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OTT represents a threat - Vodacom

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 03 Oct 2014
ICASA councillor William Stucke says Vodacom should conifer that OTT provides it with data income.
ICASA councillor William Stucke says Vodacom should conifer that OTT provides it with data income.

Vodacom says the growing range of services offered by over-the-top (OTT) players is a very real threat to the competitive mobile industry.

The country's largest operator, with 34 million subscribers, was addressing a panel at the Independent Communications Authority of SA's (ICASA's) committee that was convened to look into the issue of competition in SA's ICT market.

Head of innovation Janie van Zyl told the panel the services being provided by OTT providers were becoming increasingly data hungry and the networks were having to pick up the costs associated with improving data networks. He says if OTT players attack the operator's revenue stream, this could have an effect on its ability to invest.

Van Zyl added Vodacom may have no choice but to put its prices up because, at some point, it will become uneconomical to invest further in the network, which will affect quality of service. He pointed out operators have a requirement to maintain certain levels of quality of service in terms of its charter with ICASA. "At some point, these networks have to be paid for."

This situation will be exacerbated when higher quality video starts coming to the fore, says Van Zyl.

Unregulated operators

OTT disrupts networks at both the core and services level, says Van Zyl. At the service level, there are so-called free services such as WhatsApp and its parent, Facebook, which earns its revenue by selling consumer data to advertisers, he says.

Van Zyl says the OTT players will also start eating into voice revenue because services such as WhatsApp will soon start offering voice as well, which could impact revenue.

A concerning challenge comes from OTT players who are disrupting the company's core business by investing in techniques that will also provide data, such as drones, says Van Zyl. He referred to Google's "crazy idea" of putting balloons in the sky to provide connectivity, but added: "The reality is that these things are not that theoretical."

Van Zyl says Vodacom can work with fee-paying services, but the so-called free "OTT players are using our own services to cannibalise our own services". He says the OTT players are building networks outside of the regulatory environment, pay no taxes and have no one to answer to.

However, councillor William Stucke notes that Vodacom should reflect on why people buy smartphones, as this purchase is geared towards using OTT services, which provides Vodacom with data income.

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