the trend and regulatory issues in ottsignal.aek.mk/webprostor/20170524_the_trend_and... · 1. 1....

The trend and regulatory The trend and regulatory issues in OTTissues in OTT

International International Regulatory ConferenceRegulatory Conference

Regulatorna agencija za komunikacijeРегулаторна агенција за комуникацијеCommunications Regulatory Agency

mr. sci. Suada Hadžović, dipl.ing.el.Communications Regulatory Agency

Bosnia and Herzegovina

Ohrid, Republic of Macedonia, May 24 – 26, 2017.

Agenda Agenda

1. OTT definition and taxonomy

2. OTT - small companies with big revenues

3. Asymmetric regulation

4. Overview of differences between Telecom and OTT

5. Rise And Fall -Trend expressed by numbers

6. Activities in EU – The new Electronic Communications Code


Ohrid, Republic of MacedoniaMay 24 – 26, 2017

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6. Activities in EU – The new Electronic Communications Code

7. Activities in Indonesia – Circular Letter

8. Activities in India – Consultation Paper

9. CTO – Questionnaire

10. EMERG workshop on OTT

11. Conclusion

1. 1. OTT definition and taxonomyOTT definition and taxonomy

� “OTT” – services “over the top of” the operator’s infrastructure.

� OTT is a term frequently used but often not clearly defined.

� BEREC defines an OTT service as “content, a service or an application that is provided to the end user over the public Internet.”

� BEREC Report on OTT services, January 2016 classified OTT’s as:



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January 2016 classified OTT’s as:

� OTT-0: an OTT service that qualifies as an ECS (Electronic Communications Service);

� OTT-1: an OTT service that is not an ECS but potentially competes with an ECS;

� OTT-2: other OTT services.

22. . OTT OTT –– ’’small’’ companies but big revenues and users’’small’’ companies but big revenues and users

The best known examples of OTT are:� Skype, � Viber, � WhatsApp, � Instagram, � Google Talk,� e-commerce sites

(Amazon etc.),



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Source: Detecon -The OTT butterfly effect – Small companies and apps with big influence, 17.02.2015

(Amazon etc.),� Facebook messenger,� iMessage, � Online video games

and movies (Netflix, Pandora).

33. . Asymmetric regulation Asymmetric regulation

Telecommunications companies are at a competitive disadvantage to OTTs because of asymmetric regulation around a number of issues.



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Source: Telecom Regulatory Authority of India -Consultation Paper On Regulatory Framework for Over-the-top (OTT) services, 27th March, 2015

44. . Overview of differences between Telecom and OTTOverview of differences between Telecom and OTT



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Source: Detecon “OTTs” – Value Killers for Telcos? Focus on African Operators, 25.08.2014

55. . Rise and Fall Rise and Fall –– Trend expressed by numbersTrend expressed by numbers

� In Europe, the combined revenues of telecoms are expected to � by 1% a year for 2015-2019

� Revenue of OTT players will � at an annual rate of 13 % between 2015-2019.

� Telecoms share will drop from 41 � 34 % while OTTs share rises from 19 � 30 %

� The volume of Internet-based voice services in Europe is growing at more than 20 % a year and is expected to lead to a 21 billion EUR revenue loss for telecoms in



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% a year and is expected to lead to a 21 billion EUR revenue loss for telecoms in Europe or 1% of their total, by 2018.

� OTT messaging volume is growing more than 30% a year, and is projected to result in a 10 billion EUR revenue loss for telecoms by 2018

Source of data: The Boston Consulting Group - Five Priorites for Achieving Europe’s Digital Single Market, October 2015

� EU Commission presented draft directive called “The European Electronic Communications Code” (ECC) on September 14, 2016

� ECC shall replace the current EU telecoms framework which was last revised in 2009

� ECC will have no direct effect but must be implemented into Member State law

� How are OTT covered by the draft directive ECC:

� The new Code proposes that new online players who provide equivalentcommunications services to those provided by traditional telecoms operators are

66.. Activities inActivities in EU EU –– ECCECC



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communications services to those provided by traditional telecoms operators arecovered by similar rules, in the interest of end-user protection. The new Code clarifiesthat such services will have to provide contractual information to their customers, andalso the switching and emergency call rules apply. End-users will also be able to callharmonised numbers with an important social value (e.g. missing children helplines).

