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The time when you are a monopoly is the time to think ahead

Dec 03, 2012 Business Daily, Strategy

“The Communications Commission of Kenya (CCK) has ordered courier firms to raise their prices to the regulatory minimum in a move seen as meant to protect the troubled State-owned Postal Corporation of Kenya (PCK).
The industry regulator has established Sh150 as the minimum fee chargeable by courier companies for parcels weighing under 350 grammes.
…According to CCK data, the volume of letters sent locally dropped by 32.2 per cent in the year ending June to 74 million compared to 109 million in a similar period last year. At the same time, the volume of courier items sent dropped by 22 per cent to 1.6 million”

BUSINESS DAILY (20 November, 2012)

I have a landline at home. It’s been out of order for more than a year now. I’ve only just noticed.

Had my landline been out of order ten years ago, I would have been calling Telkom Kenya incessantly; I would have been going there personally to get the line repaired; I would have been out on the streets looking for technicians to persuade to fix my line.

A landline in those days was a lifeline.

But here’s the thing: despite the vital importance of the landline, there were only around 300,000 of the things installed in Kenya at the time. Latest figures suggest that number is 10 per cent lower today. Meanwhile, Kenya now has close to 30 million mobile phone lines. And Telkom Kenya, fixated on its legacy business for so long, has a tiny piece of the mobile pie.

Bear that in mind as you consider the recent news in this newspaper, excerpted above, that the Communications Commission of Kenya (CCK) seeks to protect the beleaguered Postal Corporation of Kenya (Posta) from competition, by forcing a price floor on courier firms.

A decade ago, when my landline was so vital, so was my post office box. I would ensure that the mail was collected several times a week, for without all that written, printed communication my life would be at a standstill. These days, I barely notice if the postal mail has come or not.

Some more figures in this regard from CCK: Kenya now has 14 million internet users, most of them using mobile subscriptions. In the Kenya of today, people communicate by calling on mobile phones, or sending emails, Tweets or Facebook updates. They are not tethered to their landline or their postal box in anything like the same way they used to be.

Certainly, there will remain a market for printed communication. And certainly, we need a postal corporation that provides universal coverage to reach remote areas as well as cater for the poor. But is price control the best way to achieve this goal? Is inflicting higher prices on Kenyans to delay the inevitable a useful policy?

The institution that should be protecting Posta is Posta itself. It should have seen the writing on the wall. It should have been engaged in a game of reinvention for the past five years. It should have been phasing down its legacy physical business, and moving boldly into the virtual. It should have been using its physical assets to form innovative partnerships with other businesses. It should have been ramping up its customer service to offer different added value to its customers.

Sadly, not much of that has been in evidence. When you are reliant on a regulator for protection, your fate is already sealed. Posta should have learned from the steady decline of Telkom Kenya before it. And Kenya Power should be paying attention to both. The years when you are a dominant monopoly are the very years you should be preparing for a post-monopoly future. By the time competition arrives, you should be ready. You should have ramped up your staff engagement and customer service to industry-leading standards.

If you only start thinking about it once the heat is on, you won’t have to think about it for long.

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