Vodacom, MTN want internet giants to pay their ‘fair share’

South Africa’s biggest mobile operators, Vodacom and MTN, want streamers like Netflix and other big internet companies to pay them for carrying often-huge volumes of data traffic over their networks.

The concept, known as “fair share” or “fair play”, has caught the attention of regulatory bodies globally, especially in Europe. The argument telecommunications operators make is that they spend large chunks of their revenue developing infrastructure that “over the top” (OTT) service providers like Netflix benefit from “disproportionately”.

“We support the policy direction,” MTN Group CEO Ralph Mupita said in response to a question from TechCentral this week.

“The OTTs will say we help you (the operators) invest in subsea cables and all that, but the reality is they are not putting 18% of their service revenue into capex like we are. They maybe put in 0.5%. They are getting a disproportionate benefit,” Mupita said.

Vodacom Group CEO Shameel Joosub expressed a similar sentiment in a recent interview with TechCentral.

“The OTT fair play discussion centres on [the idea] that these guys (OTT companies) have destroyed the revenue of telecoms operators, but we have to build all the infrastructure,” Joosub said. “Fair play says you can use the network, but you have to pay for it. 5G is a disaster in Europe because the telcos are not making money anymore,” Joosub said.

Read: MTN spends big to escape load shedding hell

The concern from the operators is in response to shrinking profit margins: mobile telecoms companies are under pressure to increase their infrastructure spend while providing more value to customers at lower cost.

‘Fair share’

Dominic Cull, regulatory advisor for the Internet Service Providers’ Association (Ispa) told TechCentral that the association does not have an official position on fair play.

But speaking in his personal capacity, he said the argument that big internet companies are not contributing their fair share towards infrastructure development is on shaky ground given that Google and Meta Platforms, for example, have invested significantly in undersea cables around Africa.

Cull also mentioned investment in fibre and data centres as significant contributions by some of the big technology companies. But the investment argument is only part of the story.

Read: WhatsApp calling nightmare for SA’s mobile operators

“It is a nuanced debate,” Cull said. “As a starting point for ISPs, there is a little bit of resistance [to supporting the telecoms providers] because that (fair share) is not what they have done in the past. OTT is just another word for competition and consumers benefit from that.”

Cull’s comments suggest the “fair share” debate in South Africa does not differ meaningfully from what’s happening in Europe. A report from the Body of European Regulators for Electronic Communications (Berec) shows that ISPs in the region were generally not in favour of fair share either.

“There is a concern that direct compensation from large content and application providers to large ISPs could endanger the principle of net neutrality and lead to a competitive distortion that puts smaller and medium-sized ISPs at a disadvantage.”

Berec also rebuffed the idea that large internet companies are not paying their fair share.

“There is no evidence of ‘free-riding’ along the value chain. ISPs’ customers buy internet connectivity and pay for sending and receiving traffic. Costs for deploying and upgrading the access networks are typically covered by payments from ISPs’ customers,” said Berec.  – © 2023 NewsCentral Media

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