� On the other hand, OTT services that do not use numbers(e.g. WhatsApp) will besubject to more focused obligations. They will have to make sure that: 1. their serversand networks are secure; 2. disabled users have equivalent accessto their services andtheir users can reach the EU emergency number 112 if there is evidence it is needed forpublic safety reasons and that the technical standards are available.

� The Indonesian government, via the Ministry of Communication and Information (MCI) has issued a Circular Letter concerning the Provision of Applications and/or Service Content through the Internet (OTT) dated 31 March 2016

� The rules set out in the Circular Letter reflect the MCI’s position on OTT-related issues in Indonesia. This Circular Letter contains guidance for OTT service providers who operate in Indonesia (Source: http://www.legalbusinessonline.com).

� Register its form of business entity and line of business and also submit periodical reports to the Indonesian Telecommunication Regulatory Body;

77. . Activities in Indonesia Activities in Indonesia -- a Circular Lettera Circular Letter



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� Set up a local contact center to accommodate user questions or complaints;

� Apply content filtering and censorship mechanism which conforms with the prevailing regulations;

� Use a national payment gateway (for paid OTT services);

� Use an Indonesian IP number and place a part of its server in a data center located within Indonesian territory;

� Guarantee access to lawful interception and collection of evidence in criminal investigation by law enforcement authorities.

� The Consultation Paper On Regulatory Framework for Over-the-top (OTT) services dated 27 March 2015 is consist of 118 pages and 19 questions

� Questions (Source: www.trai.gov.in):

� Question 4: Should the OTT players pay for use of the TSPs network over and above data charges paid by consumers? If yes, what pricing options can be adopted? Could such options include prices based on bandwidth consumption? Can prices be used as a means of product/service differentiation?

� Question 10: What forms of discrimination or traffic management practices are reasonable and consistent with a pragmatic approach? What should or can be permitted?

88. . Activities in IndiaActivities in India-- a Consultation Papera Consultation Paper



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� Question 14: Is there a justification for allowing differential pricing for data access and OTT communication services? If so, what changes need to be brought about in the present tariff and regulatory framework for telecommunication services in the country? Please comment with justifications.

� Question 15: Should OTT communication service players be treated as Bulk User of Telecom Services? How should the framework be structured to prevent any discrimination and protect stakeholder interest? Please comment with justification.

� ……

� The Commonwealth Telecommunications Organisation (CTO) is conductingastudy to understand the market dynamics and policy and regulatory issues ofOTT

99. . CTO CTO –– a Questionnaire a Questionnaire



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�Questionnaire-(Source: www.cto.int):

� Should OTT service providers offering communication services (such voice, messaging and video call services through applications) resident locally or Internationally be regulated in your Country?

� Should OTT service providers (based either Internationally or Locally) be made to pay some form of levy, fees or taxes in countries where they provide their services and are not domiciled?

� Should the OTT service providers be required to contribute to the Universal Service Fund, which is used for network roll-out in unserved and underserved areas, noting that once these areas achieve some connectivity, the OTT service operators will have potential customers? ….etc.

� The European Mediterranean Regulators Group (EMERG) was established onJuly 1, 2008 in Malta, as an independent platform of National RegulatoryAuthorities for Electronic Communications Networks and Services.

� Topic of the third 2017 EMERG workshop is’’OTT Regulation, Cross Bordercontent portability Big Data Regulation and Key market indicators’’ and i t willbe hosted by the Italian sector regulator AGCOMin Rome, 18-19 October 2017.

� Preliminary document: Questionnaire

1010. . EMERG workshop on OTTEMERG workshop on OTT



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� Rapporteur: Communications Regulatory Agency of Bosnia and Herzegovina

� Goals: Access current status of OTT services in EMERG Member Countries;Identify the impacts of OTT services, Propose background data for regulatoryview on OTT issues etc.

� Understandably is that

� OTT should not be blocked by any party through any method;

� Regulatory authorities should enable future deployment of OTT services tobe conducted in a manner that addresses the priorities and concerns ofallstakeholders to the benefit of consumers.

� But.....there are so many hard questions:

� To regulateor not to regulate?

1111. . Conclusion Conclusion



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� To regulateor not to regulate?

� If regulate, in what extent to regulate?

� etc.

Thank youThank you

The trend and regulatory issues in OTTThe trend and regulatory issues in OTT



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