Why the regulators might get OTT wrong?

It is becoming increasingly popular for telecoms regulators to address the implications of OTT services for telecommunications and ICT policy and law. We often hear about changing communications landscapes that are likely to impact regulation of the telecommunications sector.

The truth is, however, that ancient laws and regulations may well survive a revolution in service provision, and that simply putting OTT on the regulatory agenda is unlikely to cause a stir. Here is why the regulators might need to go the extra mile in order to understand the full implications of OTT:

 

1. Laws and regulations are stubborn.

The US law still relies on an ancient, long outdated distinction between ‘information’ and ‘telecommunications’ services. Recently reviewed and more advanced EU regulatory framework makes a distinction between ‘electronic communications’ and content services such as audiovisual media or on-demand ‘information society services’. Plus there is a dilemma whether an OTT service should instead be treated as goods or software, as is the case with downloadable OTT communications products such as Skype or WhatsApp. Unless more effort is put in clarifying the regulatory approach to OTT, the regulators (or judges) may soon be faced with dilemmas resembling those of the past such as whether a website can be deemed ‘an item in cable TV programme’.

 

2. There is likely to be misperception as to technology.

From the early days of the internet, the regulators have perceived internet content as something downloadable from a remote server. However, this concept is increasingly undermined not only by networks becoming information-centric instead of host-centric but also by OTT providers rolling out their own infrastructure closer and closer to their end-users. This blurs the distinction between telcos and content providers. Although the regulators will need to continue to acknowledge the existence of the last-mile bottleneck that is in most places not going away any time soon, they will also have to face the reality of having OTT providers’ networks in their neighbourhood.

 

3. ‘Free ride’ scaremongering overinfluences the debate.

The story goes OTT service providers are stealing bandwidth from telcos: unless OTT providers start paying, telcos will stop investing and networks will fall apart. As noted above, OTT providers already are investing in their own infrastructure in order to secure the delivery of huge amounts of their own specific content in different countries. Their services may be gobbling access network bandwidth but they at the same time drive end-user demand for superfast broadband products that can finance the roll out of FTTx/NGA networks. Unless one makes clear what end-users are paying for and to whom (broadband subscription for the last mile and open internet connectivity, or say Netflix subscription for content delivery), the regulators should not get involved in attempts of revenue redistribution.

Bostjan Makarovic

Bostjan Makarovic

Bostjan Makarovic is Aphaia's Founder. In addition to 14 years of industry experience, he holds Queen Mary, University of London PhD in legal regulation of NGN, London School of Economics and Political Science MSc in Environmental Policy and Regulation, and is IAPP-certified international privacy professional (CIPP/E).
Bostjan Makarovic

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