WhatsApp and other OTT services face regulation in South Africa

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.

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.