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informed decisions about their information and and foster the long-term development of the
privacy? Can they ensure that their privacy is ICT market. In recent years, the sector has Chapter 5
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respected and protected by those designing and undergone structural changes in response to
building mobile applications? There are valid convergence and innovation, and it needs to be
concerns about whether consumers are able to flexible enough to accommodate further change
make informed choices in an increasingly complex and review. As Figure 5.1 illustrates, regulation is
marketplace. not intended to serve as an end in itself.

M-services and apps are increasingly vulnerable While the conventional regulatory framework is
to security concerns. Networks worldwide are necessary to resolve disputes, address competition
falling victim to hacking by cyber criminals. concerns, protect consumers, and attain national
Cases of fraud, misuse of data and use of mobile goals such as universal access and economic
phones to commit crimes are all on the increase, development, it can also become a bottleneck to
undermining trust and confidence in the digital innovation and investment if it fails to respond
ecosystem. to the issues of the day. The need to adopt
regulatory mechanisms within a cross-sectoral
These concerns raise weighty issues and call for a framework is a critical interdependency for
thoughtful consideration of policy and regulatory m-services and applications. However, this was not
action going forward. While there is a need to anticipated within the conventional, “silo” style of
protect personal freedoms, it is important to do enacting regulations. There must be a paradigm
it in a way that does not hamper innovation. It shift to permit a new way of doing things.
is important to uphold trust and confidence in
the digital ecosystem and take active steps to The first step is to identify the objective of
mitigate the emerging concerns. Regulators need regulation before articulating a framework to
to consider whether their policy and regulatory achieve that objective. The regulatory approach
frameworks are fit for purpose, in order to achieve to be used is equally important once the object
a delicate balance for m-services and apps to of regulation has been identified. In the early
thrive within the digital economy. stages of competitive markets, the approach
was to prescribe rules, rights and obligations.
However, the general evolution has been toward
5.3 Policy and regulatory perspectives a “light-touch” approach to encourage and foster
m-services and applications by giving room to
This section of the chapter seeks to highlight policy embrace ideas that were not anticipated earlier.
and regulatory perspectives to be considered in
promoting growth of m-services and apps, while The evolution of the M-Pesa mobile money
at the same time ensuring that innovation is not transfer service is a classic case in illustrating
stifled and that consumer benefits are maximized. how a paradigm shift was needed to overcome
In doing so, this section will identify critical traditional regulatory arrangements in order to
regulatory principles that should be addressed enable the entry of an innovative m-service (See
and will offer perspectives for leveraging the Box 5.3). Cross-sectoral forbearance was applied
anticipated benefits against the risks. The to deal with an innovation that was not anticipated
perspectives shared in this section will contribute and hence not accommodated by either the
to a series of critical questions that policy-makers telecommunication or financial regulations that
and regulators can use as a guide in considering it straddled. The solution was a light-touch
proposals to foster m-services and apps. regulatory approach, a gradual introduction of
payment-system regulation for better financial
oversight, all combined with requirements for
5.3.1 Goals of regulation interoperability between the Safaricom network
with the other networks, to foster competition.
Most information and communications technology
(ICT) regulatory frameworks were designed to
guide structural changes as the sector transitioned
from monopoly to competition. Regulations then
were maintained to promote effective competition

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