The Regulation of the OTT-Service Providers in South Africa

Written by: Sivu Ngcaba

On Tuesday January 26th 2015, the South African Parliament’s Portfolio Committee on Telecommunications & Postal Services, sat in a debate listening to South Africa’s network operators requesting the regulation and implementation of policies to govern Over-The-Top (OTT) Service Providers, who constitute a part of the Internet; a small part but a crucial one none-the-less.

The request emerged from the realisation that the network providers, claim to be losing a substantial portion of their revenues. This claimed loss is partially due to many South Africans using OTT Services, to communicate, as opposed to the conventional methods of making phone calls and sending messages, which have been substantially much more costly to do for many consumers.

In this article, I shall examine why we as consumers, champions of innovation, and South Africans in general, should be fighting this regulation proposal.

Why We Should Be Fighting It As South Africans:

We live in a country characterised by extremely high levels of inequality. The rate of inequality in South Africa has left many economists facing the challenge of what measures to take in eradicating inequality within the capitalist world that we live in even after 22 years of being a democracy.

Within the Information and Communication Technology space, the problem of OTT shows its face in the form of the digital divide.  Now, there are a lot of factors that play a role in the existence of digital divide within our society.

One factor leading to digital divide is the Lack of access to the infrastructure that households and communities can use to connect to the Internet. Digital Literacy also presents a constraint in ensuring all South Africans get the opportunity to fully utilise the benefits that come with the existence of the Internet.  A third constraint and perhaps more characteristic of South Africa, is our income inequality problem.

With these considerations in mind the popularity of OTT-services amongst consumers is self explanatory.  In a society where being able to communicate the old way would cost one 80c an SMS, OTT services provide a platform that is much cheaper and are more affordable.  These old prices automatically exclude a great portion of South Africa’s society from the right to communicate.

Why We Should Fight It As The Champions of Innovation:

The Cortex Hub is an incubator/accelerator where we breed the next unicorns and game-changers within the startup ecosystem.  Startups are the answer to the development of the emerging economies,  and a characteristic of the most revolutionary startups to have come out during the last few years has been their utilisation of the Internet in delivering necessary services to a bigger portion of society.

WhatsApp, Facebook and many other applications, which have been developed, are examples of these startups that we now call OTT service providers.  To implement regulation on them will be detrimental to the economy, as we would now be deterring young people, our entrepreneurs at the Cortex Hub, from wanting to create the next social media applications that could change how we communicate and interact with one another in the near future.

As a country if we do not encourage the continuous use of OTT, we would then fail in encouraging innovation and creativity, but instead, implement a regulatory framework that protects industries that do not want to innovate!  We would in essence, be breeding a spirit of complacency in them.

Why We Should Be Fighting It as the Consumers:

As consumers we should be fighting the regulation proposal because we want markets with low barriers to entry, and a number of product options so we can be able to change options when unsatisfied.

This encourages producers to constantly seek to improve their services, and it creates an environment of opportunities for the consumers who may decide to venture into entrepreneurship, should the products available in the market be unsatisfactory.

To implement regulations to protect our network operators from fair competition would not be fair to consumers or the South African economy as a whole! It would be as absurd as implementing regulations to protect the telegraph industry in a time where communication technology has advanced so much, in order to ensure they maintain a market share.

In analysing this debate, we should go back to the reasons for the innovations that have occurred within the Information and Communication Technology sphere.  We innovate to make life easier for everyone, and as an emerging economy, one of our aims is to include all members of society in the acquisition of communication and information knowledge.  The world is a very unpredictable place, and we just never know where, and from whom the next big break through in the advancement of humanity will come from.

Bearing the above said in mind, to exclude a portion of society from being able to interact with the rest of the country and the world in order to protect our network operators who have become complacent seems too high a price to pay!