Telecom operators facing Technology evolution

Telecom operators facing Technology evolution: Challenge of new regulatory requirements in DRC

The telecommunication industry is moving with a breakneck speed and unparalleled in its history across the planet. It continually touches all aspects of social, economic and financial life. Many households in developing countries have a mobile phone, though without access to electricity or water, and nearly 70% of the population in developing countries has a cell phone. In the DRC, nearly 49% of population have a telephone. Certainly, telecommunication has affected the way of doing business, and has imposed a new ecosystem of building the experience of humanity. Prestigious innovations exacerbate the needs of consumers, which strongly encourages mobile and Internet operators to invest in a competitive path and play their pivotal role in the development of new digital markets. The rapid technological progress in the telecommunication sector in DRC is a real challenge for the public power, which is being asked to adopt a new regulation adapted to the unlimited innovations of the digital era in the DRC.

 By Gaby Kabue Kayombo, Managing Partner de RightsEmpower

Introduction

The progress of digitization has completely transformed the telecommunication sector, whereby we can notice that the relationship between different technologies is becoming closer and closer. The digital economy is expanding in the Democratic Republic of Congo. With nearly 30 million mobile subscribers, there are many business opportunities. New Information and Communication Technologies (NICTs) have thus become an engine of economic growth and jobs, a key element in the evolution towards emerging market status of the DRC. Beyond the mineral resources traditionally recognized as a powerful vector of the country’s economy, there is no doubt about the shadow and several statistics show that the telecommunication and ICT sector has also become one of the most profitable and a lever for economic growth whose contribution to GDP amounted to 15% in 2016.

In the DRC, we count four mobile operators: Vodacom Congo, a subsidiary of Vodacom South Africa and a subsidiary of Vodafone with 33% market share. Then Orange DRC, second operator in the market with 30% of share; Airtel DRC represents 23% of the market share and Africell DRC, a subsidiary of the Lebanese group Lintel Holding, with 13% of the market share. In addition to mobile operators, there is also an increased number of Internet service providers such as Iburst, Comax, Afrinet, Global Broadband Solutions, Microcom, Inet, Africanus SPRL, etc. These also experience technological, organizational and commercial innovations of services and business models.

For most of these telecom operators, innovations also bring significant operational and organizational disruption but above all, those innovations encourage “competition” they are now engaged in for the unique purpose of maintaining and increasing the base of their customers by offering rate discounts for Internet or national and international calls, interconnection costs or rather offering several other offers (per-second rate, introduction of instant messengers, etc.). Telecom companies have leveraged their strong customer portfolio to position themselves at the heart of new digital services, such as homeland security, transportation, entertainment and financial services.

What are the innovations of the telecom sector?

Before addressing the legal issues raised by the innovations that operators are experiencing, we start by identifying the key innovations that have revolutionized telecom services in the DRC.

  1. Mobile money service

The mobile money service is a lightning innovation that has inevitably marked the experience of telecom operators. A concept (innovation) well designed and adapted to the needs of consumers to offer concrete solutions to the daily problems of consumers. It is an innovation that has grown rapidly in financial transactions and offers enormous potential for economic growth in developing countries. The e-money service continues to gain ground not only in DRC but also in most of Central and Eastern African countries. The benefits of this innovation are demonstrated even in other parts of the world as it allows the use of mobile phones in commercial transactions for wider access to financial services for instance electronic money transfer, and even to a fringe of unbanked populations living in the most remote areas of regions.

In Africa, the concept was tested for the first time in Kenya through the mobile operator Safaricom, under the M-Pesa label. Launched in 2007, the service only provided money transfer; and in 2009 the service already offered the payment of certain domestic services (“kenya power” electricity). In 2011, there was progress with international money transfer operations. Then in 2012, investment and lending services were introduced (M-Shwari). In 2013, M-Pesa innovates with the merchandise payment service (Lipa M-Pesa). Later in 2017, a digital application was launched.

In the DRC, M-Pesa was launched in 2012 by the mobile operator Vodacom Congo. In 2016, M-Pesa has more than 2 million subscribers across the country. Very well received by the Congolese, this concept knows an expansion for financial transactions through the mobile phone to the unbanked people residing in the remote regions of the country where the financial institutions are almost non-existent due to the problems of basic infrastructures. Innovation has not only been about solving the financial transaction challenge, but it has also led to other economic markets such as the creation of small and medium-sized enterprises (SMEs), the solutions offered by the mobile phone facilitating the payment of bills from domestic service providers including electricity, prepaid cards, salary, gratuities, television subscription cards (Canal +), and even the possibility of paying for products in some supermarkets.

