WhatsApp and other OTT services face regulation in South Africa

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South Africa’s Parliament is set to decide whether or not WhatsApp and other Over the Top(OTT) services like Skype and Viber should be regulated following concerns of “freeboarding” raised by telecoms operators.

According to a report in Fin24 South Africa’s Portfolio Committee on Telecommunications and Postal Services has scheduled hearings which will focus on the necessary policy intervention for regulating OTT services, the impact that  OTT services have had on competition as well as “regulatory interventions on the guidelines to regulate OTTs”

Another topic also scheduled for debate within the same context is whether or not it is necessary for the OTT services to be defined as telecom services or telecom infrastructure. This will determine their eligibility for licensing and regulatory address that extends to legal intercept and emergency call access.

Vodacom and MTN, the two dominant telecom operators in South Africa, have in the past been vocal about their concerns regarding the manner in which services like WhatsApp engage in “freeloading” on network infrastructure invested in by the telecoms operators.

Management from these operators has, on independent occasions, called for regulation against this freeboarding, citing the need for a level playing field and going as far as to say that they are open for talks with OTT service providers on how they can contribute to the networks they ride on.

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The concerns being raised by the the operators are largely driven by the fall in traditional voice revenues which is being accelerated by alternative communication options presented by the OTT services.

To counter this dip in revenues, telecoms operators have had to invest significant resources into data services which, in turn, support the very same OTT services which are cannibalizing the traditional voice revenue line.

By entertaining the debate on OTT services South Africa’s legislature appears to be bending to pressure from an influential telecom lobby. If, however, it does resolve to push through any form of regulation, it will be setting a precedent for other African telecom markets.

In markets like Zimbabwe, OTT services have been singled out by the operators and even the regulator as a contributory factor to the decline in revenues. It’s hard to look at the outcome in South Africa and not see the same noise crossing the border at some point and even extending to other countries on the continent that have the same dynamics.

While OTT services are presenting similar challenges around the world, in African telecoms their impact appears to be accentuated because of business models that haven’t fully explored the revenue potential of broadband services but instead rely extensively on voice revenue.

Anything that accelerates the decline of the voice revenue cash cow therefore has to be tackled, even if this is through regulatory address. The problem is in the context of telecoms networks where the operators’ investments have been geared towards building virtual pipes that carry services, it’s difficult to determine what counts as an OTT service and what doesn’t.

Rather than seeking the regulation of new age services that represent the way value addition is going to be enabled through the internet, perhaps the telecom operators should focus on identifying other revenue opportunities or refining the ones they already have.

5 Comments

  1. E says:

    So in other words i cant use the internet in a way that loses you revenue. Hw abt just switching off internet access so that people are forced to use tct and calls. I mean telecom operattors got too comfortable and dnt innovate you could have owned whatsapp and sjype and made people pay a nominal fee

  2. 263CodeNinja says:

    It just doesn’t make sense.

    So beyond just whatsapp, will they also attack email service providers (gmail, yahoo, etc)?
    After all, email allows customers to send text messages and multimedia which also contribute to loss un SMS revenue.

    Furthermore, will they go after search engines too and every other website? Traffic to these sites is achieved using their infrastructure.

  3. Robert Ndlovu says:

    The root cause of their problem is that the African telecoms does not take R&D seriously.No wonder why they wake up and there is a new service (OTT) using the application layer. They must stop being cry babies.Innovate or die. Protocols such as SIP for VoIP and XMPP used on Whatsapp are here for keeps.

    I dont need a GSM operator to use my App account ever since I received the registration SMS “Hello World!” Instead they must invest in skills to take advantage of the OTT services. To give you an idea of the nature of our predicamency look at the following figures on how much 3 tech companies invested in R&D in 2013

    – Intel $ 10.6 billion
    – Microsoft $ 10.4billion
    – Google $ 8 billion

    Point being of course we can not afford that much but we should invest in R&D proportional with our market size and revenue.

    This is the very reason why telco regulators in Africa always want to use law to deal with technology instead of investing in R&D .Wake up ICASA .Wake up POTRAZ.

  4. Ruvie says:

    zimbabwe regulator aka dhibha

  5. Citizen4 says:

    Netflix is free loading, YouTube is free loading yet they ensure people use their data and more income for you!

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