Page 273 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

5.2 Protect consumers

Imagine this potential future state:

• most of the world’s population participates in social networks;
• online identities are inextricably linked to real names;

• user locations are always known;
• most communication travels through social networks;
• social networks can predict and influence an individual’s behaviour

• social networks are payment ‘gatekeepers’ to a significant portion of the economy.
This scenario is not farfetched. WeChat, Facebook, Uber, and others demonstrate movement in all these
dimensions. Social networks could become extremely powerful. The answer is not to stop social networks.
Rather, the answer is to monitor and manage them judiciously so as to derive as much social benefit as possible
for the BoP populations. Key topics include:
• free service vs. net neutrality;

• market power;
• data privacy;
• agency and transparency.

5.2.1 Free service vs. net neutrality
Social networks see an opportunity in developing countries and are tailoring their approaches. For example,
Facebook offers Free Basics by Facebook, which provides free Internet access in certain markets. Specifically,
no data charge applies when users visit a predefined list of websites and have a subscriber account with a
participating MNO. Any website may join if they meet certain technical requirements (i.e., offer a lightweight,
mobile-friendly version that will work on both smartphones and web-enabled feature phones). Naturally,
Facebook offers a lightweight version of its own site called Facebook 0. The free service is currently available
from at least one MNO within 44 countries in the Africa, Middle East, Asia-Pacific, and Latin American regions.
10
Free Basics by Facebook has been controversial. After much public debate, India’s regulatory body determined
the service violated net neutrality laws since free access only applied to certain websites. In theory, any
website can participate in the Free Basics service but there are technical hurdles and Facebook approves
the applications. Additionally, all traffic is routed through (and thus visible to) Facebook, raising privacy and
competition concerns.

This controversy does not have an obvious right answer. While free access to any website is ideal and pro-
consumer, the reality is that millions of poor Indians lost an opportunity to access the Internet. Given the
stakes, regulators and businesses need to find common ground so opportunities are not lost.

5.2.2 Market power

As prime examples of the network effect, social networks are prone to ‘winner-take-all’ market consolidation.
This resulting ubiquity, scale, and market concentration can be quite beneficial, primarily by bringing efficiency
to a social network’s ecosystem. For example, users can reach all of their friends via a single social network.
Additionally, market fragmentation does not stall the adoption of services such as payments.

10 Internet.org website (accessed August 4, 2016)

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