This study reviews the impact that Over The Top Services (OTTs) such as Skype, WhatsApp or YouTube have had on the traditional telecommunication services. It explores the question of whether OTTs should be regulated or not; and if so, in what way. With the rapid changes experienced in the telecommunications and internet space where new and old services have converged, the traditional Telco providers find themselves with reducing revenues in voice, sms and video segment where their new rivals, the OTT service providers, continue to enjoy increasing revenues.
This comes within the backdrop of developing countries (ATU 2016)1 resolution that argued that OTT service providers take advantage of the prevailing regulatory imbalance that allows them to offer services that are equivalent to regulated services – without necessarily being subjected to the stringent regulatory obligations. Some traditional Telco providers have been known to block, throttle or prioritize some of the OTT traffic as a reaction to reduce the ever-growing bandwidth burden placed on their networks by OTT providers. Such interventions are in breach of the principle of Network Neutrality – where all transmitted data is expected to be treated equally irrespective of its source, type or destination.
The regulatory landscape is further complicated by the fact that OTT providers are global players but with significant local impact. This impact goes beyond competition and includes aspects that touch on content, data protection, privacy and security issues of the local citizens. The study finds that whereas OTTs do provide direct competition to traditional telecom service providers, without being subjected to similar regulatory burdens, the problem may not be resolved by subjecting them to the traditional regulatory frameworks.
Regulating OTTs may require new and different approaches while retaining the basic principles of light regulation – where competitive market forces are given the first priority to resolve outstanding issues. Regulatory intervention is then exercised only where consumers have little or no choices (monopoly environments) or where choice exists but switching costs are too high.
Additionally, regulatory interventions for such new services are best served by multiple frameworks and principles including but not limited to promoting Competitive markets, Network –Neutrality, Cyber security, Data Privacy and Protection.