MTN and Vodacom recently made headlines when representatives from the companies suggested that WhatsApp should compensate them for using their networks.
The tension between network operators and over-the-top (OTT) players such as WhatsApp and Skype is nothing new.
As far back as 2004 in South Africa, Telkom took issue with the then-illegal use of Skype – and said industry regulator Icasa should enforce its licensing regulations.
This is an example of one of the core issues carriers have with OTT players: while they operate in a heavily-regulated environment, Internet companies sit outside the jurisdiction of local controlling bodies and are therefore largely unregulated.
But really, it’s about money. While the ease or difficulty of regulating online services makes for an interesting point of argument, the real issue is how WhatsApp affects operators’ revenue.
This is evident when you look at the double standard networks have when it comes to OTT players.
Services such as Facebook and YouTube are welcome so long as they drive traffic and revenue on a network – but if apps like Skype or WhatsApp threaten to erode revenue, suddenly they have to contribute to a network’s infrastructure costs.
Yet on the other, it calls for regulatory intervention to “level the playing field” between itself and WhatsApp.
This sits at the heart of the debate around net neutrality – giving one service preferential treatment while calling for others to be hobbled.
It’s also interesting to note that Cell C opted to take a different route, zero-rating WhatsApp on its network for a while and now offering cheap WhatsApp bundles. Free WhatsApp is also still available through Cell C’s TRACE tariff plans.
Adapt or die
Vodacom and MTN have no one to blame for the failing fortunes of SMS besides themselves. For years they dominated the mobile messaging space, and for years they failed to innovate and adapt to threats.
Mxit was around since at least 2005, showing people’s need not only for a cheaper text messaging service, but for features such as group chat.
The rise in popularity of services such as BlackBerry Messenger from around 2009 also showed people’s need for features such as read receipts and cheaper picture messaging.
Despite these signals from the market, operators did not respond. And now that SMS revenues are being wiped out, suddenly the regulator must step in?
For a while you got to be the disruptor, Vodacom and MTN, subverting Telkom’s dominance in South African telecommunications. You failed to adapt and now you are becoming the disrupted.
The question is, will you take the route of diminishing returns Telkom followed from 1994 until around 2011, and try to have your prosperity protected through regulation and legislation?
Or will you change with the times before it’s too late?