A PYMNTS Company

South Africa’s Telecom Industry Pushes for OTT Platforms to Fund Network Infrastructure

By  |  August 21, 2024

South Africa’s telecommunications industry is urging digital content and service providers (OTT platforms) to contribute to the costs of building and maintaining network infrastructure, citing their substantial role in generating internet traffic. According to Reuters, the Association of Communications and Technology (ACT) is advocating for this financial contribution from over-the-top platforms, which deliver digital content such as video, audio, and messaging directly to consumers over the internet.

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    Nomvuyiso Batyi, CEO of ACT, emphasized the reliance of OTT platforms on high-quality, reliable network infrastructure for their continued success. “The revenues generated by OTT platforms and the continued success of the OTT model are dependent on the availability of high-quality, reliable, and efficient network infrastructure,” Batyi stated. She further argued that these platforms should play a role in financing network upgrades and expansions.

    The industry body argues that “fair share” arrangements would ensure that OTT providers contribute to the costs associated with building, maintaining, and upgrading the infrastructure that supports their services. Such contributions, according to ACT, would not only balance resource usage but also encourage network operators to continue investing in infrastructure to meet the growing demands of digital services. This perspective was detailed in a paper published by ACT earlier this week.

    Mobile operators like Vodacom Group and MTN Group currently invest significant amounts—up to 41 billion rand ($2 billion) annually—into expanding their networks. The ACT paper suggests that the contribution from OTT platforms should be determined through mutual agreements on usage charges. However, it also acknowledges the complexity of calculating how these tech companies should share the costs of network rollouts.

    To ensure that any proposed “fair share” arrangements are equitable, ACT stresses that these agreements should be based on legal frameworks, commercial fairness, and a comprehensive understanding of industry dynamics. The organization is calling for a collaborative approach to explore how OTT service providers can be regulated similarly to network operators and integrated into South Africa’s licensing and policy regimes.

    MTN Group CEO Ralph Mupita also weighed in on the issue, noting that the tech sector has already contributed to sub-sea cable investments across the continent. He warned that overly punitive measures could harm the broader ecosystem. “If you’re too punitive, you can destroy that whole broader ecosystem, and there needs to be some share of that investment that is more like operational expenses than capital expenditure,” Mupita said.

    Source: Reuters