By way of a brief explanation, OTT in this context refers to Over-the-top messaging. It is basically the concept of third party operators providing instant messaging services as an immediate alternative to normal network directed text messaging services provided by a mobile network operator.
An example of an OTT is WhatsApp which narrowly focuses on replacing text messaging on internet connected smartphones. WhatsApp now has over 900 million active subscribers, this is after being founded in 2009 after which it was acquired by Facebook in 2014 for about US$16 billion. WhatsApp has also introduced voice calling capabilities over secure internet connections. Skype is also among the number of OTTs detracting from traditional mobile phone operators by providing video calling services and messaging services that have replaced standard mobile network operations.
It is easy to see why top mobile network operators in South Africa would be a little worried as more and more people are switching to the OTT players which are a cheap alternative to the “Pay as you use” network operated services. Following the call by South Africa’s top mobile network players; MTN and Vodacom last year, the scheduled hearings into the possible regulation of OTT services are going on as planned. The hearings which are open to the public have been designated mostly as meetings and not conclusive regulatory proceedings.
The South African mobile operators; Cell C, MTN and Vodacom; seem to remain split on whether to regulate the over-the-top (OTT) services, where Cell C seeks no regulations stating that it may stifle innovation and the government would do well to go by a light-touch approach if it decides to regulate certain aspects. MTN and Vodacom were however more open to suggestions on regulations, especially for those in direct-competition with them, stating that they were not concerned with infrastructure or some legal requirements like; security agencies monitoring their networks, consumer protection legislation and taxation, which they; network-operators were.
A meeting held yesterday, the 26th of January, saw varied view points on the issues presented. These include;
- OTTs present a disruptive impact on voice revenues for network operators and thus potentially on investment for 4G network roll out
- OTT provides a growing source of data revenues of Network Operators
- Network operators are licensed and governed under the laws and licensing regime of the country in which they are providing the network- which do not evenly apply to OTTs
- South Africa is not unique – globally regulators are likewise grappling with these issues
All the tech giant representatives present at the meeting however slammed the option of regulating OTTs to the ground. A Microsoft representative (Microsoft owns skype) warned government against using “20th century regulations on internet services”, an official from Facebook (WhatsApp) spoke up saying; “You are effectively killing anyone who wants to break into the market just to protect the revenues of mobile operators.” The public policy manager for Google SA also said “Services are not networks; There is no evidence that OTTs are harming telco revenues,”.
There is no doubt that the move to regulate these OTTs are based more on revenue fears from MTN and Vodacom whose revenue has been greatly reduced, with them piggybacking on data subscription rates and not much else. A better move might be however for them to get more innovative as the others on the OTT scene are no small players and are equally important to any government. We will continue watching how this plays out and if moves are made in other countries following this.