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ALTON seeks equitable revenue sharing between OTT, MNO operators

Considering the changing trend in the use of telecoms services from the traditional voice and sms to Over The Top (OTT) services including WhatsApp, WeChat, Skype, Facebook, Viber, Imo, etc., the leadership of Association of Licensed Telecommunication Operators of Nigeria (ALTON), has called for immediate review of the situation so that Mobile Network Operator (MNOs) can remain in business.

Chairman of the group, Engineer Gbenga Adebayo in a statement, based his argument on the fact that “Increasing usage of OTT services by customers is adversely impacting on traditional telecoms platforms.  According to Ovum, the independent analyst and consultancy: The growing adoption of OTT services by customers instead of traditional telecoms services will occasion global revenue loss of $386bn over a period of six years (2012 – 2018) for the traditional telecom operators, thus endangering network development”.

He explained that OTT service providers utilize traditional MNOs’ infrastructure to offer social networks, voice and instant messaging services to retain users loyalty and drive stickiness. With a view create large on-line communities and eventually attract huge advertisement revenues.

According to him, “The Mobile Network Operators (MNO) has neither rights nor control over the OTT services, as its customers have the discretion to use the Internet as desired”.

Adebayo listed the observed ‘Displacement Effect’ hobbling the sector to include as follows; Data shows that voice minutes have been declining due to impact of OTT; Voice Minutes has been declining while VoIP has been increasing; OTT Data flux has been increasing as shown with the 2016 data; Telecoms are losing money due to this trend; and Urgent action is required to save Telecoms further loss due to activities of OTT players who do not invest in infrastructure.

In his further submission, he averred that “Telecom Operators (Telcos) Incur the Costs; Over OTT Players Make the Money. Telecom operators (Telcos) invest a lot on network infrastructure in order to provide basic and innovative services to customers”.

“Core voice and SMS revenues are decreasing continuously due to impact of OTT players who offer voice, video and messaging services free of charge to their users. Telecom operators will continue to invest a lot to make the networks support the data tsunami, with the required quality of service and numerous innovative services.

“On the top of their infrastructures and customers, they will strive to keep with huge investments, the OTTs are offering contents & applications, using huge amount of Telecoms bandwidth, collecting revenues but paying nothing to the Telco operators and to the government.

“The increasing adoption of OTT applications by telecom subscribers negatively impact on incoming international traffic as well as SMS at huge cost to the Telecoms but revenue to OTT.

Besides, ALTON argued that “OTT players also holds much customers’ personal data they can use for any desired purpose without risk of being sanctioned by the government while Telecoms are not permitted to use or disclose subscriber information to third party.

Comparing OTT and MNOs, ALTON observed further that whereas OTT operators offer the same services as the operators (voice, SMS, content, etc.), they are neither subject to licensing under the NCA nor have any contractual obligation with telecommunication operators in terms of interconnection.

The group also argued that just as the strong presence in the country had attracted over USD38bn FDI in the past 16 years, the industry is a Catalyst for telecoms infrastructural development in the country, and also a major employer of labour having created over 30,000 direct job opportunities and over 500,000 indirect job opportunities.

Adebayo also noted that MNOs have paid over NGN300bn to the coffers of the Government in taxes and levies annually, but the OTT players have no traceable address in the country, which makes little or no contribution to the nation’s direct economy either in employment generation, payment of taxes, etc..

He buttressed his argument on the need for a regulation that will create an equitable revenue sharing between OTT and MNOs, saying “S.31(1) of the Nigerian Communications Act, 2003 (NCA) states that no individual or corporate is authorized to provide telecommunications services in the country without obtaining a prior authorization or exemption from the Commission”.

“OTT Service Providers are currently providing voice and instant messaging services throughout the country without satisfying this requirement.

Against this background, ALTON argued OTT are not covered by obligations such as Annual Operating Levies, Emergency Service Provisioning; Do not disturb (DND) and other consumer-protection measures, taxation, subscriber registration/identification, lawful interception, Mandatory consumer codes, and others.

Key recommendations of ALTON include the “same service, same licensing” regime to avoid distortion in the digital landscape.

“ALTON Support models intended to engender revenue-share arrangements on advertisement-based OTT content. This co-operative model is being developed by operators and may necessitate special data bundles.

“We support innovative solutions by operators to minimize impact of disruptive platforms in the best interests of consumers and of industry sustainability.

Continuing, ALTON boss said “Security issues need to be addressed: because of Lawful Interception (LI) reasons – OTT players will not open up their services for LI, and that poses a huge security risk. There is need to consider regulation regarding LI compliance for OTT services. Sustainability Issues also need attention”.

“Operators should reserve the right to charge for OTT calls based on criteria available to the operators, such as: OTT calls terminating to offshore IP addresses;     OTT calls based on call count or duration per call; possibly apply limits to call duration or call count for basic unregulated OTT calling. Also,          OTT calls based on time of day and             OTT Video (P2P) is subject to the above.

“OTT video content streaming may not need to be regulated, operators can decide to apply QoS parameters to the specific service, and manage QoS as applicable for their subscribers. Also operators can decide to prioritize or de-prioritize OTT traffic on their networks for economic and quality reasons.

“Introduction of data price floor is needed to ensure that Telecoms price data profitably irrespective of activities carried out by data customers. We recommend that OTT players to enter into agreement with Telecoms for revenue share or payment of a kind of interconnect fee to Telecoms,” Adebayo, ALTON chairman submitted.