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CONVERGENCE OF MOBILE AND
FINANCIAL SERVICES:
IMPLICATIONS FOR MOBILE
TELECOMMUNICATIONS
REGULATION
BY:
JEREMMY OKONJO
MWA...
Convergence in ICTs
Meaning: the shift from the traditional “vertical
silos”
architecture,
whereby
different
communication...
Levels of ICTs Convergence
1. Network convergence
2. Service convergence
3. Industry/market convergence

4. Regulatory con...
Convergence
ICTs convergence most prolific in mobile
telecommunications sector for 2 reasons:
1. Mobile phone infrastructu...
Mobile & Financial Services as
Converged Services
Mobile Financial Services Models
• Bank Model
• Mobile Network Operator (MNO) Model
• Hybrid Model
The Role of Regulation in
Telecoms, and Mobile Financial
Services
Impact of Convergence on Mobile and
Financial Services on mobile telecoms
regulation
• Regulatory overlap
• Regulatory arb...
Implications of MFS on Regulation of
Mobile Telecoms in Kenya
1. Authorization and Licensing
2. Interconnection and intero...
Authorization and Licensing
• Introduction of the Unified Licensing
Framework (ULF) of Licensing;
• Classification of MFS ...
Authorization and Licensing
Importance of Licensing:
1. Raising fees/revenue
2. Registration of Licenses
3. Regulation of ...
Interconnection and Interoperability
• Interconnection - the physical and logical
linking of telecommunication networks us...
Interconnection and Interoperability
• Interoperability - the ability of communication
systems, units or elements to provi...
Justification for Interconnection and
Interoperability
1. Consumer benefit perspective
2. Capturing valuable network exter...
Levels of Interconnection and
Interoperability in MFS
1. Platform interconnection
2. Agent interconnection
3. Customer lev...
Regulation of Interconnection and
interoperability
• Should Interconnection and interoperability
be regulated by CCK?
• Ho...
Competition
• Competition pushes firms to be
efficient, innovative and customer oriented in
order to thrive and survive in...
Elements of Competition in the MFS
sub-sector in Kenya
1.
2.
3.
4.

Market entry
Interconnection and interoperability
Excl...
Universal Access and Service
• the objectives and policies that a government
implements to ensure that all its citizens ha...
Universal Access and Service
• Universal service refers to service at the
individual or household level, for example, a
mo...
Rationale for Universal Access and
Service
• Telecoms, and ICTs generally, are socioeconomic enablers;
• Market forces can...
Universal Access and Services
• Do the telecoms regulations on Universal
Access and Service apply to VAS such as
Mobile Fi...
Universal Access and Services
Why should UAS by applied on MFS?
1. MFS are bundled services
2. They are important for soci...
Universal Access and Service Concerns
Relevant to Mobile Financial Services
• Extent and quality of network coverage;
• Pr...
Quality of Service (QoS)
In Kenya’s liberalized telecommunications
sector, competition is considered one of the
main tools...
Quality of Services (QoS)
• Imperfect Markets;
• Safaricom and Orange Telkom - have been
declared significant market playe...
Rationale for QoS Regulation of MFS
• Price/quality trade-off by service providers
• Insensitivity of MNOs in asymmetrical...
Applicability of Quality of Service
Regulations to Mobile Financial
Services
• Indirect application – indicators ensure
ne...
QoS Elements Critical to Provision of
Mobile Financial Services
• Complaints or redress mechanism
• Authentication and reg...
Recommendations and Conclusion
Regulatory response required at the institutional
level:
1. Regulatory convergence;
2. Regu...
Recommendations and Conclusion
Regulatory Responses to specific telecoms
regulatory issues:
1. Licensing
2. Interconnectio...
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Convergence of mobile and financial services implications for regulation of mobile telecoms in Kenya

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Presentation to the Africa Mobile Money Research (AMMREC) conference on Mobile Money, held at the Kenya School of Monetary Studies on 2nd and 3rd April 2012, under the auspices of the University of Nairobi

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Transcript of "Convergence of mobile and financial services implications for regulation of mobile telecoms in Kenya"

