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Innovation

Lipa Na M-Pesa access will boost innovation

Columnists

Lipa Na M-Pesa access will boost innovation


A customer pays for goods through Lipa na M-Pesa platform at a kiosk in Nairobi. FILE PHOTO | NMG

Summary

  • Basically, the capacity of computerized systems to link and interact with one another is critical to the modern economy, even if they were designed by vastly disparate producers in disparate industries.
  • Interoperability is a critical policy for a competitive market since it reduces network effects, which keep users locked into a conglomerate’s ecosystem.
  • A crucial collateral benefit of interoperability and competition is the potential to improve user privacy.

Safaricom’s #ticker: SCOM Lipa Na M-Pesa will take payments from Airtel and Telkom Kenya. Airtel and Telkom will benefit from interoperability. Over the past few years, chorus of voices, led by regulators such as the Central Bank of Kenya (CBK) and Communication Authority (CA), have called for action to rein in telco power.

They have found an answer in interoperability, which refers to the capacity of information systems to interchange data and share information.

This technological advancement improves both the creation of new items and the manufacture of products through more efficient manufacturing procedures. That is, the ability to share data between different components or machines, via software and hardware.

Basically, the capacity of computerized systems to link and interact with one another is critical to the modern economy, even if they were designed by vastly disparate producers in disparate industries.

The right of new market entrants — commercial and non-profit, individual and institutional — to link their products and services to existing ones, particularly dominant ones, has long been argued as it lowers the entry barrier for newcomers —including small businesses – to use the infrastructure that big businesses have built.

Accordingly, interoperability is a critical policy for a competitive market since it reduces network effects, which keep users locked into a conglomerate’s ecosystem.

It’s a terrific goal, simple to envisage a future where users have fewer switching costs, incumbents have less protection, and everyone benefits from greater innovation. Data flow is the essence of interoperability.

Thus, privacy harms resulting from telco monopolies are extensive and well-documented. For that reason, enabling competitive compatibility helps loosen dominant platforms control over how their services are used.

A crucial collateral benefit of interoperability and competition is the potential to improve user privacy. Consequently, competition gives users more power to decide how their information is shared and with whom, and to move to different services when one is not sufficiently respecting their privacy, and chip away at the multifaceted surveillance networks that a handful of large companies deploy.

Since telcos have never been effective stewards of sensitive user data, and the laws have never provided the correct instruments to safeguard it, new entrants make it simpler to establish privacy-preserving alternatives, pressing incumbents to do better, by allowing customers to move away when they don’t.

With the above comes the adage ‘data subject right of data portability’. Whereby, data subjects deserve to do what they want with their data, and have a right to quickly, easily access or move data that a platform has about them. Data portability is a relatively easy policy lift since the laws have created a wide data portability mandate.

Further, portability should be less of a technical lift and users thought to access their data in a useful, accessible form.

But there’s a catch: regulations that promote interoperability may erode the instruments that enterprises employ to safeguard customers.

Taking away freedom

We’ll need to deconstruct some of the legal instruments that firms employ against bad actors to allow for tinkering and unofficial innovation. We’ll take away corporations’ entire freedom over when and with whom they disclose data in to legislate on baseline standards of interoperability.

Furthermore, greater interoperability implies that businesses must devise new ways to exchange and gather personal data, thus posing a novel privacy risk.

Another snag is that interoperability allows for the infringement of exclusive intellectual property rights in the public interest by necessitating the issuance of licenses to third parties wanting to enter or remain on the market.

The Microsoft Corporation v European Commission case is the most well-known example of this. Microsoft’s refusal to give interoperability-related information to its rivals in the workgroup server market was found to be an abuse of dominance.

We can imagine a world where interoperability, proprietary rights and privacy coexist, and abusive monopolists are not deputised to operate as the State’s private arm.

Mutua K Mutuku, Data compliance & Intellectual Property Law expert

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