The mobile money service has spread to other telecoms companies operating in the DRC, such as Airtel, which offers this service under the Airtel Money label and Orange under Orange Money.

However, financial transactions for bill payments and product purchases in supermarkets are still very limited. It would be beneficial for this mechanism to extend it to other companies such as Régideso, Sonas, etc. And this would avoid consumers going to the traditional ticket offices to pay their bills.

Despite the innumerable benefits of innovation, the mobile money service presents operational risks that will be demonstrated in following points.

2. Cloud computing service

Cloud computing is a sophisticated innovation in the 21st century digital age. In simpler terms, cloud computing is the access via a telecommunication network, on demand and self-service, to configurable shared computing resources. This is a relocation of the IT infrastructure. It provides services that individuals and communities can exploit at will from anywhere in the world.

The Cloud Computing Service offers a simplified IT model that enables governments, international organizations, private institutions and businesses around the world to no longer need to invest heavily in computing resources and infrastructure that are necessarily limited and require internal heavy and expensive management. Today they have the choice to migrate to a Cloud Computing model where they can buy or rent online resources. This model saves them the costs of internal management since IT resources are managed at the level of the cloud provider.

The cloud computing service has characteristics that offer it a different scope to other technologies namely: first, cloud users do not own the computer resources they use. The servers they use are hosted in external data centers. Secondly, services are provided according to the pay-per-use or subscription model. Tertio, the services that are provided to the customers are virtual and shared by several users and finally, the services are provided via internet.

However, the cloud computing service presents innumerable legal risks that will be pinned in this study.

a) Big data

Big data or mega data (massive data), is a very favorable technological innovation for telecom operators. It refers to a very large set of data that no conventional database management or information management tool can really contain.

Indeed, every day the world generates about 2.5 trillion bytes of data. This could be information from everywhere: messages that we send, videos we publish, weather information, GPS signals from mobile phones, messages on social media sites, digital images and videos posted online, transactional records online and many more. The giants of the Web, first and foremost Yahoo, but also Facebook and Google were the first to deploy this type of technology.

Big data has emerged as one of the important issues related to the development of new technologies within companies. It is considered as the engine of innovation, customer satisfaction and achieving greater profit margins.

Big data is based on four pillars of the solution: mass storage, information exploitation, research and visualization, and the exploitation of information on the fly. Big data technology enables telco operators to process, use and exploit a real-time data flow that flows through their networks, with the aim of gaining a better understanding of the consumption patterns of their customers, allowing them to offer more personalized packages and offers. In addition, they value their data by selling to third parties on data markets.

Telco operators are among companies that store and deliver very large volumes of data. So big data is a technology that allows them to improve the efficiency and performance of their activities.

b) Mobile applications

By Mobile applications (Apps), we mean downloadable and executable programs from an operating system of a mobile phone or tablet. A mobile application can have a marketing (service/advertising) or commercial (e-commerce) vocation.

The exponential outbreak of mobile applications has not only created considerable opportunities in the mobile network operators’ economic market but also disruptions.

The development of applications on smartphones (Android, Apple or Windows) is now essential for telecommunication companies to conquer new markets and maintain their visibility. These operators do realize smartphone and iPhone / iPad applications to present their company, their products and services by offering to their subscribers tailor-made offers such as: streaming (music and videos), video calls, photo sharing, online shopping, online banking, etc.

Google, Amazon, Uber, Airbnb, Facebook and Whatsapp are currently world-famous mobile apps that have revolutionized the business market.

Mobile applications give autonomy to their users, they are currently making mobile phones real gates to access the online world. A new wave of Smartphone applications stimulated by broadband networks is bringing social networks into action. And innovation allows mobile phones to transform people’s living ecosystems in both developed and developing countries. Apps did not only empower individuals, but also spurred growth, entrepreneurship (start-up), and productivity across the entire economy. Mobile apps have become a digital indicator of business performance and competitiveness. Apps enable accessibility and SEO of a company.

We should note that mobile applications have created problems that still fall outside the existing telecommunication legislation, especially in DRC.

c) Digital marketing

Digital marketing is an irrefutable step forward in the current digital age that mobile network operators and consumers are experimenting to the limit. It aims to use all interactive digital tools to promote products and services in the context of personalized and direct relationships with consumers. It concerns all points of digital contact: Internet, smartphones, tablet. It is a technological process that has changed the deal on how to advertise products and services. It is no longer a question of necessarily relying on traditional media such as radio, television, billboards, leaflets… But thanks to mobile telephony, thousands of advertisements are broadcast digitally. Digital marketing is faster, cheaper, participatory, engaging and interactive with consumers through the use of the Internet.

