In what was tagged a “fair share” rule, the South African Association for Communications and Technology (ACT) is making moves that will see major streaming platforms like Netflix, YouTube, Disney+, and Amazon Prime Video pay to South African telecom operators.
This follows a recent move by the agency to implement the policy in August 2024, under which over-the-top (OTT) players contribute to network costs such as building and upgrading costs, consistently investing in network expansion, capacity upgrades, and service enhancements.
OTT is a term used by network operators to describe streaming platforms that rely on telecom infrastructure for their operation. The policy will also include platforms like WhatsApp, which compete directly against mobile networks’ core services such as voice and messaging.
The communications agency argued that OTT revenue generation directly relies on network quality with the streaming platforms already a competitor with service providers like Cell C, MTN, Telkom, and Vodacom.
ACT stated further that OTT providers would contribute their fair portion to building, maintenance, and upgrade costs for the infrastructure supporting their operations through fair-share arrangements.
“OTT providers heavily rely on the network infrastructure provided by network operators to deliver their services. This (fair share) helps balance the utilization of resources and prevents network operators from shouldering the burden alone,” it said.
On the implementation route, the ACT looks to establish a regulatory framework for both OTT and network providers to strike a balance between small and large network operators.
ACT added that network providers feel OTT are not contributing their fair share which stands to discourage them from upgrading their services and investing in infrastructure building. The agency believes “fair share” implementation will incentivize network operators to invest in their network infrastructure.
“Fair compensation encourages continued investments in network development, leading to enhanced connectivity and better services for users. The goal is to create an enabling regulatory framework that is technology-neutral, treats similar services in a consistent manner, and fosters fair competition,” the ACT said.
ACT noted that the shape of the contributing quota from OTT will be decided through mutual agreements based on usage charges, where the arrangement should be legally binding, commercially fair, and consider industry dynamics.
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Fair share: What telecom operators are saying
MTN South Africa expressed that it welcomes the fair share debate which will see players in the space benefit disproportionately from network investments. “While OTTs invest in undersea cables to deliver traffic to our network, MTN commits significant capital expenditure to build and maintain this infrastructure,” it said.
Another, Vodacom highlighted how network traffic has surged over the past few years which was accustomed to the demand for OTT services like Netflix. It added that despite the substantial investments by telecom operators, the demand for data has outpaced the sector’s ability to invest at a sustainable rate.
“It is also common cause that platform players are the drivers of traffic on the networks of operators. To close the digital divide, it is evident that the connectivity ecosystem needs further investment,” it noted.
Vodacom noted that the greatest gap in access to digital services is network access in rural and underserved areas and believes that network operators and platform services have crucial roles in network infrastructure investment.
“Operators have made an effort to make progress towards digital inclusion through social obligations, license fees, spectrum fees, and universal service fund contributions, over and above their capex commitment and contributions to the fiscal through taxation. To this end, all relevant players need to ensure that an enabling ICT infrastructure is maintained and ideally expanded,” it expressed.
End users gain from “Fair Share”
The proposed changes are set to result in higher-quality services for South African end users. ACT pointed out that the country needs a flexible, non-disruptive, and coordinated approach to “building an information society.”
“Ultimately, to benefit consumers, South Africa needs a flexible, non-disruptive, and coordinated approach to building an information society,” it says.
In the wake of this, the agency stressed that regulators must maintain robust competition policies to prevent anti-competitive behaviour in the space which enables them to strike a balance between fairness and legal reasoning.
“They should assess the economic impact on both network operators and OTT providers, while also ensuring compliance with existing competition laws and regulations,” it said.
ACT believes to make the ‘fair share” policy a reality, regulators should engage with one another and all stakeholders, including network operators, OTT services, consumer groups, and industry associations to ensure regulatory decisions cover a range of perspectives.
Achieving this will require clear regulations, innovative solutions, and close collaboration between regulators, OTTs, and network infrastructure operators.
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