New ITU Recommendation provides parameters for a collaborative framework for OTTs

ITU has approved a new ITU Recommendation addressing the relationship between network operators and providers of over-the-top (OTT) applications.

Recommendation ITU-T D.262 provides parameters for the analysis of the new economic dynamics of the ICT ecosystem and how policy and regulatory frameworks could promote competition, consumer protection, consumer benefits, dynamic innovation, sustainable investment and infrastructure development, accessibility and affordability in relation to the global growth of OTTs.

The Recommendation’s approval follows ITU Member States’ agreement of a new resolution outlining the scope of ITU activities relevant to OTTs at the ITU Plenipotentiary Conference 2018 in Dubai, United Arab Emirates. The resolution recognizes that the mutual cooperation of OTTs and network operators could foster considerable socioeconomic benefits, in addition recognizing the need to discuss the economic implications of OTTs and related policy issues.

OTT business models have reshaped and expanded the ICT ecosystem. The extraordinary innovation of companies such as Google, WeChat, Line, Skype, Facebook and WhatsApp has created a more interactive, multimedia-rich communications experience. Certain OTT services are, however, direct substitutes for telecoms services, decreasing network operators’ return on their investment in network infrastructure. This has provided grounds for debate as to whether the sustainability of this investment is under threat.

The new ITU Recommendation – ITU-T D.262 “Collaborative framework for OTTs” – describes the interdependence of OTT and telecoms business. It represents the recognition of ITU Member States that the coexistence of OTT and telecoms, and their complementary contributions to innovation and investment, will be central to the advance of the ICT ecosystem.

“I would like to commend the ITU members involved in the development of this Recommendation for the strong spirit of collaboration that guided their work,” says Seiichi Tsugawa, Chairman of ITU-T Study Group 3, the ITU standardization expert group responsible for economic and policy issues relevant to international communications. “This Recommendation makes an important contribution to the efforts of ITU-T Study Group 3 to strengthen the ties between technology, business and policy,” says Tsugawa.

The Recommendation offers a definition of OTT: An over-the-top (OTT) is an application accessed and delivered over the public Internet that may be a direct technical / functional substitute for traditional international telecommunications services. The Recommendation notes, however, that “the definition of OTT is a matter of national sovereignty and may vary among Member States.”

“The definition of OTT included in the Recommendation is the world’s first such definition issued by a multistakeholder organization,” says Ahmed Said,  Head of Economic Affairs at the National Telecom Regulatory Authority of Egypt and Rapporteur for the ITU-T Study Group 3 work stream responsible for the OTT Recommendation’s development.

The Recommendation highlights that investment in network infrastructure has provided the foundations for the rise of OTT and, conversely, that demand for OTT services has stimulated demand for the connectivity offered by network infrastructure.

This recognition of OTT and telecoms’ interdependence will inform the work of ITU Member States to promote innovation, fair competition and sustainable investment in network infrastructure. The Recommendation thus encourages Member States to assess the economic, policy and consumer welfare impacts of OTT in all critical areas affected, including their regulatory frameworks and existing economic incentives with respect to the provisioning and use of OTTs.

The Recommendation highlights that ITU Member States’ associated consideration of competition policy, in particular the identification and definition of relevant markets, should consider the fundamental differences between OTT and telecom business with respect to regulatory exposure, barriers to market entry and the degree of substitutability between OTT and telecom services. It encourages ITU Member States to consider and develop enabling policies or regulatory frameworks to foster fair competition between network operators and providers of OTTs and also to examine, if necessary, the reduction of the regulatory burden on traditional networks and telecommunication services.

“This Recommendation is an important starting point,” says Ahmed Said. “It is a starting point to develop policies or regulatory frameworks that enable fair competition between network operators and OTTs as well as a starting point for the discussion of how the relationship between OTT and telecoms business could become one of mutually beneficial cooperation.”

Find an analysis of the relationship of OTT and telecoms business and case studies of selected countries’ policy approaches to this relationship in an ITU Technical Report on the ‘Economic impact of OTT’.

For more information on the work of ITU-T Study Group 3, visit the group’s homepage.