oa Journal of Management & Administration - Barriers to entry of Kenya's telecommunication industry : is there a market slice for new entrants?
|Article Title||Barriers to entry of Kenya's telecommunication industry : is there a market slice for new entrants?|
|© Publisher:||Management College of Southern Africa (MANCOSA)|
|Journal||Journal of Management & Administration|
|Author||Simphiwe Nojiyeza and Jocelyn Muthoka|
|Publication Date||Jul 2013|
|Pages||136 - 196|
This paper focuses on the extent to which the market regulatory environment in the mobile telecommunication industry in Kenya has posed great challenges to new entrants and small operators and frustrated their efforts to counter the continued market leadership and dominance by Safaricom. Debates on ICT regulation in Sub Saharan Africa and the rest of the developing countries were confined to technology and tele-density issues without looking at the social, political, institutional, legal and economic factors that shape industry specific issues. Globally, the telecommunications industry has been viewed as a public utility and public ownership or strong government controls went with that. The argument this paper is premised on is that post liberalization of the telecommunications sector in Kenya, state monopoly of the Kenya Posts and Telecommunication Corporation shifted from government to the private sector oligopoly (Kerretts, 2005:50, Mureithi, 2008, Manica and Vescovi: 2011:23). There was a shift from structuralism (active role of the state in driving economic development) to neo-liberalism (freeing market forces from government control, reducing taxes, divesting state-owned enterprises, deregulation of telecommunication, weakening of the state's redistributive functions) (Nwankwo, 2000:147). Despite privatization and introduction of competition, most incumbents are still able to continue dominating the markets and enjoying significant advantages. The market share amongst the four operators in the telecommunications industry in Kenya is skewed in favour of one operator. The paper presents an argument on macro-economic, political, legal, social, cultural, economic, institutional and policy issues (Isik, Arditi, Dilem and Birgonul, 2010:119) at the end of the seven year old oligopoly, market liberalisation, market distortions and competitive environment that favour established market players compared to new entrants. The paper is also highlighting the relevance of a classical theory such as Porter's Five Forces competitive theory and macro environmental forces in explaining regulatory challenges faced by new market entrants in the telecommunications industry in Kenya and other emerging markets.
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