Can telcos and the new wave of OTT services work together?

November 12th, 2014, Published in Articles: EngineerIT

 

This was the question for the first panel discussion at the launch of day one of AfriCom 2014, which opened in Cape Town on 11 November 2014.  This three day event is claimed to be the biggest telecom event in Africa with 9000 pre-booked delegates and 380 exhibitors representing twelve countries.

Arthur Goldstuck facilitating the panel: Arthur Bastings, Millcom; Chris Daniels, Facebook; Christian de Faria, Airtel Africa; Ahmad Farroukh and Marc Rennard, the Orange Group.

Arthur Goldstuck facilitating the panel: Arthur Bastings, Millcom; Chris Daniels, Facebook; Christian de Faria, Airtel Africa; Ahmad Farroukh and Marc Rennard, the Orange Group.

Not all the panellists were optimistic about working together with OTT providers, mainly because of loss of revenue and of the fear of being classed as  a pipe provider. The panel was moderated by Arthur Goldstuck of World Wide Worx. He was joined by Arthur Bastings of Millcom, Chris Daniels of Facebook, Christian de Faria of Airtel Africa, Ahmad  Farroukh and Marc Rennard of the Orange group.

Two presentations before the panel discussion set the scene. Chris Daniels, VP of Internet.org, a Face Book initiative,  said that 80% of Africa’s population is not connected to the internet, while India is the most unconnected  country. He believes that it is mainly so because the country has 920- million illiterate people. “Barriers to connect to the internet is about affordability and often because of language. 80% of content on the internet represents as few as ten languages, with English the main language,” he said.

The Internet.org model is about telcos in cooperation with Facebook providing free basic internet with limited access to for example Wikipedia, facebook messages, health information, education and basic financial services.  He told delegates that this had already been successfully implemented in Zambia and Kenya. Daniels believes that once people appreciate the value that such a free service offers they will ultimately subscribe to a full internet service.

Katie Lampie of Twitter said that Twitter was born mobile-designed as a text message service to connect the world. “With currently 284-million active users, Twitter and other social media platforms are destined to replace traditional communication in the future.”

The question that Goldstuck put to the panel was “Are the OTT players a threat or opportunity from the operators point of view?”  De Faie said that operators cannot be like ostriches. He said that models to monetise Facebook and Twitter need to be developed. “Blocking them will be like living in the middle ages; Zambia and Kenya are already offering basic free internet services. We must make it work!”

MTN is known for having expressed opposition to OTT players and its call to allow services to be accessed free of charge.  Goldstuck asked Faroukh  if after the presentations by Daniels and Lampie  he had taken a new stance?  Faroukh responded that he did not want to block social media, and that what is needed is a win-win situation between MTN and all social networks. “Operators are making huge investments to grow the networks; it cannot be one-sided, operators want to make money. That is why they are investing in their networks.”

Rennard’s comment: “We should give free access to Wikipedia!”

There was a much discussion about taxation. While operators are expected to play their part, many governments see the internet as a cash cow. In some countries a handset carries 40% tax plus 18% VAT which means a $50  unit has to sell for $100 with no margin for the seller. In many areas municipalities add to the cost of building infrastructure by charging exorbitant fees for wayleaves per kilometre.

Goldstuck said that governments are clearly misunderstanding the ICT sector and the contribution that a connected population can make to accelerate a country’s economy.

MTN believes the main priority should be to build an eco-system together and charge OTT services through the operator for a better and more sustainable service to all.

Rennard said that voice will decline as data increases. “Telcos and OTT operators must work together and governments must come to the party!”

The panel did not really answer the question of whether telcos and  OTT operators can work together. The consensus – such as it was – was maybe, if somehow the  revenue model can be agreed upon and governments can be brought to the party and lower taxes. The panel members were however  strong in their pronouncements that the internet can be a major booster for economic development.

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