When Singtel CEO calls regulators to give operators like Singtel the rights to charge over-the-top (OTT) free service like Whatsapp and Skype, that could also actually mean free service like Viber, LINE, WeChat and other similar free calls & messaging would be affected if such regulation pass through. Here is a few probability that could happen if regulators agrees to give the rights to ISP / Operators to charge over-the-top content providers / service.
Probability No. 1
Singtel can demand OTT service some form of fees to allow their content to be distributed / pass through Singtel IP (in layman term – internet) network. If no agreement reached between Singtel and the OTT service, Singtel will have the rights to block their services on Singtel’s network just like how some porn sites are being filtered / blocked in Singapore. Now, please do understand that Singtel mentioned to have the rights to charge OTT, so in essence, OTT service providers are simply those guys like Whatsapp, Skype, Viber, WeChat, Telegram and so on. These are the OTT which has affected the telcos causing them to have major declined in revenue from voice calls and SMS charges. Oh what, need i to mentioned Singtel already made such drastic adjustment to their data bundle to their mobile plans from 12GB downsized to 4GB due to competition from these OTT service providers?
Probability No. 2
Lets assume Singtel and OTT service provider agreed on a fee, where do you think that overhead cost will go to? Bravo! definitely the end users a.k.a consumers. While Singtel may argue that their investments are at risk with declining income / revenues, OTT service providers also have the cost of developing, operating and building their infrastructure to support the growing users / data on their own network. That fee that Singtel talks about will in the end have to be passed down to its user, that’s us! So no matter whether it is Whatsapp, Skype, Viber, Line, WeChat or Telegram, that overhead cost fee has to go somewhere right?
That is why the Australian Competition and Consumer Commission considers it to be anti-competitive move if ISP / Operators were to be given the rights to charge these OTT content / service providers. If such rights is given to operators, since Singapore has only the big 3 telcos and basically Singtel being dominant owning most of the network infrastructures, it could have a diverse effect to consumers and what it would mean is that the could either compete with each other by not charging OTT and provide better package or simply charge OTT and let OTT do the passing down of cost to their consumers.
While for me it is simply telcos failing to re-invent themselves to help themselves dissolve depleting revenue streams. Need not to look deeper, just look at how long it took them to re-design their website when every one else in other industry has finally come up with responsive websites and mobile application while they are still hovering on ancient technologies.
I am sure there are existing solutions to help telcos cope with high density traffics. Rather than building up new tower, they could have invested on end to end compression to help them manipulate network traffics. With such compression capability, they could probably come up with mobile app at a small fee that would encourage and educate consumer that it would save data usage / charges by using that end to end compression software. At the end of the day it is a win-win situation since it would also mean that there is a reduce load on packet transfers on their infrastructure. I am not an expert however have been in the I.T industry long enough to know such technology exist – it is only a matter of acceptance and adaptation. That is just one example, i am sure there many more solutions to telco issue of depleting revenue however ‘rights to charge OTT’ definitely should never be one of them!.
And end of the day, the only ‘why’ you can think of right now is Singtel is taking the short cut route to making big profits through exclusivity and rights since they are probably the biggest telco in SEA and probably Asia and have the power to influence such moves.
Related articles around the web:
*** Update 28 Feb 2014 ***
Interesting read for all the buzz on over-the-top (OTT).
Facebook CEO Mark Zuckerberg had dinner in Barcelona with several wireless carrier executives, many of whom are clearly terrified of his $19 billion acquisition of the WhatsApp messaging service. The event was “private” and many of its guests declined to identify themselves, according to Bloomberg.
They’re scared for two reasons: First, users can send messages for free on WhatsApp using wifi — thus completely bypassing the need to use wireless carriers’ expensive mobile phone data plans. It renders the wireless carriers’ traditional SMS texting services pointless, and removes Facebook and WhatsApp’s 1.2 billion and 450 million respective users from their text messaging ecosystem.
Second, the carriers must continue to pay for the wireless infrastructure on which Facebook and WhatsApp sit — even though neither company has spent a penny to build it. Zuckerberg is creating a world in which Facebook provides people with free services and creams off the ad revenue, and the carriers are stuck with the bill.
Long the titans of the mobile landscape — carriers are the people you pay up to $100 a month just to text and talk — they’re now looking at a Zuckerberg-world in which they are “downgraded to simple pipes,” as one of the dinner guests put it.
Stephane Richard: “We’ll be downgraded to simple pipes.”
The ironic icing on Zuckerberg’s chutzpah-filled cake is that on Monday he asked for up to five of the biggest wireless carriers to work with him on a project that would provide free basic wireless service to developing countries — in hopes that later, down the line, they might get some revenue from add-on services once poor users there realized the benefits.
But the execs showed up to dinner with Zuckerberg anyway because Facebook has shown that it has gigantic sway over the mobile user base. Facebook’s market cap is also now $180 billion — bigger than Vodafone, Orange and Telecom Italia combined — making the carriers look like trembling chihuahuas on a windy sidewalk by comparison.
Here are a few quotes from people at the dinner, courtesy of Bloomberg:
“The risk for us is being excluded from the world of services,” [Orange CEO Stephane Richard] said in an interview this week at the Mobile World Congress in Barcelona. “If that happens, we’ll be downgraded to simple pipes.”
… “Over-the-top operators have no intentions of investing in fiber networks,” Telecom Italia CEO Marco Patuano said in an interview this week. “The Facebook-WhatsApp deal teaches us that with $19 billion Facebook could have built new fiber networks in both Italy and France.”
… “A service like WhatsApp, to be honest, that’s something we could’ve and should’ve come up with before,” said Orange’s Richard. “We’re well decided to catch up.”
Source: Business Insider Singapore