Challenges on OTT´s regulation

Ignacio Eulalio Cabañas Morán
Luis Alberto Padilla Galicia

Abstract
Instituto Federal de Telecomunicaciones
Autoridad Investigadora
Exists a strong worldwide debate regarding over the top (OTT) services regulation. Its advocates argument that OTT
companies do no invest in the network nor subject themselves to safety requirements; they do not have to pay for
spectrum licenses and usually fiscal questions are attended in the count ries with lower tax rates.
Thus, it is considered that the fact that OTT companies are not
subject to similar obligations and regulations than traditional
operators promotes an unequal competition between OTT
companies and traditional operators.
On the other side, the growth of OTT services has allowed the
development of an economy that every day bases more on the
Internet, representing new changes. One of them refers to the
consideration of a regulation that could be applied, in this case,
to the new services. Furthermore, net neutrality principles’
defenders, hold that any type of charge imposed by internet
service providers (ISP) to OTT companies in order to priorize its
traffic would suppose a barrier to nascent and potentially
disruptive companies that otherwise might not develop.

OTT Definition
BEREC
 Content, a service or an application that is provided
to the end user over the public Internet.
 This means that the term OTT does not refer to a
particular type of service but to a method of
provision, namely provision over the public Internet.
 Include the provision of content and applications
such as voice services provided over the Internet,
web-based content, search engines, hosting services,
email services, instant messaging, video and
multimedia content.
EUROPEAN PARLIAMENT
 OTT services are innovative services that make use of
increased broadband capacity and lower network costs to
provide communications and content services over the
internet.
 Internet-based services are different from traditional
telecommunications services because they are managed
entirely separately from the business of transporting the
electronic signals.
 OTT services include voice and video calling (e.g. Skype,
FaceTime, Viber), text messaging (e.g. Facebook Messenger,
WhatsApp), video content delivery (e.g. YouTube, Netflix) and
social networking (e.g. Facebook).

Regulation Issues

Challenges of OTT Services
Challenges
TaxesLicensing Pricing Fees
Quality of
service
Operating
Area
Interconnection
Data Protection
& Privacy
Number
Portability
Infrastructure/
Network
Telecom operators and network owners are
required to purchase a license in order to
operate and offer services. This does not apply to
most OTT application providers.
In a fully competitive environment, it is left for
the market forces. However, this form of
regulation does not apply to OTT service
providers who may possess similar market power
which is equally subject to abuse.
While many telecom operators/network owners
are liable to pay taxes in every country they are
operating in, such an obligation is not applicable
to OTT service providers as they are, mainly
required to pay taxes to the country where there
main headquarters is located.
Unlike OTT service providers, a licensed operator
has to pay a host of charges, including spectrum
usage charges, license fees, service tax to the
government, which adds to a Telco’s cost. But an
OTT can provide the same voice and messaging
services for less or no fee payment, since OTTs
are unlicensed.
Most Telco operators have to comply with
stringent rules regarding complying with Quality
of Service In contrast, OTT service providers do
not have to provide any Quality of Service
guarantees.
While regulators strictly monitor data protection
and privacy requirements for users by operators,
OTTs regulation is practiced on a rather limited
and generally voluntary basis. OTT service
providers face minimal regulatory constraints.
The limits put on their business usually exist only
to the extent of addressing the security and
privacy concerns associated with user data
There is an obligation to operators to offer
number portability between themselves while
operating in different jurisdictions. The OTT
service providers are independent from mobile
numbers, and therefore have no obligation to
implement number portability.
Most operators and network owners invest in
their networks infrastructure to deliver services
to end-users. OTT services on the other hand, do
not invest in these networks built by operators to
enable end-user access to services.
That emphasize on net neutrality, telcos are
compelled to deliver competitors traffic and
services regardless of the impact to its networks.
Operators have claimed that by generating
demand for bandwidth, OTT service providers
generate expenses in (next generation)
infrastructure investment, but have not made a
fair contribution to these expenses through the
‘interconnection’ arrangements they make with
telecom operators.
Network providers are also subject to
requirements such as local sourcing obligations,
data protection rules, lawful interception laws,
and non-discrimination pacts. Furthermore, the
operators are also constrained by the
geographical boundaries of their networks they
are serving in. However, OTT players are not
constrained to any geographical region.

