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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.
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.
