For the sustainability of the telecoms sector, policy-makers and regulators must make sure there is an effective policy framework in place, amid the plethora of over-the-top (OTT) services.
This, as the continued success of the OTT service model remains dependent on the availability of high-quality, reliable and efficient network infrastructure.
So said Nomvuyiso Batyi, CEO of the Association of Comms and Technology (ACT), speaking during a webinar presentation of the industry body’s research paper on OTT services.
ACT represents South African operators on non-competitive industry matters. It represents Cell C, Vodacom, MTN, Telkom, Rain and Liquid Intelligent Technologies.
Its OTT research paper, says ACT, hasn’t been crafted as a conclusive position, but is an invitation to engage, deliberate and explore the complexities of the ecosystem in a collaborative manner across all levels, with all stakeholders. Global counterparts are already advancing in these discussions, it notes.
For ACT, the aim is to strike a balance that supports the telcos and OTT players in a commercially viable, competitively fair and socio-economically beneficial market for SA.
Been here before
The issue of OTT services and their impact on mobile operators’ margins is not a new debate within the South African context.
Calls to regulate these players or have them pay taxes in SA can be traced back to 2016, with mobile operators voicing their displeasure, saying these services have increasingly become data-hungry.
This is mainly because OTT service providers are hosted on top of operators’ broadband networks, allowing them to bypass traditional distribution channels, as well as legislative and regulatory frameworks.
Some examples include WhatsApp, Facebook, TikTok, Snapchat, Instagram, Skype and Google Meet. Meanwhile, e-commerce, video and music streaming services are said to require dependence on broadband networks.
While OTT service providers have experienced exceptional growth, traditional telephony services have witnessed a decline. Despite the increase in broadband services usage, this doesn’t necessarily translate to revenue growth for the mobile operators within this segment.
Delivering insights from the paper, Batyi said operators have to make sure their infrastructure is upgraded and maintained at all times, because of the over-reliance of the OTTs on their networks.
“Due to this reliance and dependence of OTTs on broadband networks, SA needs, from a policy and regulatory point of view, to demonstrate and investigate how to regulate and bring on board over-the-top service providers within the licensing and policy regime, including the regulatory regime. This is important in order for the network infrastructure to be maintained within the short- to-medium term.”
She added there is opportunity for OTTs and the traditional regulated network operators to work together, to provide services in the digital society.
Remedial action
According to Batyi, the Electronic Communications Act and its proposed amendments are an opportunity for a comprehensive and holistic assessment of the OTT landscape.
“Striking a balance between collaboration and competition with OTTs can pave the way for more vibrant and sustainable digital ecosystem in which both OTT providers and network operators can thrive.
“ACT believes South Africa requires a proactive and inclusive stance in the OTT space, to advance digital technologies in the country.”
To finance the broadband networks of the future, conversations about fair share arrangements are already taking place in Europe and Asia, said Batyi.
“Regulated service providers argue that the revenues generated by OTT platforms are tied to the network usage they drive and that OTT services compete directly against regulated service providers without any regulatory obligations.”
She noted three areas where OTT providers could be expected to make a proportional contribution towards infrastructure costs: ensuring efficient resource utilisation, commitment to a sustainable ecosystem and investment incentive.
“Fair share arrangements create an incentive for network operators to invest in network infrastructure. If network operators perceive that OTT providers are not contributing their fair share, it may discourage them from investing in the necessary infrastructure to support the growing demands of the OTT services.
“Fair compensation encourages continued investments in network development, leading to enhanced connectivity and better services for users.
“Ideally, this contribution should be determined through mutual agreements on usage charges. However, calculating how fair share should be achieved is a complex task, and any fair share arrangement should be grounded in law, commercial fairness and a consideration of the industry dynamics.
“As the South African digital market aims to close the digital divide and bring network infrastructure and digital services to everyone, it is critical for the cost of this new network deployment to be fairly distributed across all who benefit to bring network infrastructure and services.”
Batyi added: “Ultimately, to benefit consumers, SA needs a flexible, non-disruptive and co-ordinated approach to building an information society. This includes clear regulations, innovative solutions, and close collaboration between policymakers, regulators, OTTs and network operators to foster a thriving and competitive ICT sector in South Africa.
“As the ACT, we recommend that South African policy and regulatory authorities engage with electronic communications services network operators and OTT service providers to gather data-driven evidence on the impact that OTTs have on regulated and unregulated services, to ensure fair and effective competition, innovation and consumer welfare.”
Batyi noted the research paper will be shared with the Competition Commission and Independent Communications Authority of SA.
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