By Prince Osuagwu Hi-Tech Editor & Juliet Umeh
The Nigerian communications Commission, NCC, appears in a dilemma to regulate activities of Over the top, OTT service providers, despite persistent calls.
The dilemma is understandable considering the combo of activities they generate in the telecommunications ecosystem. OTT service providers are mainly agents of social media. Social Media has indeed become the mainstream Platform to beat. While it disrupts the status quo, rail road revenue streams of the traditional licensed telecom operators, its activities are also people-based and self regulated. The platform is free for people to voice their opinions and transform society.
Despite the disruptions, social media also delivers equitable playing field for business, people and commerce, to build and reshape their brands. Above all, it is a strategic development vehicle for national and global accountability. The new medial presents a win-win situation, because it cannot be controlled and exclusively manipulated without short-term detection.
These were part of the arguments that appeared to tie the hands of the regulator.
But the operators could not hear any of that. Those who make investments that sustain the economy should be protected. The employment opportunities are fast waning because social media is doing, for free, what employers are paid to do. They are providing, for free, services that generate revenues for licensed operators. Operators’ Average Revenue per User, ARPU, is dropping and the economy bleeds as a result.
These arguments have characterised the OTT discussion for a long time, and added to the intractable problems of the Information and Communications Technology, ICT, ecosystem.
The conversations have also been in silos, with every tier of the ecosystem arguing to its benefits.
However, Vanguard newspapers recently provided a decent forum for structured conversation on the issue when it organised a telecom conference themed: ‘Unlocking the Revenue and Growth Opportunities in the Telecoms sector in a changing business model and digital technology environment – Role of regulator, Operators and OTT Service Providers.”
The conference provided different stakeholders, across the divides, the opportunity to table their arguments in a structured format for proper public attention.
Both the NCC, the telecom operators and OTT service providers savoured the privilege to defend why they stuck to their views on the matter.
The conversation kicked off with a keynote presentation by the Executive Vice Chairman of the NCC, Prof Umar Danbatta, represented by Director, Technical Standards and Network Integrity, Eng. Bako Wakil.
Danbatta admitted there are complexities in the telecom business today due to the activities of the OTTs but regretted that most industry players still focus traditional services like voice call and Short Messaging Services, SMS, which are now suffering decline while OTT services such as WhatsApp, Snapchat, Facebook Messenger and Skype are fast replacing them as primary methods of communication.
He said: “As a result of the increasing complexity of the operating environment of our industry, Telcos who grew on the back of traditional voice and data traffic are realizing that value is moving into other stages in the telecom ecosystem and also into completely different markets as consumption patterns change, and these consumption patterns are changing rapidly.
“ Telecom industry players should understand the ongoing trend. It is important for Telcos, vendors and Value Added Service (VAS) licenses to consider taking steps to change their business models in line with current and forecasted industry trends and challenge the traditional norm of where a telecom business fits in the lager ecosystem”.
He added that the old business models created by the operators are no longer sustainable, saying this is why they are suffering gradual erosion of their Average Revenue Per User, ARPU.
The regulator made clear that for now, it is not regulating the activities of OTTs in any form even though “conversations are on-going” on possible ways of creating a middle ground between the telcos and OTTs so that both can coexist in a friendly ecosystem
In his own presentation, the chairman of the Association of Licensed Telecom operators in Nigeria ALTON, Engr Gbenga Adebayo, said that admitting the complexities of the sector is one thing for the regulator but what can be done to challenge those complexities is more important.
He said: “In the intervention of the EVC, he alluded to the fact that the business environment is quite complex and the cost that we incur is quite high but I will be more comforted if I hear from him as those costs are declining the cost of regulating them will reduce. I will expect that while those costs go high even things like annual operating levies should be considered for a downward review. Reason, is that we have fixed costs, including licensing and compliance obligations to the NCC. So while NCC agrees that our business environment is complex, our revenues are declining, I will expect that it will be considering reduction on these charges as well.”
He outlined why the operators are complaining about the OTTs: “OTT is a service that is offered as a layer above the traditional services and this service in Nigeria include voice services, and a few other applications such as WhatsApp, snapchat, Skype, Facebook, and rest of them.
They are offered free of charge to the consumers but at very high cost by the operators. The infrastructures which they ride were built and maintained by the operators and this is actually the irony.
“The increasing usage of OTTs by consumers is already adversely impacting on traditional telecom platforms and according to OVUM, the independent analyst and consultant services based in the UK, the growing adoption of OTT services by customers instead of the traditional telecoms services created a revenue loss of over three hundred and ninety six billion dollars within the six years period of 2012 and 2018. This is endangering network development.
“It means that networks have been deployed, infrastructure has been built, there has been projected return on investment over a period of time and there you have to contain with OTT players impacting on your revenue. The question is- how will you return this investment?