The Rise of OTT Players: What is the Appropriate Regulatory Response?

Abstract

The internet application market has developed applications to attack ever-increasing parts of the Telco market—first international telephony, then national telephony and messaging, then local. As a consequence Telcos were and are still losing revenues, but no one is gaining them. Meanwhile net neutrality rules prevented differentiated QoS offerings and regulatory developments such data portability obligations limit planning certainty concerning the income to be earned from investments. This makes it necessary to change the regulatory framework which Telcos face. Existing regulatory requirements must be reassessed within the framework of the new market situation to re-establish a level playing field and incentives to invest. While the EU has started this reassessment and among others the new Electronic Communication Code for example explicitly takes OTTs into account further steps seem to be necessary. In Emerging markets regulatory usually go further—however success is rather limited. New business models can emerge as demonstrated in the Media industry. In the Telco world this requires a re-definition of Net Neutrality in order to enable Quality of Service differentiation. Current Zero rating practice show a change of regulatory priorities in this regard. At a higher level governance of the internet and digital transformation must take into account convergence and follow three targets: 1.Enabling agile regulation and agile governance.2.Reorganize governance structures to reflect the central and elementary importance of digital issues in every aspect of life.3.Review of existing acts, legislations and frameworks to reflect rapid technological, economic and societal change in the light of digital transformation.