  1. 1. CONVERGENCE OF MOBILE AND FINANCIAL SERVICES: IMPLICATIONS FOR MOBILE TELECOMMUNICATIONS REGULATION BY: JEREMMY OKONJO MWAGAMBO & OKONJO ADVOCATES
  2. 2. Convergence in ICTs Meaning: the shift from the traditional “vertical silos” architecture, whereby different communications services were provided through separate networks (for example, fixed telecoms, mobile telecoms, CATV, IP), to a situation in which communications services are accessed and used seamlessly across different networks and provided over multiple platforms in an interactive way.
  3. 3. Levels of ICTs Convergence 1. Network convergence 2. Service convergence 3. Industry/market convergence 4. Regulatory convergence
  4. 4. Convergence ICTs convergence most prolific in mobile telecommunications sector for 2 reasons: 1. Mobile phone infrastructure used to offer most ICTS and other services; 1. Convergence in mobile telephony has been at the expense of other ICTs sub-sectors e.g. ISPs, fixed line telecoms, branchless banking etc;
  5. 5. Mobile & Financial Services as Converged Services
  6. 6. Mobile Financial Services Models • Bank Model • Mobile Network Operator (MNO) Model • Hybrid Model
  7. 7. The Role of Regulation in Telecoms, and Mobile Financial Services
  8. 8. Impact of Convergence on Mobile and Financial Services on mobile telecoms regulation • Regulatory overlap • Regulatory arbitrage • Regulatory inertia • Regulatory conflict
  9. 9. Implications of MFS on Regulation of Mobile Telecoms in Kenya 1. Authorization and Licensing 2. Interconnection and interoperability 3. Competition 4. Universal access 5. Quality of service
  10. 10. Authorization and Licensing • Introduction of the Unified Licensing Framework (ULF) of Licensing; • Classification of MFS as Value Added Services under the ULF Licenses
  11. 11. Authorization and Licensing Importance of Licensing: 1. Raising fees/revenue 2. Registration of Licenses 3. Regulation of market entry 4. Quality control 5. Enforcement of regulations 6. Contract between MNO and Government
  12. 12. Interconnection and Interoperability • Interconnection - the physical and logical linking of telecommunication networks used by the same or different service licensees in order to allow the users of one licensee to communicate with the users of the same or another licensee or to access services provided by another licensee.
  13. 13. Interconnection and Interoperability • Interoperability - the ability of communication systems, units or elements to provide services and to accept services from other systems, units or forces, and to use the services exchanged to enable them operate effectively together.
  14. 14. Justification for Interconnection and Interoperability 1. Consumer benefit perspective 2. Capturing valuable network externalties 3. competition
  15. 15. Levels of Interconnection and Interoperability in MFS 1. Platform interconnection 2. Agent interconnection 3. Customer level inter-operability
  16. 16. Regulation of Interconnection and interoperability • Should Interconnection and interoperability be regulated by CCK? • How do regulators balance access and interconnection rights with proprietary rights, and the need to encourage innovation and investments in MFS?
  17. 17. Competition • Competition pushes firms to be efficient, innovative and customer oriented in order to thrive and survive in the market. • Effects of competition: 1. Lower prices/tarrifs 2. Higher productivity 3. Increased innovation 4. Greater connectivity
  18. 18. Elements of Competition in the MFS sub-sector in Kenya 1. 2. 3. 4. Market entry Interconnection and interoperability Exclusive dealing agreements Cross-subsidy, service bundling and predatory pricing 5. Mobile Number Portability (MNP)
  19. 19. Universal Access and Service • the objectives and policies that a government implements to ensure that all its citizens have access to the benefits of modern communications infrastructure and services, regardless of region or location, socioeconomic status, ethnicity, gender, disability, or any other factor. • Universal Service and universal access to telecommunications are distinct.
  20. 20. Universal Access and Service • Universal service refers to service at the individual or household level, for example, a mobile phone in each home. • Universal access, on the other hand, refers to a publicly shared level of service, for example, “simu-ya-jamii” payphones, or MFS agents networks.
  21. 21. Rationale for Universal Access and Service • Telecoms, and ICTs generally, are socioeconomic enablers; • Market forces cannot eliminate market gaps left by service providers; • Market supply and demand forces increases importance of universal access and services
  22. 22. Universal Access and Services • Do the telecoms regulations on Universal Access and Service apply to VAS such as Mobile Financial Services?
  23. 23. Universal Access and Services Why should UAS by applied on MFS? 1. MFS are bundled services 2. They are important for social inclusion 1. Regulatory inertia?
  24. 24. Universal Access and Service Concerns Relevant to Mobile Financial Services • Extent and quality of network coverage; • Provision of technology-agnostic mobile financial services; • Design of user-friendly interfaces and subscriberfriendly registration procedures; • Interconnection and interoperability.
  25. 25. Quality of Service (QoS) In Kenya’s liberalized telecommunications sector, competition is considered one of the main tools for fostering innovation, fair pricing, and promoting high quality of telecommunications services. The objective to keep down churn rates in a competitive market is seen as an incentive for the provision of high quality services.
  26. 26. Quality of Services (QoS) • Imperfect Markets; • Safaricom and Orange Telkom - have been declared significant market players (SMPs) by the CCK; • Need to implement a system for monitoring and reporting Quality of Service (QoS) of mobile telecommunications services.
  27. 27. Rationale for QoS Regulation of MFS • Price/quality trade-off by service providers • Insensitivity of MNOs in asymmetrical telecoms and MFS markets; • Published, comparable QoS indicators are essential for assisting customers make informed choices and foster market competition;
  28. 28. Applicability of Quality of Service Regulations to Mobile Financial Services • Indirect application – indicators ensure network strength and availability, hence aid the provision of MFS; • Direct application – the KICA QoS regulations do not address peculiarities of MFS;
  29. 29. QoS Elements Critical to Provision of Mobile Financial Services • Complaints or redress mechanism • Authentication and registration; • Verification and tracking of transactions;
  30. 30. Recommendations and Conclusion Regulatory response required at the institutional level: 1. Regulatory convergence; 2. Regulatory cooperation; 3. Balance of ex ante and ex post regulatory approaches; 4. Regulatory trend-setting.
  31. 31. Recommendations and Conclusion Regulatory Responses to specific telecoms regulatory issues: 1. Licensing 2. Interconnection and interoperability 3. Competition 4. Universal Access and Services 5. Quality of Service
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