Cell C has called out competitors MTN and Vodacom over their 'telco-type' stance on the regulation of over-the-top (OTT) service providers like Whatsapp, Facebook and Skype in South Africa.

Graham Mackinnon, Chief Legal Officer at Cell C, explained: "It appears the initial call came from MTN and Vodacom during the course of last year. Both the CEO of Vodacom and the previous CEO of MTN South Africa, as well as the present one, said they wanted OTT operators to be regulated because they are getting a free ride, and they (mobile networks) have spent billions on infrastructure without their (OTT) contribution. Vodacom has made similar statements where they said that they are cannibalising us and they need to be regulated. We appreciate that there are regulatory imbalances between network operators and over the top players, but Cell C's position is that it would be impractical and also not feasible from a commercial point of view to regulate OTTs in the way that is proposed by the likes of MTN and Vodacom."

Mackinnon says Cell C does recognise that there is type of regulation that is more relevant, which he classifies under the headings security, privacy and tax regulations, but it should be left up to existing frameworks to be managed and is "not anything that telco operators need to get involved in."

Cell C, he says, advocates a light touch because anything heavy-handed will stifle innovation.

Mmamoloko Kubayi, MP and Chairperson of the Portfolio Committee on Telecommunications and Postal Services, said the body would only look at various governance issues relating to OTT services in South Africa, global trends, what impact they have on society and the country's economy.

Emboldened regulators

Cell C presented its assessment of the impact of OTTs on the telecommunication landscape to the Committee this week.

Mackinnon says Cell C's view is that some mobile network operators are overstating the economic impact of OTT services, as well as their need to recoup millions that have been invested in infrastructure.

Although he anticipates that the Portfolio Committee would not go on to propose regulation and thereby negate the need for legal action between interested parties, he stresses that there are more important matters for the telecommunications industry in South Africa to consider.

"We've got a lot of other things that if they are looked into it would help the industry and consumers a lot. Things like infrastructure sharing. The main issue at the moment in our industry is that the input costs are too high because you've got duplication of infrastructure where one guy builds a tower and another guy builds one next to it. If the sharing of infrastructure was regulated in a better way, that would bring down input costs."

Cell C's open attack

Dominic Cull, communications regulation expert and regulatory advisor at the Internet Service Providers Association (ISPA) agrees with Mackinnon on the need for mobile networks to form closer relationships - particularly in light of cost reduction through site-sharing and co-building arrangements.

He sees Cell C's open rebuke of MTN and Vodacom as competition in action and unlikely to affect relations between the operators in any major way.

"Cell C have consistently sought to position themselves as consumer-friendly (which is not to say that the others have not) and to differentiate themselves from Vodacom and MTN in this regard. This strategy came out strongly over the course of the discussions into reduction of call termination fees over the past five years and reflects their position in the market and need for growth (as opposed to Vodacom which has a stronger motivation to protect market share). So I think it has been sustained and will be for some time on a marketing level. It is difficult to assess how sustainable some of their strategies may be in terms of zero-rating OTTs will be but they have shown they are prepared to spend cash to get market share and the recent Blue Label investment will help."

Cull does not see the matter going to court unless ICASA attempts to impose some form of regulation in the future.

"The Portfolio Committee is now preparing a report and the Department of Telecommunications and Postal Services will outline policy to be applied in respect of OTTs in a White Paper later this year. The latter will probably reflect the current policy recommendations which are to monitor the situation and intervene if deemed necessary. It will then be up to ICASA to launch an investigation or market study into the impact of OTTs and to decide whether there is a need for regulation and, if so, what form that should take. I cannot see this issue going anywhere meaningful in terms of legal process in the next two years. It is also the case that the Department and ICASA have far more pressing priorities: the fundamental reasons for the current OTT debate really relate to the inability of DTPS and ICASA to release spectrum and finalise policies and regulations which will allow the whole industry to grow."