Over the top services (OTT), such as internet messaging application WhatsApp, are eating Vodacom’s ‘lunch’ but the company has no plan to block the service.
This is according to Vodacom’s group chief executive officer Shameel Joosub in an interview with Fin24 on Monday.
In an earnings call earlier in the day regarding Vodacom’s interim results for the six months ended September 30, Joosub called for regulators to take a closer look at OTT players in South Africa.
Joosub explained to Fin24 on Monday afternoon that OTT providers present a “double-edged sword” in that they are a big driver of data growth but don’t invest in mobile networks.
Services such as WhatsApp have rocketed in usage in South Africa with over 10 million users in the country, according to a recent report by World Wide Worx and Fuseware.
“I think that the regulator Icasa (Independent Communications Authority of South Africa) should have certain rules around them in terms of licensing them properly,” Joosub told Fin24.
“I think that there’s an ecosystem that needs to exist. So, I’m not saying we should block it. I’m saying the different deliberations if you like need to be heard…and it needs to be controlled in terms of how does it play,” Joosub added.
Joosub’s comments about WhatsApp come hot on the heels of MTN South Africa CEO, Mteto Nyati, having also questioned OTT providers and called for greater regulation.“You have these players which are getting huge benefit out of an industry without making any investment,” Nyati told Fin24 last month.
Icasa, though, told Fin24 that it is not currently investigating OTT providers but that it may look into the matter in the next financial year.
‘Part of ecosystem’
Vodacom’s Joosub further explained that the likes of WhatsApp voice calling is of particular concern and he also questioned where OTT providers’ revenues end up.
WhatsApp currently doesn’t have advertising but other internet services such as Facebook do tap this kind of revenue.
“The model that these guys use is advertising revenue. Where’s the advertising revenue being paid? In South Africa or in Europe or the US?
“So, these are the kinds of things that need to be considered very carefully. That’s why I call it an ecosystem. I think that there’s a role for them to play, but I think it needs to be regulated, controlled in a way,” said Joosub.
Meanwhile, Vodacom on Monday reported for the six months ended September 2015 that its data revenue in South Africa increased 33.4% in South Africa to R8.2bn for the period owing to strong demand and cheaper smartphones.