Nicola Mawson

The Association of Comms and Technology (ACT), made up of various representatives from mobile and broadband companies, has put out a position paper that argues that streaming companies, such as Netflix and Spotify, should be helping to pay for infrastructure.

The position paper, “Promoting Equitable Participation and Sustainable Growth: Exploring Policy, Commercial, Competition and Socio-Economic Perspectives in South Africa’s Over-the-Top (OTT) and Telco Ecosystem”, seeks to tackle a decades-old debate about the fact that over-the-top companies piggyback off broadband networks without the network providers receiving compensation apart from increased demand for data.

The paper points out that OTT service bypass “traditional distribution channels and legislative and regulatory frameworks”, while acknowledging they offer “end-users more control and freedom in their content consumption”.

ACT, whose office bearers include the likes of senior leaders from Cell C, Liquid, MTN, Rain, Vodacom, and Telkom, said in the paper that for OTT services to continue to be successful, there is a need for “high quality, reliable and efficient network infrastructure”.

It noted that the “exponential growth of connected devices and OTT applications has created an unprecedented demand for data bandwidth and network capacity”. According to Express Connect, the average South African used 16.1 gigabytes of data each month in 2021.

ACT said, as the volume of video consumption is forecast to increase, network operators face the “daunting” future of the continuous upgrade and expansion of their network infrastructure.

Official figures show that telecoms companies spent R36 billion last year, the bulk of which went into mobile communications services followed by infrastructure.

For this reason, it said, it is vital to ensure that commercial implications of challenges in the OTT and telecommunications sector are dealt with through evidence-based decision-making given that this sector is complex. There is a need, ACT said, to ensure that regulations and frameworks align with the realities of the digital landscape.

“This is not a problem unique to this sector; many economic industries face similar challenges as they adapt to the ever-changing digital technological landscape.”

One model it suggested should be considered when it comes to policy-making and regulations is that of the concept of what it calls fair share – services such as Netflix and others would need to contribute their fair portion to the costs of building, maintaining, and upgrading the infrastructure that supports their business.

“It is critical for the industry as a whole to take a first step and recognise that both network operators’ and OTT providers have a shared responsibility to provide high-quality services to end-users.”

Arthur Goldstuck, MD of World Wide Worx, told Business Report that the OTT regulation debate has been going on ever since WhatsApp began taking off in South Africa, when operators realised they were enabling the tools that would kill their voice business.

Operators, he said, “want to have their cake and eat it, seeing massive data demand as a result of these services, but wanting these services to pay for driving the demand. There is room for a regulatory framework, but it must focus on enablement, not restriction. Our government does not have a sterling track record in this regard”.

According to the Independent Communications Authority of South Africa (Icasa), in 2023 there was a “substantial increase” in total fixed internet and data revenue, which increased by 45.85% from R20.9 billion in 2022 to R30.5bn last year.

Yet, ICT veteran commentator, Adrian Schofield, said it comes down to who pays, and how they pay for infrastructure. “The bottom line has to be that user pays in some form or another.”

BUSINESS REPORT

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