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SG3-C.n

/ INTERNATIONAL TELECOMMUNICATION UNION
TELECOMMUNICATION
STANDARDIZATION SECTOR
STUDY PERIOD 2017-2020 / SG3-C195
STUDY GROUP 3
Original: English
Question(s): / 12/3 / Geneva, 9-18 April 2018
CONTRIBUTION
Source: / United States of America
Title: / New draft ITU-T RecommendationD.MFS: Costs, Charges and Competition for Mobile Financial Services (MFS)
Purpose: / Proposal
Contact: / Paul B. Najarian
U.S. Department of State
United States of America / Tel: +1 (202) 647-7847
Fax: n/a
E-mail: /
Contact: / Carl R. Frank
National Telecommunications & Information Administration
United States / Tel: +1 (202) 482-0390
Fax: n/a
E-mail: /
Keywords: / Q12/3; Draft Recommendation; Mobile Financial Services
Abstract: / This contribution questions the need forthe new draft Recommendation ITU-T D.MFS: Costs, Charges and Competition for Mobile Financial Services (MFS), which resulted from the Rapporteur Group Meeting (RGM) for Q12/3(Geneva, 6-7 December 2017). The United States does not believe it is within the scope of the Study Group and the ITU. Additionally, much of this work duplicates that done in the Development Sector, by the World Bank, and by the Bank for International Settlement’s (BIS) Committee on Payments and Market Infrastructure. Given that, the costs of such a Recommendation may outweigh any benefits.

Discussion: TD13-WP2 was the product of a Rapporteur Group Meeting (RGM) principally to discuss a new draft Recommendation on Costs, Charges and Competition for Mobile Financial Services based on TD341Rev1, and to consider C28, C45, C128 ,C70, C114andC117, as well as outputs from the Focus Group on Digital Financial Services, in order to harmonize and achieve a stable text. In addition, the RGM was to consider some 2017 contributions on consumer protection, but a new Work Item exists on that issue alone.

The United States questions the appropriateness of any Recommendation here, for several reasons. Initially, the text appears to cover national mobile money entities not providing “telecommunications,” and so not within the ITU’s remit. In addition, the draft is duplicative of work being done in many other forums. Lastly, the costs of Member States employing the draft Recommendation might exceed the benefits.

First, the draft is unrelated to SG3’s mission, which is international telecommunication services and networks. For example, the word “international” never appears in the draft Recommendation. In addition, the RGM draft suggests regulating charges of financial agent/intermediaries and potentially even banks (for example, in the Definition and in Sections 6.2 and 8.3),yet the mission of TSB Study Groups as set forth in Article 14 of the Convention, provision 193, is “standardizing telecommunications on a worldwide basis” (emphasis added). In addition,Article 1 of the Constitution speaks in terms of “telecommunications,” which is defined as a transmission. Financial institutions and financial intermediaries do not engage in transmission. Thus, because it covers entities neither engaged in telecommunications nor necessarily operating internationally, TD13-WP2 is outside the ITU’s remit.[1]

It is true that TSAGassigned severaloutputs from the Focus Groups on Digital Financial Servicesto various study groups, including SG3. Yet TSAG cannot enlarge the mandate of the Union or the Convention. Even the FG-DFS Report on Regulation in the Digital Financial Sector focused on collaboration between telecommunication and financial regulators, potentially formalized by a Memorandum of Understanding that did “not affect the independence of the parties thereto” (Section 3.3.3). Nothing in the FG-DFS report demandsan SG3 Recommendation.

Second,a T-Sector Recommendation would be duplicative of work done elsewhere. The ITU-D’s Global Dialogue on Digital Financial Inclusion (GDDFI)is designed to foster and strengthen collaborative regulation between ICT regulators and regulators from other sectors. This was the principal theme of the 2016 Global Symposium on Regulators. Moreover, and building on the strong collaboration initiated by FG DFS, a Financial Inclusion Global Initiative (FIGI)was established as a joint collaboration between the ITU, Bill & Melinda Gates Foundation, the World Bank, and the Committee on Payments and Market Infrastructure (CPMI) of the Bank for International Settlements, to accelerate universal access to financial services. Over the next three years (2017-2020), FIGI willexamineimplementing recommendations from the ITU FG-DFS, the Payment Aspects of Financial Inclusion (PAFI) report of the World Bank and Bank for International Settlements, and the Level One Project of the Gates Foundation.

The World Bank and CPMI are financial experts. If anything, the Standardization Sectoris best suited to suggest best practices for network operators. FIGI will hold annual symposiums on these issues for ITU members. In these times of budgetary austerity, rather than act in areas beyond the T-Sector’s jurisdiction and expertise and duplicate the work of others, the United Stateswonders ifSG3 might more helpfully coordinate with the D-Sector and with work already being done elsewhere.

Third, given the duplication, a draft Recommendation could even raise the costs of mobile money. Some of the payments addressed here can be small, or even, as noted in the Introduction, “micro-payments.” Yet the difficulties in establishing a cost model and overseeing regulation of financial intermediaries and banks may be greater than the enormous benefits payment though mobile phones can provide to the consumer. Before proceeding to determine a Recommendation, we suggest investigating whether the benefits exceed the costs.

The United States requests that this contribution be made available publicly without restriction.

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[1]Such issues are matters for Member State banking supervisors under national law, and will vary from country to country. Indeed, the definition itself may be overbroad. Although it would cover financial services delivered via mobile network operators, the references to “platform operator” and “a bank itself” suggest the draft could cover fixed money transfers, such as wire transfers or even Automated Teller Machines (ATMs).