Smartphones and high-speed Internet connectivity are returning to haunt mobile phone companies, threatening to wipe out their main source of revenue.
The threat, first admitted by Airtel Africa chief executive Christian de Faria two weeks ago, comes from the rise of messaging platforms Facebook, Viber and WhatsApp and their ability to let people make free calls and send short messages.
The rise of over-the-top (OTT) content providers threatens to do what mobile phone and Internet did to the postal corporations across the world — induce a slow death.
The grave implication of OTT service providers to mobile phone companies is reflected in the zeal with which the government is moving to regulate their business.
In Kenya, the Ministry of ICT and the regulator, Communications Authority of Kenya (CA), say they are weighing options on how to reign in the revenue loss by the companies and the taxman.
“We are investigating this issue together with CA. We will meet for a week looking into available policies, then see what move to make,” said ICT Cabinet secretary Fred Matiang’i.
Local telcos have also warmed to the debate with Airtel Kenya and Safaricom stating that OTT players operate without local licences.
Safaricom Director of Corporate Affairs Michael Chege said OTT players avoid high licence fees paid locally, giving them unfair advantage.
“CA would have to be involved but also the other regulators need to do the same due to the matter of jurisdiction and where the OTT’s are registered or operate from. We can, however, have regulations governing them so that they are given certain obligations such as Universal Service Access,” said Airtel Kenya Director of Corporate Affairs Dick Omondi.
Telkom Kenya CEO Vincent Lobry did not give his views on the matter only saying the regulator is in the best position to advice on the way forward.
Two years ago, Telkom Kenya former CEO Mickael Ghossein brought up the subject. He said Google should help to pay for the billions of shillings invested in networks for services that consume huge bandwidth such as videos.
USING THEIR INFRASTRUCTURE
Globally, network companies say Skype, Viber, WhatsApp, Chat On, Snapchat, Instagram, Kik, Google and Talk generate huge amounts of traffic but do not compensate them for using their infrastructure.
Other applications that fall in the category of OTT are Hike, Line, WeChat, Tango, ecommerce sites (Amazon, Flipkart etc.), Ola, Facebook messenger, BlackBerry Messenger, iMessage, online video games and movies (Netflix, Pandora).
Today, customers directly access these applications online from any place, at any time, using a variety of Internet-connected consumer devices.
The applications are currently straining both fixed and mobile telecommunications networks as uptake increases.
The debate is hotter in India where Airtel has pushed the telecom regulator TRAI, to look for a regulatory framework for OTT players.
In April, The Indian Express reported a twitter exchange between Bharti Airtel and Facebook CEO Mark Zuckerberg. Indian companies withdrew from Facebook’s Internet.org — a partnership between social networking services company Facebook and six firms (Samsung, Ericsson, MediaTek, Opera Software, Nokia and Qualcomm) that plans to provide consumers free access to selected Internet services without in less developed countries. However, telcos absorb the data costs associated with handling Internet.org traffic.
“For people who are not on the Internet though, having some connectivity and some ability to share is always much better than having no ability to connect and share at all. That’s why programmes like Internet.org are important and can co-exist with net neutrality regulations,” the publication quoted Zuckerberg. Net neutrality, the publication added, was equally important and that Internet service providers should not be allowed to discriminate and limit access.
Airtel’s call for regulation of OTT brings us to the subject of ‘net neutrality’, a topic that has received diverse views round the globe.
Many of Western and European nations apply the principle of ‘net neutrality’ that says Internet service providers or telcos must treat all data on the Internet — OTTs included — equally. They are not permitted to discriminate, block or charge the companies differently for the services.
The US, for instance, has stringent rules on net neutrality. The Federal Communications Commissions (FCC) regulations bar broadband providers from blocking access to legal content, applications, services, or non-harmful devices.
FCC also stops broadband providers from impairing or degrading what they refer to as lawful Internet. It is in line with this requirement that on Wednesday last week, FCC said it plans to slap wireless broadband company AT&T Inc. $100 million fine.
The US regulator said AT&T had allegedly deceived millions of smartphone customers about unlimited wireless data plans. FCC said AT&T sold consumers data plans advertised as unlimited, then capped data speeds for those subscribers after they used five gigabytes of data within a billing cycle.
According to the European Commission (Electronic Communications Framework) ‘net neutrality’ is the ability by customers to “access and distribute information or run applications and services of their choice.”
Kenya currently has no solid rules that dictate the co-existence of applications accessed through broadband and telcom firms. The country is a pioneer in mobile phone industry in the region with a penetration rate of 68 per cent currently. This is below the global mobile penetration at 96 per cent.
Mr Matiang’i said it is hard to regulate the industry with a bias on applications because Kenya’s current legal framework does not give a guide on OTTs.
“The nature of ICT sector as we move further into convergence is in such a way that broadcasters, broadband providers and telcos have to agree on ways of co-existing,” he said, adding that the subject of ‘net neutrality’ has sparked global discussions.
Kenya has now joined a race that was started by US telcos. Britain’s mobile phone companies also want OTTs regulated. The Telegraph reported in March that UK mobile operators had said they face unfair competition from Internet-based communications services that rely on their network infrastructure to run.
The Telegraph quoted Irish telecoms billionaire Denis O’Brien, who operates in the Caribbean, saying: “Mark Zuckerberg is like the guy who comes to your party and drinks your champagne, and kisses your girls, and doesn’t bring anything.”
Airtel Kenya said the main reason for the campaign is not to block the OTTs but to urge regulators to ensure a level playing field that will benefit customers.
“Regulators should consider regulations for OTT players that cover licensing, spectrum, security and revenues. Should OTT services such as VoIP continue to grow, mobile network operators will be forced to charge their subscribers a premium fee to access the services,” said Airtel’s Dick Omondi.
Safaricom said the apps cause security concerns as calls are encrypted and no records can be produced of such communications should they be required by investigating bodies.
The companies expect an action from CA and the ICT ministry. France, South Korea, Germany, Taiwan and China all have their telcos complaining of the applications.
France has demanded that Skype register as a telecom operator in the country so that it can be subject to its telecommunications legislation and meet certain obligations.
South Korea Communications Commission has reportedly made it legal for telcom operators to charge their customers extra fees to use the voice applications or block their use entirely.
The National Communication Commission of Taiwan is planning to regulate mobile apps. This will force certain mobile app developers to obtain an operating licence from the watchdogs.
Independent Communications Authority of South Africa Councillor William Currie said in March that the regulator is “interested to see” what the industry has to say on the subject of net neutrality. “We are aware of what is taking place with the Federal Communication.
Commission,” he said. It would be “useful” if industry stakeholders used the inquiry to provide feedback on the need, or otherwise, for net neutrality regulations as well the impact such regulations might have on “different segments of the ICT system”.
“Clearly, this issue is something that will affect us at some stage, if it is not already doing so.” The current position in South Africa is that there is no obligation for telcos and Internet firms to observe rules of open Internet.