Can What­sApp be reg­u­lated?

CityPress - - Business - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­

MTN and Vo­da­com came in for a drub­bing in Par­lia­ment this week for their push to have so-called over-the-top (OTT) ser­vices such as What­sApp and Skype reg­u­lated as com­peti­tors.

The dis­cus­sion, how­ever, kept re­turn­ing to the wide­spread be­lief that the real prob­lem was the lack of new spec­trum due to the de­lays in switch­ing off ana­logue tele­vi­sion broad­cast­ing.

Tele­coms firms MTN and Vo­da­com would prob­a­bly not have even raised the is­sue if the dig­i­tal mi­gra­tion had al­ready hap­pened, ar­gued a num­ber of ex­perts and in­dus­try rep­re­sen­ta­tives.

Be­cause it hasn’t, they have been forced to “re­gres­sively” guard their tra­di­tional rev­enue sources: voice calls and SMSes.

Cell C has at­tacked the two larger net­works for al­legedly us­ing pub­lic-in­ter­est con­cerns as a smoke­screen in a trans­par­ent at­tempt to en­trench their dom­i­nance.

Cell C has been of­fer­ing free ac­cess to What­sApp calls as a strat­egy to win sub­scribers away from MTN and Vo­da­com.

A num­ber of par­tic­i­pants in Par­lia­ment pro­claimed that reg­u­lat­ing th­ese in­ter­na­tional ser­vices would be prac­ti­cally im­pos­si­ble any­way. Even the reg­u­la­tor, Icasa, took this po­si­tion. Ac­cord­ing to Icasa chief op­er­at­ing of­fi­cer Willing­ton Ng­wepe, “any regulation that was ap­plied to OTT ser­vices would be very dif­fi­cult to en­force”.

Icasa’s of­fi­cial stand­point on the is­sue was to “wait and see”, he added.

The ma­jor OTT ser­vices that dom­i­nate the dis­cus­sion are Skype (owned by Mi­crosoft), What­sApp (owned by Face­book) and Google.

All three of th­ese global be­he­moths had rep­re­sen­ta­tives in Par­lia­ment this week to ar­gue against regulation.

David John­son, a re­searcher at the CSIR, said the “ele­phant in the room” was the fact that it was im­pos­si­ble to even de­fine OTT.

Do­minic Cull, trea­surer of the In­ter­net Ser­vice Providers’ As­so­ci­a­tion, agreed and ac­cused the mo­bile net­works of hypocrisy be­cause they were fo­cus­ing their at­ten­tion on ser­vices and apps that con­sumed lit­tle data, in­stead of ones such as YouTube, which prob­a­bly pro­vided the net­work own­ers with a lot of rev­enue from data use.

Even though a phone ser­vice over the in­ter­net and mes­sag­ing apps use data, which are gen­er­ally charged for by MTN and Vo­da­com, this ap­par­ently falls far short of what they are los­ing in rev­enues.

Both com­pany’s have been flag­ging the com­pe­ti­tion from OTT ser­vices for years, and the im­pact on their tra­di­tional rev­enue sources has be­come ap­par­ent since 2012, es­pe­cially in the dra­matic de­cline in the use of SMSes as a com­mu­ni­ca­tion tool.

MTN’s SMS rev­enues peaked at R8 bil­lion in 2012, but prob­a­bly fell below R4 bil­lion last year, judg­ing by its half-year re­sults ( see graphic).

Vo­da­com’s mes­sag­ing rev­enues also peaked in 2012, but have fallen less dra­mat­i­cally thanks to in­creases in bulk mes­sag­ing.

When you ex­clude bulk mes­sag­ing, the num­ber of mes­sages sent on the Vo­da­com net­work in South Africa have plum­meted from 6.65 bil­lion in the 2011/12 fi­nan­cial year to 4.38 bil­lion last year.

Judg­ing by the re­sults for the first half of this fi­nan­cial year, this will drop to 3.86 bil­lion.

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