…How towering revenue base influences battle
…ICT players seek local OTT alternatives
By Juliet Umeh
For some years, the use of over-the-top, OTT, services such as Skype, WeChat, WhatsApp, Facebook, Netflix, among others, have been subject of debate by Information and Communications Technology, ICT, players.
The bone of contention was whether OTTs should be subjected to regulation or not. The argument divided industry players into two camps, with some disposed to the regulation and others against it.
However, today, the hues and cries of regulation are beginning to change as the players are now seeking for local mobile operators to start having local OTTs in order to also start tapping from the huge benefits.
Opinions from diverse stakeholders in the ICT industry suggest that what is happening with the OTTs is a global trend and Nigeria must tap into it by also innovating; most specifically by developing its own type of over-the- top services for economic growth.
At first, the local mobile operators believe they are losing so much as a result of the activities of these OTTs.
According to the London-based research and analytics firm, Ovum, between 2012 and 2018, the telecommunications industry lost $386 billion.
However, while mobile operators continue to count their losses to OTTs, the pressure had been on the regulators to intervene by way of strict regulation, which will either compel the more or less virtual OTT service providers to get licensed or get banned totally.
Also, that the OTTs players are not accountable to anyone, don’t pay taxes, develop infrastructure or even create jobs, were part of the reasons local mobile operators called for their regulation.
But as it stands, it appears local operators are beginning to tell themselves some home truth. Managing Director of Mainone, Funke Opeke, enumerated some statistics generated by the OTTs in the developed nations where their operations started.
She said: “If we look over the past 15 years where these companies have largely exploded in terms of the range of services, size and the impact they have in the world today, not only are they the world largest companies by evaluation, these companies dwarf the economy of many countries including Nigeria.
“For example, Alphabet which is the parent company of Google had revenue in 2018 of $136 billion. Their R&D budget was $21 billion, Net income $31 billion, the company has a peak evaluation of over $900 billion. Facebook, in 2018, had revenues of $56 billion, R&D of $11 billion and Net income of $22 billion. Facebook’s evaluation is about $500 billion. Of course, there are other companies delivering services online like Amazon, Apple, Tencent, Alibaba who are in $500 billion valuation category.
“When we place Nigeria by context, our national budget is in the range of $25 billion, and that is less than the net income of Google, just about the size of its R&D budget. Our government revenue is $20 billion for 190 million Nigerians. Our capital infrastructure spend is $8 billion and our GDP in 2018 is just N400 billion.
“So, if you put it in context, the size and the scale at which globalisation is taking place with this coming of OTTs, they can hardly be ignored. They are providing a variety of services, borderless services because that is the nature of the internet and the underlying technology that enables the services. So it is content, cloud, connectivity, satellite, cables, and terrestrial fibres.
“However, in some economies, like the EU, you have the General Data Protection Regulation, GDPR, and other initiatives with respect to taxation of these companies for their participation in the economy.
“We also have other African countries taxing social media. These experiences are also good for us because we know that as broadband expands, it enables access to certification of services, information, 21st Century jobs. It drives economic growth,” she added.
Meanwhile, critical stakeholders in the ICT sector are now proffering solutions that would square the local operators up with the prowess of these foreign service providers, saying that instead of regulating OTTs, Nigeria should start having own OTT service base.
A senior manager at MTN Nigeria, Mr. Funsho Finnish, said: “I’m of the opinion that rather than regulating, it should be more of collaboration and embracing the OTT and to a large extent, more of local players providing the OTT services.
“What that means essentially is to get the local players and help them to develop similar OTT provision so that they can compete favourably with global OTT players.
We should more or less enhance and facilitate innovation and drive local companies to be more innovative and build solutions that can play as OTTs.”
Also, MD/CEO of an ICT company, Medallion Communications Ltd., Mr. Ikechukwu Nnamani, believes that “OTTs have positive impact on the citizens and the operators. The telcos have generated revenues from data services that these OTTs created the demand for.
“Like the MTN appears to have understood, we just need to find the best way this can work for our own good within the country. If you look at other areas where they have tried to regulate the OTTs, most times, it is not for good reasons.
Head, Business Development, Cedarview Communications Limited, Mr. Olawale Owoeye, also wants Nigeria to encourage local OTT players to scale up.
He said: “I want to look at it from the angle of what OTT brings and how we can flip them to our advantage rather than taking them out of the system.
“For me, we must encourage our own OTT players, allow them scale, knowing that we have a population of 200 million, that will enable us lead Africa. OTT is about numbers and that’s why they all come to Nigeria, we must work with telcos to develop that. I know there are a few of OTT players around building up and trying to scale but we need a bit of fair engagement, especially with the bigger players so that we can also get it right.
“But beyond that, we also need to design an effective engagement mechanism to let the big players know they have to localise their services here beyond just having an office, or a few staff here.
President of the Association of Telecommunications Companies of Nigeria, Mr. Olusola Teniola, said that an industry that is constantly being disrupted would also need to always review its policies to suit.
He said: “The truth is that our industry is changing on a daily basis, being disrupted by new technological innovations and so, for players, new business models must evolve while regulation and policies also need to be reviewed, fine-tuned and strengthened.
Also the Director-General of National Information Technology Development Agency, NITDA, Dr. Ali Pantami, however, promised that within the NITDA capacity and statutory mandate, it will always accord local players and vendors preferential status, particularly when they now decide to offer OTT services in the ICT sector.
The NCC wants telecom operators to think out of the box. A Senior Manager in the Public Affairs department of the commission, Mr Sonny Aragba-Akpore, said: “OTTs are not indigenous to Nigeria or our economy, they are just global players, running their own business which is technology-based and they have lived with that business for so many years.
“Yes, there are losses to mobile network operators especially in developing countries because they have not been able to think out of the box to find out how they can accommodate OTTs in their scheme of operations.
For instance, even in the US where the Federal Communications Commission tried to bring some form of regulation to OTT, there are limitations. They restricted it primarily to a few templates.
“We agree, between 2012 and 2018, $386 million was lost by telecoms operators to OTT. But they also have some gains and profits recorded over the years, as a result of the activities of the OTTs. So, I think what is needed is to strike a balance. But primarily, the telcos must be innovative” he added.