Proper rules result in long-term benefits to consumers as they are
assured of freedom of choice and competitive pricing. FILE PHOTO | NMG
Kenya has been lauded as one of the most successful mobile money
markets in the world. However, failure to effect comprehensive
interoperability may be seen more as a competitive barrier than by
default.
The recent agreement by Kenyan Telco players
to execute an interoperable wallet-to-wallet system will lead to a more
desired level of competitive status. It will further facilitate an open
system with unquantifiable benefits to consumers, industry players and
the economy – gravitating towards financial inclusion.
Fundamentally,
it gestures the beginning of the end of the era of ‘walled gardens’ -
where subscribers were straitjacketed on single platforms, unable to
freely transfer money to users on other platforms.
However,
it is imperative to note that its success, in as much as all operators
are demonstrating cooperation, requires regulators to ensure that
initiatives such as these thrive. This is the only way to keep the
environment conducive enough to encourage further growth and development
in this market.
Over the years, regulatory nudge has pushed the industry
forward. The liberalisation of the telecommunications sector in Kenya,
that came after the passing of the Kenya Information and Communications
Act (KICA), 1998, saw the first wave of concerted regulatory
intervention. It ended the monopoly that the then Kenya Posts and
Telecommunications Company (KPTC) had, leading to the entry of new
players, and thereby enabling consumers to reap more benefits.
This
would see the entry of cellular operators in the year 2000 and 2001, as
well as Internet Service Providers (ISPs) in 2005, ending Telkom’s hold
on provision of Internet backbone and international gateway. This led
to price reductions and introduction of other services and solutions to
the sector. Broadly, these actions helped shape and sustain exponential
growth of the sector, to deliver notable coverage expansion that
eventually triggered growth of these ISPs and other resale services. All
this was realised off the back of regulation and compliance by KPTC,
the then monopoly and dominant player, thus enabling the market to
thrive.
A market regulator’s responsibility never
stops. It is the continued review of checks and balances that keep the
level of competition and market scales in check, ensuring an attractive
market for further investment by current and prospective entrants.
The
Communications Authority currently has in place regulation that
addresses quality of service that telco operators offer and punish those
who fail to meet expected service level threshold. Punitive regulation
has been put in place the world over to encourage further compliance. In
2015, the Federal Communications Commission (FCC) in the United States
fined Telco AT&T $100 million, for misleading customers about their
wireless speeds, thereby violating the “transparency rule” of its
Network Neutrality requirements.
It is commendable for
a market player to rise to the top due to an innovative strategy.
However, this success also depends on regulatory interventions that will
encourage growth of the smaller players in the market by way of further
investment in resources, infrastructure and research. The current trend
is worrying, with smaller players becoming ever more cautious and
deliberate with the investments they make, as returns are not assured,
despite the creation and roll-out of trend-setting products and
solutions, in line with market needs.
Back to
Interoperability, whilst we just got started, it is not too early to
call for an expansion of the interoperability scope by the regulator -
from wallet-to-wallet interoperability to other propositions like agent
interoperability, wallet-to-service providers, bank-to-wallet, and
wallet-to-merchant to stimulate further financial inclusion. It is
worthy to note that the Kenyan telco sector is unique, and should not be
compared to other conventional sectors within the larger service
industry.
Customers of any given telco operator in any
market are not independent of other operators’ customers. It is a whole
communication eco-system in which the actions of one operator directly
impact not only its customers but the customers of the other operators
as well. Within the telco sector, there remains the need for continued
and step-by-step oversight by the regulator to ensure growth, market
attractiveness and a level playing field. All these result in long-term
benefits to consumers as they are assured of freedom of choice,
competitive pricing and better solutions.
Granted,
interoperability is a multifaceted affair. Challenges will swarm free
but they must be dealt with. Operators, especially those
first-to-market, long used to profiteering from a skewed competitive
landscape, at least from experience in forerunner interoperability
markets, are wont to perceive interoperability as perilous and expensive
thus placing hurdles.
For instance, other than high
initial set-up costs, interoperability means that industry players, will
end up sharing resources, meaning a probable charge put on
interoperable transactions as a cost for using the other company’s
network.
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