Potential Impact of Unregulated OTT Services

Benefits of the provision of OTT Services

Regulation Precedents
Regulators Initiatives
European Union The European Union approved rules in April 2014 to ensure equal access of firms and individuals to online services
and harmonize rules across national borders to create a unified European market.
Individually certain countries like France and Spain have blocked OTT providers when offering voice services that
connect to the STN.
Netherland Included net neutrality principles into a law in 2011. Telecom operators are prevented from blocking or charging
consumers over and above the regular data charges, for using VoIP based apps and other internet-based
communication services.
South Korea The KCC announced “Net Neutrality (NN) and Internet Traffic management Guidelines” in2011 (Transparency, No
blocking; no unreasonable discrimination, Reasonable traffic management).
It is legal for telecom operators to charge their customers extra fees to use VoIP apps or block their use entirely.
UK OFCOM permits experimentation with new business models that rely on certain forms of traffic management(the
“best effort” Internet is then protected).
Canada The CRTC has banned zero-rated mobile video streaming of carriers own services.
USA New FCC draft internet rules to ensue reasonable network management were released on March 12, 2015.
This might take few years to be finalized.
Chile In July 2010, net neutrality principles have been introduced in the National Telecommunications Act. “Zero-rating”
was recently banned in May 2014.
Kingdom
of Bahrain
Voice services connected to PSTN only allowed for license holders.
Foreign providers not actively marketing their services in the country will not be pursued.
Singapore Specific licenses for VoIP connecting to PSTN. Peerto- peer not licensed, subject to competition law.
Egypt Legislation expected soon (NTRA), but none at present. VoIP using mobile network is forbidden.

Case Skype in Belgium
BIPT considered that the
service:
is provided against payment
consists completely or mainly of
signal transmission
over electronic communications
networks
Considering the above, exist cases like the Skype in Belgium where the
regulatory authorities showed their tendency towards an equal regulatory
treatment between the ISP and OTT companies. In that decision Belgian
Institute for Postal services and Telecommunications specifies that the
SkypeOut service constitutes an electronic communications service,
because its legal components are fulfilled.

What about in Mexico?
On the other hand, in countries like Mexico, the OTT services
are not regulated like the telecommunications operators. It
has even been resolved for the Federal Telecommunications
Institute that OTT services are not substitutes of the
telecommnications services like the Pay TV, because:
 offer contents that it has been provided on other plataforms,
 do not offer linear programming, and
 depend of the capacity of Internet access.

Recommendations
Create regulatory
framework
supporting telcos
and innovation of
OTT players
Policy on net
neutrality
Enact laws for
consumer privacy,
data protection
and electronic
transactions
Costing of
transport and
access networks to
decide about
regulatory
intervention
Policy to support
investments in
networks

References
 Acuerdo P/IFT/EXT/021115/16, Instituto Federal de Telecomunicaciones, November 2015. Available:
http://www.ift.org.mx/sites/default/files/contenidogeneral/unidad-de-competencia-economica/versionpublicaresolucionai-dc-002-
2014.pdf
 Belgian Institute for Postal services and Telecommunications, Skype fined by BIPT regarding the SkypeOut telecom service, July 2016.
Available: http://www.ibpt.be/public/pressrelease/en/123/Skype_EN.pdf
 Body of European Regulators for Electronic Communications, Report on OTT Services, January 2016.
Available: http://berec.europa.eu/eng/document_register/subject_matter/berec/reports/5751-berec-report-on-ott-services
 Candelaria, José Alberto, An international comparison of Mexico's over-the-top video services market using hierarchical clustering
algorithm, Centro de Estudios, Instituto Federal de Telecomunicaciones. Available:
http://centrodeestudios.ift.org.mx/documentos/publicaciones/An_international_comparison_of_Mexicos.pdf
 Commonwealth Telecommunications Organization, Understanding the dynamics of Over-The-Top (OTT) services, october 2016.
Available: http://www.cto.int/media/CTOOTTStudyPaperFinal_ReviewedDraft04Oct2016.pdf
 European Parliament, Briefing: Regulating electronic communications A level playing field for telecoms and OTTs?, september 2016.
Available: http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/586641/EPRS_BRI%282016%29586641_EN.pdf
 Muhammad Ahmad Kamal, Regulatory Approaches Over the Top (OTT) Services, july 2016. Available: https://www.itu.int/en/ITU-
D/Regional-Presence/AsiaPacific/Documents/Events/2016/Jul-RR-ITP/OTT_Muhammad_Ahmed_Kamal.pdf
 Policy Department A: Economic and Scientific Policy, European Parliament, Over-the-Top (OTTs) players: Market dynamics and policy
challenges, december 2015. Available:
http://www.europarl.europa.eu/RegData/etudes/STUD/2015/569979/IPOL_STU(2015)569979_EN.pdf

Challenges on OTT´s regulation

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Challenges on OTT´s regulation

Similaire à Challenges on OTT´s regulation (20)

Dernier

Dernier (20)

Challenges on OTT´s regulation