Daily Times Nigeria Wednesday, September 13, 2017
B7 ICT
Why ‘Over The Top’ in telecom is difficult to regulate –Experts In the last decade, telecommunications’ industry has been witnessing tremendous developments. This is as a result of its ever-growing number of connected people across the world. Innovations have continued to change the telecommunications’ landscape, thus forcing the industry regulators to intermittently adjust their rules to meet the demand of the dynamic industry. Stakeholders in the telecommunications industry, however began singing discordant tunes over their dwelling revenue as a result of the activities of over the top practitioner in the industry. TONY NWAKAEGHO reports Innovation has always been the lip of the captain of ICT industry worldwide. But today, licensed telecom operators across the world are counting their losses due to innovations that produce over the top (OTT) services. However, they are not just folding their arms; they are crying to the regulators, who are also faced with the technically hard decision of whether to regulate the OTTs or not. Telco-OTT (Over-The-Top) according to Wikipedia, is where a telecommunications’ service provider delivers one or more services across an Internet Protocol (IP) network. The IP networks is predominantly the public Internet; although sometimes, telco-run cloud services delivered via a corporation’s existing Internet Protocol- Virtual Private Network (IP-VPN) from another provider, as opposed to the carrier’s own access network. It embraces a variety of telco services including communications (e.g. voice and messaging), content (e.g. TV and music) and cloudbased (e.g. computer and storage) offerings.) VPN, is a private communications’ network usually used within a company, or by several different entities, to communicate over a public network. Over-the-top (OTT) companies include Whatsapp, Viber, Netflix, Skype, and Google, which are said to encroach on the telecom industry and create unrest for telecom operators particularly in the areas of what could have come to them in revenue. In the same vein, third party web content and social networking companies, such as Google and Facebook are increasingly generating huge revenues and driving high levels of data traffic, which ride on the broadband networks of traditional telecom operators. OTTs are regarded as agents of disruptive technology. They mostly haul their services across to the consumers, over the network of traditional operators, bypassing controls. For instance, on instant messaging, over the top providers are third parties, provid-
ing the services free of charge, as an alternative to text messaging services already being provided by a mobile network operator. Many research companies have undertaken to study the impact of OTT VoIP (Voice over Internet Protocol) applications on voice and issued reports that will assist the industry. Informa’s World Cellular Revenue Forecasts for 2018, disclosed that global annual SMS revenues will fall from US$120 billion in 2013 to US$96.7bn by 2018, due to increasing adoption and use of Over-TheTop (OTT) messaging applications. In its own report tagged: “The Future of Voice”, a research firm, Spirit DSP, declared that the overall global telco voice revenues including fixed subscriptions will decline from $970.4 billion in 2012 to $799.6 billion by 2020, at a CAGR of 2.4 per cent. It is also estimated that as a result of Voice Over Internet Protocol (VoIP) by 2020 the telecom industry worldwide will see a loss of revenues approximately worth $479bn which accounts for 6.9 per cent of the total revenue from voice. Although no operator has voiced out any plan to block such services, yet there are complaint about the OTT, the ripple effect of revenue loss and the quest to stay afloat in business. When he appeared at a public hearing on communication in Abuja, recently, MTN Nigeria CEO, Ferdi Moolman claimed that his company’s local business was being adversely impacted by Whatsapp and other non-tax paying products, including Viber, Skype among others which deplete its revenues. Moolman also cautioned that the activities of these operators threaten the sustainability of the telecoms’ industry in Nigeria. According to him, “the depletion of operator revenues by unlicensed providers of “over-the-top” telecoms’ services that do not have any physical presence; nor pay any taxes; nor make any significant contribution to employment or other socio-economic objectives of government in Nigeria, is worrisome. Companies like WhatsApp and Viber are eroding gains of Nigeria’s telecom companies.”
Prof Umar Garba Danbatta
He cited the United Arab Emirates (UAE) and its enforcement of limited access to OTT services, and urged the government to take drastic steps to protect the interests of telecommunication companies. The activities of the OTT was echoed by the Director-General of National Film and Video Censors Board (NFVCB) Ms Patricia Bala, when she recently visited the Executive Vice Chairman of the Nigerian Communication Commission (NCC), Prof. Umar Garba Danbatta, in order to seek the commission’s collaboration on how best to regulate the major OTT service providers. Bala posited that there must be a way to curb the circulation of harmful content over telecommunication platforms which over time has been attributed to the handi-
work of OTT operators. The request for collaboration on this matter was stalemate as the telcoms’ regulatory boss, Danbatta, informed Bala that regulators, all over the world approach the issue of OTT regulation with a lot of caution, basically because of the positive transformation and steady growth their disruption gives to world technology eco-system. NCC’s position has a similitude with a report by ResearchICTAfrica.net titled: “OTT – threat or opportunity for African Telcos?” Simulate OTTs through bundling: The report advised operators to respond to OTT services by bundling voice, SMS and data into packages that provides OTT like services. “The number of SMS’s included in the bundles is high enough to be
unlimited for most users and thus resembles free OTT texting”. The report claims that MTC Namibia is offering these types of bundles for several years in an effort to defend market share and keep new competition out. MTC’s aim for constant Average Revenue Per Unit (ARPU) and competitive pressure leads not to lower ARPUs but to more bundled value. This strategy is simulating flat rate pricing for unlimited voice and SMS. It said that operators in 24 African countries offered bundling voice, text and data together in 2015. The operator sets the price of the top-up so that it receives the desired ARPU and in exchange provides close to unlimited voice call and text messages. In Namibia and South Africa dominant and smaller operators adopted bundling as part of their pricing strategies – MTN and Cell C in South Africa and MTC and TN Mobile in Namibia. In Kenya, operators Airtel and Orange adopted bundling as part of their pricing strategies. Safaricom has a very strong market position as well as the MPESA mobile money service to ward off competition. The report appears to be saying that in most of these countries, leveraging their distinct assets and capabilities has produced more positive result for telcos than other measures that could stifle the dynamism of the sector. He adduced that the same situation is playing out in the area of international traffic, where the telecos are complaining bitterly, because with Skype, WhatsApp calls, people can call across countries provided you are connected on the internet. He stressed that the telcos are losing the revenue from the traditional international call (voice), but advised that the telcos shouldn’t be fighting these platforms, rather move around it to generate revenue, which some are already doing.