Page 193 - ITU-T Focus Group Digital Financial Services – Technology, innovation and competition

ITU-T Focus Group Digital Financial Services
Technology, Innovation and Competition

• Obtain access to USSD or STK short codes.

• Being able to utilize the full capabilities of these access channels.
• Negotiate FRAND-based pricing for USSD and STK access.
• Obtain QOSS assurances from the bearer supplier.

5.2 Competition aspects

5.2.1 Overview

Because USSD can mostly only be offered by aggregators and licensed MNOs through their own USSD gateways,
USSD is a scarce technology resource. If the MNO is in competition with the DFS SP over a DFS-related service,
it could potentially block that service, either by denying the SP access to the gateway, or by not supplying it
with short codes required for customer access.

This refusal to supply service is not necessarily the norm as there are many instances of sound commercial
arrangements between MNOs and entities that may compete with it in relation to DFS. Robust competition
between MNOs in Tanzania, Malawi and South Africa, for example, has made USSD access a very profitable
revenue source for MNOs, even where provided to SPs who may compete with the MNO on some services.
However, the vertical integration between the MNOs infrastructure business and its DFS business has in some
markets raised competition issues where there has been, objectively, a denial of service. These instances are
outlined below.

5.2.2 Access to the USSD gateway or USSD components

5.2.2.1 Overview

As noted above, access to USSD is crucial to the business plans of SPs. Loss of this access may irrevocably
damage their business.
86

5.2.2.2 Competition aspects

Usually the access given by MNOs to SPs is the Mobile Originated USSD (MO-USSD) accessible via short codes.
87
Inability to access the gateway is fatal to a business predicated on USSD access. SPs denied access by the MNO
could, however, approach aggregators, who have access to the MNO gateway, for access, but potentially at a
higher price as the aggregator will charge a fee.
In some countries, MNOs have given MO-USSD access only to those banks that are in a partnership with the
MNO.
88
Besides MO-USSD, the provision of Network Initiated (NI)-USSD can provide a competitive advantage for SPs.
For example, if there is a dropped USSD session and the transaction is not completed, the customer may not
want to reinitiate the transaction so as to avoid potential double billing. NI-USSD will allow re-initiation of a
dropped USSD-based transaction so that customers can complete their unfinished transaction. However,
89
even if NI-USSD is provisioned on the MNOs USSD gateway, the MNO may decide not to make it available to
third parties. 90

86 MNOs though may have legitimate reasons for denying a SPs access to their USSD gateway, for example a history of fraudulent
use of USSD-based services with other MNOs or bad credit history. See also CGAP (2014) ibid
87 See Section 5 on Short codes.
88 CGAP (2014) ibid
89 TRAI (2016a) Consultation Paper On The Review Of Regulatory Framework For The Use Of USSD For Mobile Financial Services,
available at https:// goo. gl/ dSSPLN
90 ibid

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