ICTworks by Inveneo

Kenyan consumers are rightly excited that the mobile phone company Zain, now owned by Bharti Airtel, has kicked off a price war with just announced unprecedented low and permanent new tariffs of Kes. 3.00 to call and Kes. 1.00 per SMS message to any mobile network in Kenya. This huge price reduction caused such a storm of traffic on Zain's network, they actually had connectivity problems with other mobile phone companies.

Safaricom, the dominant mobile phone company in Kenya, is responding with the "Masaa Tariff" - Safaricom customers will be able to make calls within the network at between Kes. 2.00 to Kes 4.00, with Kes. 2.00 per minute now the lowest calling rate on any mobile network operator in the Kenyan market. Orange/Telkom Kenya has matched this pricing and other mobile phone companies are expected to follow suit with their own price decreases in the coming days.

This price war is an obvious benefit to all Kenyans in lowering the barrier to using mobile devices, but what about its impact on ICT companies? How does the mobile price war help ICT adoption and sales volume beyond just dropping call and SMS costs? Here's three ways:

1. Visible Impact of Good Government Policy

The mobile phone price war started when the Communications Commission of Kenya (CCK) cut interconnection tariffs by 50%, based on a report that determined the existing interconnection rates were way too high. A second tariff lowering will occur in 2011.

This immediate price war is a big, bold validation that lowering government-controlled tariffs directly benefits its citizens where there is already a decent level of competition. Hopefully the regulators in other countries who control mobile and Internet rates will realize that lowering those rates is a net benefit for everyone

2. Stimulate More Services & Innovation

Now that voice and especially SMS are no longer the fat cash cows of quarters past, Safaricom and Zain will need to bring more services and more innovation to the mobile subscriber to maintain their revenue per user. This means more than just M-PESA and its clones, but also new data services and even whole new solutions.

For ICT companies this is an opportunity to sell new mobile services to these companies and their subscribers - Safaricom and Zain will be hungry for new ideas. It's also an opportunity to build on the new services they roll out, with value-added solutions. Many have already done this with SMS, data, and M-PESA and your underlying connectivity costs are only going to drop, increasing your profit margins.

3. Increase Customer Respect

Last but not least, ICT companies as customers of the mobile companies should start to see more attention paid to them. Each business subscriber is going to be come more valuable, as they are the high-usage and high-income clients in Kenya. This will only be more apparent when mobile number portability comes to the Kenyan market.

For larger ICT companies (and even small ones) it is a good time to review your current contracts with mobile providers and see if you can reduce costs and increase services. You may even get the mobile company representatives to have a bit of humility. Or as this tweet from Rombokins says:

In my interview with Rachel Essendi, founder of the eCommerce marketplace, Rachel's Bargain Corner, she mentioned an interesting advantage that she felt differenced her site in Kenya.

None of the other shopping sites have an automated payment engine that integrates Zap and M-PESA. Our payment engine has set us apart from all the other shopping sites in the country.

This move towards mobile payment systems for web-based eCommerce sites is quite recent - previously they were all credit card driven. Which lead me to ask Rachel more questions, specifically around mobile payments. Her conclusion: both Zap and M-PESA give shoppers comfort and convenience unmatched by credit cards.

A new way to pay - online!

You take Zap and M-PESA, but not credit cards or Paypal. Why?

Rachel: This is a deliberate move and we have had some local publishers ask us the same question. Credit cards in Kenya are a preserve of the rich and we reckoned that this would turn off many Kenyans who don't have the same and usually associate the same with the rich.

Our target market is the majority of Kenyans and with the popularity of Zap and M-PESA in the country we wanted and continue to provide a solution that is relevant and one which the local market can identify with its all about our market.

Was it hard to get M-PESA or Zap? Do you feel they are enabling your site's growth?

M-PESA and Zap are the most popular money transfer modes in the country, this is because of their availability and ease of use, we are just riding on this technology that the mobile phone operators launched. What we did was to integrate the same into our web site. Most people identify with M-PESA and Zap and when they come to our site and see that we are supporting the same they find it easier to transact on our site.