Operational risks and legal issues of technological innovations in DRC

  1. Electronic theft of funds.

The mobile money service has generated a wide range of operational risks for consumers. The typical case is that of M-Pesa, Airtel money or Orange money service with a number of subscribers currently estimated at nearly 5 million across the country. There is a systematic electronic theft of funds that is done through these electronic money services in the DRC. We met some victims who revealed to us that there are indeed networks of electronic thieves operating on behalf of mobile operators. How do they carry out these thieves? They start by giving a call to the subscriber, to inform him that he has won a bonus. In this scheme, they then ask the consumer (uninformed) to provide the digital data of his M-Pesa, Orange or Airtel money and once these codes are delivered, the electronic funds theft is operated.

The legal questions that can be asked are: How can the existing legal framework on telecommunications solve the case of digital theft of funds? How to establish criminal responsibilities? Admittedly, the existing laws applicable to the telecommunications sector are almost out of date and obsolete to respond to such risks as a result of technological evolution.

  1. Insecurity, fraud, loss and theft of personal data

While Cloud Computing and Big Data have advantages as demonstrated above, however, these two innovative technologies that have revolutionized the IT ecosystem of companies also present legal risks, including insecurity, fraud, loss and theft of personal data. These two processes present risks that are increasing in the pooling of servers and the relocation of these. And access to the service requires a secure connection and user authentication; there may be a management problem of identifiers and that of responsibilities (unauthorized access, loss or theft of identifiers). The risks highlighted can not necessarily find the legal answer in the existing telecommunication laws. The loss of control by the customer over the data they have given to a third party in a cloud computing environment may give rise to specific problems because of the geographic dispersion of data across multiple processing centers. This new context requires Congolese lawyers to make provisions to best protect the interests of one another.

  1. Violation of intellectual property rights

The rise of new technologies, and in particular mobile applications, has inflamed the problems of legal uncertainty generally experienced in the intellectual property law. This is the tangible case of mobile applications where consumers engage in the use of personal data for various purposes that violate copyright. However, the use of a mobile application and the processing of personal data of the users possibly collected by the download is not to be taken lightly. Many times users of mobile applications, seizing not only confidential information or business secrets, but also personal data of the author. The financial loss caused by these violations, in terms of loss of income and compensation to the wronged perpetrator, is often considerable, amounting to tens of millions or even billions. Paradoxically, the existing Congolese law on intellectual property is not adapted to answer digital legal questions including the publication of an idea (mobile application) on an online store and for example the transfer of copyright on the code of this application.

  1. Fraud, incompatibility and disloyalty of digital advertising

Nowadays, most online advertisements are fraudulent, incompatible and unfair. In a Google study, in partnership with Facebook and other players in the web and online advertising, new policies are announced to fight against the click fraud, these advertising impressions artificially generated by robots that distort the traffic estimations. Especially in e-commerce, the majority of merchandise advertised online does not reflect the goods as presented. It goes without saying that incompatibilities of online advertising are much reported regarding good lives and morals. These online advertisements escape the norms of conformity even national and international.

Today in DRC, the Ordinance-Law No. 41-63 of February 24, 1950 on Competition and Ordinance No. 97-327 of October 15, 1955 on Advertising are over and obsolete to regulate the legal issues of digital advertising as well as the competition that reigns there.

Conclusion

Like other African countries, in the DRC, the telecommunications and ICT sector is booming, so that mobile operators are experimenting unprecedented technological developments in the market. The impressive growth of the mobile phone network has led to rapid technological progress, which challenges the decision-makers and regulatory authorities to endow the country with new regulations in the telecommunications and ICT field. Technological constraints recommend that they adopt as soon as possible a new regulatory approach that takes into account the new context of digital technology in order to protect consumers against operational risks such as electronic theft, loss, theft and fraud on confidential data generated by new technologies. Existing telecommunications laws are inadequate and outdated to ensure security, confidentiality of data and protection of personal data. The new law adapted to the challenges of the digital age could contribute to and anticipate the new governance requirements of new services such as Cloud computing and Big data, provided that they are already regulated and operational in most markets in African countries. In the same perspective, the new regulation will have to be attractive and incentive for the foreign and national investments to the contribution of the economic growth.

Bibliography

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Legal Notice: This publication is not to be construed as a legal opinion of a lawyer or firm. Readers are encouraged to consult with our lawyers for appropriate legal advice on the law relating to their business.

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