service we put up with from government and some businesses (KPLC are you listening??) and more area than I care to delve into. Safaricom has been no exception and has in the past been consistently underwhelmed subscriber with sub-par service. That said, the green giant is trying to up its game in terms of service delivery and have succeeded in some measure.
3. The contentious 3G licencing fee: CCK set the fee at $25M. Safaricom ponied up the cash and went happily on its way. Zain (then Celtel) felt the tag was too steep at the time and focused on improving the quality of its calls. Well….i guess we all know how that turned out. In their defense, Zain had little option as far as broad band strategies to pursue are concerned. The only other viable alternative is Wimax…which is a “fixed” as opposed to mobile technology. Wimax has a considerably steeper acceptance and upgrade path for consumers and presents several integration issues for a telco. Compound that with a lack of available spectrum and you are left with a sitting duck.
I get where the 3 entrants are at. They all have mother companies to report back to….and their balance sheets have more red stuff than all blood-banks in the region combined. So they will call for back up and hope that they get some kryptonite rock….coz a pissed of Goliath has the ability to drop kick their butts into 3 continents.
Be afraid David(s)…be very afraid.