Both Zap and M-PESA has enabled us to have our checkout system, without an efficient money transfer system we would not be able to offer a complete online shopping experience. The fees they charge are reasonable with Zap charges being lower than M-PESA, but the latter has more people on it.

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Last year the microblogging service Twitter, pulled its outbound SMS service from Africa. While only a few technology elite bemoaned its loss, for me it was a great disappointment. Twitter didn't see that the SMS carrier fees Twitter had to pay ($1,000 per account per year on average) to send SMS to African subscribers were worth future value of these users.

Now ArabCrunch reports that Twitter is in talks with Zain to bring outbound SMS alerts back to Africa for its subscribers. And that's a big deal!

Why Twitter Matters to African ICT Businesses

Twitter is an amazingly convenient way for businesses to reach their best customers, quickly, with breaking news. In the USA, its mainly a web application. In Africa, with its small Internet user based but explosive mobile phone penetration (greater than light bulbs!), Twitter's SMS return can herald a whole new way to get and keep customer attention with targeted messages. For example:

1. Daily specials and sales
2. Location updates of technicians or sales reps
3. Quick feedback to customer questions
4. Service outage or downtime updates
5. Virus or hacking threats

That's just the internal use of Twitter. Add in the sales possibilities around training clients how to use Twitter or upgrading them to hosted SMS options like Frontline SMS or RapidSMS and the return of Twitter to Africa could become a real boost to ICT adoption. Just look at its Facebook in Africa, Twitter already become a must-have for the tech elite and leading companies, and its just getting started. Expect it to rival Facebook due to is amazing ease of use and immediate gratification for both sender and receiver of the tweet.

Africa-Focused Twitter Experimentation

At Inveneo, we're experimenting with Twitter and hosted SMS options to develop solutions for the African market. Just this past weekend, we ran a real-time SMS feedback demo at Maker Faire Africa, using Frontline SMS and Twitter. Of course, to keep up with our ideas, be sure to subscribe to:

• Inveneo on Twitter
• ICTworks on Twitter

And if you have suggestions for future Twitter and SMS experiments, please let us know. We're always interested in mixing SMS and web-based technologies to find African business opportunities.

Hat tip to Appfrica

As everyone in Kenya knows, there's been explosive growth in voice and data usage, mainly through mobile phones. And while the vast majority of mobile phone usage is beneficial to Kenya's economy, the very ubiquity, ease, and anonymity of prepaid mobile phones that make them so attractive for positive uses, has also made them great tools for nefarious ones.

Can't wait to know you

In reaction to this trend of using prepaid accounts to facilitate crime - from petty to serious acts - the government of Kenya is now requiring mobile phone providers to identify all prepaid account holders, following similar acts by the governments of South Africa and Tanzania.

As The Nation reports, Kenyan mobile phone operators are not happy with this new government mandate:

Zain CEO Rene Meza said the move would not reduce crime. "Prepaid subscribers registration is a good initiative to identify mobile users. However, it does not prevent or reduce crimes as the criminals normally manage to get hold of stolen mobile phones or fake or stolen identity cards to get their own mobile connections," he said. This was based on his experience in Pakistan and Paraguay where the law required that prepaid subscribers be registered.

And who can blame them - establishing a prepaid phone line registry will do little to discourage or solve crime. Mobile phones are an enabler for sure, but just as much as any other communications device. And creating a registry for Kenya's 17.6 million mobile phone users will vastly increase paperwork for both customers and mobile line operators, with little impact on mobile phone usage in crimes or the ability to solve crimes after they happen. Worse, the mobile subscriber database, with all those personal records, would be a target in itself for criminals.

So while mobile phone operators fight this battle, Internet cafe owners should not think themselves immune. They could very well be the next registration target for the government. To combat cybercrime in Italy, Internet cafe owners are required to record the identification of anyone who uses their computers and worried African governments may not be far behind.

I'm surprised that there isn't already a call for Internet user registration in Nigeria, home of the famous "Yahoo Boys", to curtail 419 fraud.