OTT Regulation is under Discussion
We like to think there is a shared belief that giving people access to the Internet is good for the world. The recent issues raised in India have shown that even free Internet has strings attached (here). OTT regulation may be on its way…
Developing markets such as Africa and India have a different look at OTT Regulation than other parts of the world. In India, even when Facebook tried to give away free Internet, regulators and others were suspicious. The questions came fast and furious – What is the real cost of free Internet? What are the possible future ramifications?
In other countries, the discussion becomes rather philosophical, with commentators weighing in on the rights and freedoms of people and companies on the Internet. In developing countries, it’s not a philosophical debate, it’s about what is the practical, “no strings attached” approach to get internet to all the people who are not connected. The question is which policy will allow for growth and development at the lowest cost to the consumer, and not hinder it.
In South Africa Parliament’s the Portfolio Committee on Telecoms & Postal Service has triggered a storm of controversy by announcing it intends to hold a meeting (informal) later this month to discuss the need (or otherwise) for OTT Regulation. The announcement follows much public dismay by MTN, Telkom and Vodacom executives over the impact of OTT providers on their businesses.
Former MTN South Africa CEO Ahmad Farroukh (mentioned here before) went as far as to argue that companies such as Facebook and Google are getting a “free ride” and “should pay their way” if they want to profit from their use of the operators’ substantial investments in next-generation broadband infrastructure. Only Cell C, which is trying to position itself as different than the other operators, has spoken out against regulation. Its CEO, Jose Dos Santos, this week blasted bigger rivals MTN and Vodacom for “declaring war on consumers’ interests”.
Other places in Africa operators have very aggressive, Morocco’s three main operators — Maroc Telecom, Méditel and Inwi — earlier this month cut off their customers’ access to Skype, Viber, WhatsApp and FaceTime. Though that decision has enraged their clients, they have been backed their regulator, which has argued that providers of such services should be licensed.
None of South Africa’s big operators is likely to do this, however. Even if Vodacom and MTN are successful in tolling OTT providers for the use their networks, it would open up arbitrage opportunities for rivals, says Neilson. “Cell C has already embraced this disruptive model in its competitive approach, and Telkom could do likewise.”
Also, regulating any content on the Internet is widely considered to be a bad idea, there are fears that the operators could link hands with the largest content players, effectively forming a cabal and locking smaller players. Policy decisions are quite complex here.
Yash Ramkolowan and Genna Robb, economists at Pretoria-based consultancy DNA Economics, argue that OTT Regulation will;
- Raise another barrier to competition in the telecoms sector, rather than protect consumers from harm
- Hurt the Market because OTT providers such as WhatsApp, WeChat and even Facebook Messenger have revolutionized the way in which we communicate.
- OTT providers are not “free-riding” on the mobile operators’ infrastructure. subscribers pay to use the data that OTT services consume.
- From a regulatory perspective the debate is more nuanced. It is true that mobile operators face a heavier regulatory burden than the OTT providers, but this in itself is not necessarily a justification for further regulation.
- OTT regulation may only serve to entrench the position of existing operators and throttle the benefits that arise from increased competition.
OTT regulation are a worldwide issue, TRAI, the telecom regulator in India, is actively developing a regulatory framework for OTT services, European regulators are embroiled in efforts to classify and manage OTT services (for which European operators are eagerly lobbying), Brazil is embracing OTT regulation – the list goes on.
Regulation is healthy where it provides safe boundaries for citizens and encourages competition, unhealthy where it is protectionism. What’s clear is that any regulation should be applied fairly and equally to both operators and OTT players.