Complaints by local operators that their revenues and profits are being eroded by Over-the-Top (OTT) service providers, have been supported by a Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) report revealing that in the 9 month period from June 2015 to February 2016 local mobile operators lost an estimated $12,336,594 as measured through OTT voice traffic on their networks.
Operator viability remains a major preoccupation of the mobile network operators as well as the Regulatory Authority.
Figures pertaining to losses accrued from the second to the fourth quarter of 2016 are yet to be ascertained but the Regulator maintains that revenues have been declining since 2013 as a result of the substitution of voice and SMS by IP voice and messaging services of the international OTT players who ride on their networks.
In its successive quarterly reports, Potraz has highlighted the fact that the growth in data revenue has not been sufficient to offset the sharp decline in voice and SMS revenues.
A study by Wavestone, an international think-tank, determined that VoIP from OTT players will represent 8.7 billion minutes and an estimated revenue of $63 billion globally in 2018 - with Africa being seen as a major source of future growth for OTTs. In Africa, Wavestone noted that operators will see their voice revenues heavily impacted, a situation that is already prevailing in the Zimbabwean context.
A further problem for nations like Zimbabwe, according to Potraz, is that since the OTT providers operate independent of geography and are domiciled abroad, the macroeconomic benefits of their businesses are only enjoyed in their land of domicile and national governments are losing tax revenue due to declining viability of the local network operators.
“Due to these imbalances it may be necessary to come up with a regulatory framework for provision of OTT services in the country to ensure a win-win situation for all stakeholders”, reads the Potraz report.
According to the Potraz report, arguments advanced by licensed telecommunications service providers pushing for some kind of regulatory intervention include the fact that:
- OTT service providers use the services on their networks without making any contribution to the sustainability of the infrastructure;
- they are not licensed by the country to provide regulated services to its citizens and thus do not incur any license costs and other obligations;
- and are not registered as operating entities within the country, and therefore are not subject to relevant taxes as is the case with the local operators.
It is against this background that the regulated bona fide operators, argue that the playing field is not even and due to the factors stated above OTT providers are able to offer ‘almost free’ services as they ride on their networks for at no cost, reads the Potraz report.
The erosion of mobile network operators' revenues by OTTs is not exclusive to Zimbabwe as shown by a recent IT Web report (based on Juniper Research) which revealed that “consumer migration from operator voice and text services to over-the-top (OTT) messaging services and social media will cost network operators nearly $104 billion this year, equivalent to 12% of their service revenues".
- by MyZOL Staff Writer