ITU launches new study paper on economic impact of OTTs

The demand for ‘Over-the-Top’ applications (OTTs) has reshaped several aspects of the telecommunication market and transformed how people access resources for health, transportation, education, agriculture, government and financial services.

Increasingly, mobile network operators (MNOs) are embracing data-centric business models as data drives the ongoing digital revolution in virtually every industry vertical.

OTTs now often provide the content that drives demand for telecoms operator services, which can increase revenues for operators’ core access services. OTTs have helped usher in economic and social transformation beyond traditional communications services in the ever-growing digital economy.

At the same time, this success has brought with it new challenges, spanning issues of business models, infrastructure development, competitiveness and telecommunications regulations, as well as the changing dynamics of consumer behavior.

New paper addresses key questions

A new ITU study paper “Economic Impact of OTTs on National Telecommunication/ICT Markets”, helps regulators, policymakers and other interested parties consider a range of factors to navigate this evolving industry landscape.

The paper aims to help ICT stakeholders face complex questions, such as: How are OTTs impacting demand, revenue and cost of mobile network operators? How can ICT stakeholders build partnerships between MNOs and OTTs for maximum potential? How can ICT regulation transition from past models to keep pace with the new and rapidly changing landscape of OTTs?

“OTTs are a vast and diverse collection of businesses,” reads the report. “Regulators need to see the benefits that OTTs deliver while adapting regimes to address new challenges. And while OTT innovation can be rapid, regulation sometimes struggles not only to keep pace but to address large-scale OTT operations outside of the regulator’s national mandate, thus a need for improved international cooperation.”

The paper highlights two sets of considerations: One for regulators and decision makers in Government; and another for telco operators and OTT providers.

REGULATORS AND GOVERNMENTS TO CONSIDER:

• Developing their digital skills in order to better understand and assess the development of the telecommunications / ICT market in the context of OTTs.
• The evolution of the Internet value chain and the telecommunications / ICT market as a whole for taking relevant measures in line with market realities.
• OTT regulations based upon actual evidence of harm from OTTs and on a quantitative analysis of the socio-economic effects such regulation.
• Assessing in advance the potentially negative effects of taxes on OTTs for vulnerable communities, businesses and citizens in order to avoid high social costs.
• Engaging in real dialogue and consult with different stakeholder groups before adopting new policies and regulations

TELECOMMUNICATION OPERATORS AND OTT PROVIDERS TO CONSIDER:

• Adopting data-driven business models and rebalancing their rate grids in order to reduce their dependence on telephone and SMS services.
• Exploring different models of partnerships and agreements including investments in network infrastructure, and providing insight into these partnership agreements to regulators.

Nasser Ketani, Rapporteur of the ITU Telecommunication Development Sector (ITU-D) Study Group 1, Q3/1 and Arseny Plossky, Rapporteur of the ITU Telecommunication Development Sector (ITU-D) Study Group 1, Q4/1 answered  a few questions on ITU’s policy recommendations to reap the benefits of OTTs with innovative, partnership-driven business models at affordable costs.

Follow the work of:

• ITU-D Study Group 1 Question 3/1 “Emerging technologies, including cloud computing, m-services, and OTTs”
• ITU-D Study Group 1 Question 4/1 “Economic policies and methods of determining the costs of services related to national telecommunication/ICT networks

Subscribe to our mailing list here.

Learn more about ITU-D study groups.

More information on ITU development work on Policy and Regulation is available here.