Regulating performance in the telecom sector
The telecom sector in Bangladesh, particularly the mobile telecom business, has experienced rapid growth over the last couple of years. The price of telecom services has been falling over the years, resulting in more subscribers availing more services from these operators. According to the data published by Bangladesh Telecommunication Regulatory Commission (BTRC), there were 15 crore mobile subscribers in Bangladesh in June 2018.
Effective regulation has been instrumental to this growth journey of the telecom companies. The mobile telecom sector in Bangladesh is regulated by the BTRC, which started operations in January 2002. Among its many duties, the BTRC is responsible for regulating the sector to ensure the attainment of economic and social objectives of each stakeholder, including customers.
An effective regulator is also responsible for encouraging the market participants to innovate and create new products and services. The innovation may also lead to a new business model. An effective regulator assesses such business models objectively and creates an environment for those business models to operate. An effective regulator should also champion continuous learning. Many new innovations are taking place around the world in the telecom sector. The regulator should learn from the experience of other regulators, and should encourage telecom operators to learn from experiences of operators in other countries.
For example, regulatory technology is fast becoming an enabler for improving regulations, regulating the performance of market participants and improving stakeholder experiences. Regulatory technology is popularly called RegTech, a new field of work that promises to leverage technology for enhancing regulatory processes.
For policymakers and regulators, the challenge of regulating rapidly transforming businesses can be addressed effectively by RegTech. While the principal regulatory objectives remain unchanged, the traditional methods of achieving those objectives are becoming irrelevant in this fast-changing world. The tools applied for decades are bound to lose relevance in the near future. Sustainable adoption of RegTech will help the regulator to stay relevant and will aid progress on some of the national objectives, such as Digital Bangladesh.
Most of the regulators around the world have been relying on tools that digitalise data collection and reporting processes, primarily around compliance processes. Such initiatives were driven by a goal to reduce costs and cycle time. However, the potential of RegTech is far greater. It can create a new regulatory regime that works faster to identify risks, report issues and assure provenance. RegTech can create an environment where compliance will no longer be a periodic activity, say once in a year, but an ongoing activity where deviations can be reported every day.
Managing the identity of customers is an area where RegTech is being used most extensively. Telecom operators in Bangladesh today manage their own customer databases. At times, the same human customer may be listed multiple times in those databases. Additionally, one person may have multiple subscriptions from multiple operators, which leads to their information being stored in multiple databases. Although the regulator has instructed operators to limit the number of connections per national identification number (NID), the process of NID verification is mostly manual. Moreover, telecom operators collected and stored biometric information of subscribers. Such data require special protection from digital theft. RegTech has the potential to simplify such processes. It can authenticate each subscriber instantaneously using the biometric information stored in the NID database without telecom operators having to store any biometric data in their own databases. Such a process can reduce fraudulent registrations significantly. However, it will require regular collaboration between the regulator and data owner for successful implementation.
RegTech extensively leverages new technologies such as blockchain, machine learning and analytics. For example, blockchain technology allows multiple market participants to share data through a distributed ledger and to authorise transactions transparently. Interoperable processes like mobile number portability (MNP) are a good candidate process for blockchain-based implementation. RegTech facilitates sharing of data about a ported number so that both the donor operator and recipient operator of that particular number get information quickly and economically, and terminate each subscriber call successfully. The estimated cost of porting a number using RegTech would be substantially lower than the cost of porting a number using traditional technology.
The telecom regulator today collects and publishes some useful information about the telecom sector. This includes the number of mobile and internet subscribers. Most of this data is collected and published at a monthly frequency. With tower operators joining the business soon, the regulator will also need to collect and publish data pertaining to their operations. If these companies don't offer their services at an acceptable level of quality, the experience of mobile subscribers will suffer. Hence, the regulator will need to monitor performance parameters more frequently in the future. Proper adoption of RegTech will enable the regulator to monitor the performance of the market participants regularly and take decisions quickly. RegTech will also be able to assist the regulator to foster competition uniformly and consistently in a fair environment.
RegTech is about three years old, yet there are more than 100 RegTech start-ups in the world according to industry observers. The regulator in Bangladesh also needs to engage with the local start-up ecosystem to encourage the development of RegTech products and services. These products and services are going to be not only the regulator's market but also the businesses regulated by such regulators.
There is a significant opportunity to catalyse national growth and inclusive digitalisation using RegTech. By choosing suitable elements of RegTech and adopting it sustainably, the regulator can make itself relevant for the future and assist in national progress.
