Cell C warns against OTT regulation - TechCentral

Cell C warns against OTT regulation

Cell C CEO Jose Dos Santos

Cell C CEO Jose Dos Santos

South Africa’s third largest mobile network, Cell C, says that possible local regulation of over-the-top (OTT) services such as WhatsApp and Skype could harm the industry and consumers.

OTT services — which range from WhatsApp to Skype and Google Hangouts — allow users, among other things, to make messages and calls over data networks — typically at lower costs than traditional telephone calls or SMS.

But local growth of these services prompted Vodacom and MTN last year to call for regulation of OTT services.

And now that call has been taken up by parliament’s portfolio committee on telecommunications & postal services, which said in a statement on Thursday that “mobile operators are requesting that parliament consider passing a policy or regulations of data services on mobile networks such that they generate revenue for carrying the data services on their bandwidth infrastructure”.

The committee has scheduled hearings on 26 January to discuss possible regulation of OTT services in South Africa.

However, in light of the upcoming hearings, Cell C is taking a different stance to its rivals on the matter.

“We strongly believe that this (regulating OTT players) could be to the detriment of the industry and consumer at large,” said Cell C CEO Jose Dos Santos.

“Contrary to our competitors, Cell C has been embracing the services offered by OTTs,” Dos Santos said.

Cell C provides free access to Facebook and basic internet services through the social network’s Free Basics programme. The company also offers unlimited WhatsApp at R5/month, Dos Santos said.

The Cell C CEO further said his company plans to attend the OTT hearings on 26 January.

“It is key for mobile operators and OTTs to find innovative ways to work together and we look forward to building on our existing partnerships with the OTTs,” he added.

Cell C is South Africa’s third largest operator with 22m subscribers in South Africa.

Last month, it  announced that its board had accepted an offer from JSE-listed Blue Label Telecoms to acquire 35% of the mobile network for R4bn.

The boards of Cell C and its holding company, 3C Telecommunications, have also accepted an offer from Cell C management and staff to hold about 30% of the mobile network’s shares for R2,5bn.  — Fin24


  1. MTN and Vodacom need to move with the times and find compelling alternatives to the OTT services – that’s called innovation – rather than relying on an out-dated mentality of preventing competition of any sort. As a Vodacom client for more than 20 years (business and personal) – should Vodacom be successful in its quest for implementing regulations against OTT, they will lose me as a client.

  2. Richard Wickens on

    We already pay for them to build the infrastructure via airtime, contracts and data fees. If the providers are losing out because we are using other messenging services that are a) more user friendly, and b) cheaper, then the providers themselves have failed to keep up. Why should OTT’s now pay the providers when we have ALREADY paid them for the data to use the OTT’s? On that note, why the hell does data expire? Perhaps parliament should sit down for a day and deliberate on the fact that data is not a carton of milk and should not expire 30 days after purchase! That is a complete an utter rip off and should not have been allowed to happen in the first place.

  3. Jannie van Zyl on

    TBH, Jose’ is trying to score cheap political points here.

    I think there’s a lot of confusion (some fueled by incendary headlines) around this.

    Logically, a MNO should have no desire to block any OTT player. Vodacom is on record stating this categorically.

    The regulation that government is now considering focus on a number of aspects most consumers don’t know (or care) about. These include:

    1. Legal Intercept – This is already law and most – if not all – OTT voice and messaging players don’t comply.

    2. QoS – A requirement of the MNOs but not the OTTs. This might sound like a moot point but already consumers are complaining about long delivery times or even non-delivery of messages. As the uptake and load on these services increase, so will the complaints, especially as the OTT voice services become more prevalent. While this kinda work in favour of the MNOs (people will still use MNO voice for critical calls), the regulator will have a different view and would expect consumers to get a decent level of service. If every call you make is routed via some off-shore service, think of the QoS challenges.

    3. Taxation – OTTs like FB derive a crap-load of revenue from advertising. That is how they can give the service for free. They are selling YOU as the product. All this money flowing out of SA is making people sit up and take notice.

  4. Greg Mahlknecht on

    >Legal Intercept – This is already law and most – if not all – OTT voice and messaging players don’t comply

    How does this concept apply to HTTPS traffic? This will soon be the vast majority of traffic on the internet with HTTPS Everywhere gaining traction. USA and UK governments are also going after this angle, and it’s clearly a losing battle for them.

    >OTTs like FB derive a crap-load of revenue from advertising

    Pretty much the entire web works on this model – do the MNOs intend trying to get money out of every popular website that is used? Are you guys going after Google, the biggest beneficiary of the advertising? People have a choice to “make themselves the product”. I do not believe this is an issue at all.

  5. Jannie van Zyl on

    Don’t think any of the MNOs – at least not Vodacom – ever said they want to share in the advertising revenue. Rather is the lost taxation that’s making waves.

    The issues of encrypted traffic is a real issue and likely one of the main reasons regulators around the world are looking at it. I assume you are following what’s happening in the EU at the moment in this space?

  6. Greg Mahlknecht on

    >Don’t think any of the MNOs – at least not Vodacom – ever said they want to share in the advertising revenue

    This was certainly the implication when the point was being discussed last year, the underlying argument was “we need to get money from OTTs to help pay for infrastructure” – that argument clearly tanked, so the MNOs are taking another go at it with a different argument.

    > I assume you are following what’s happening in the EU at the moment in this space

    Yeah, a total farce – I think their leaders are as clueless as ours when it comes to tech. It’s a battle that’s impossible for them to win. They’re all sulky that tech has progressed to where it is and they can’t get all that juicy info easily, and this is a last gasp effort to extend their ludicrous over-reach.

  7. Vusumuzi Sibiya on

    >>TBH, Jose’ is trying to score cheap political points here.

    What Jose’ is doing is thinking proactively and keeping Cell C out of the war about to erupt sparked by the;

    #GreedyCravingCrybabies who want government to allow them to take a second bite out of the data which consumers have already paid for –

    The only sensible point which you make that government can look at is;

    >>3. Taxation

    …and that does not need the #GreedyCravingCrybabies to be involved;

    I would strongly advise government to tread very cautiously around entertaining these #GreedyCravingCrybabies because the bite that government is going to get from the public; is certainly NOT worth the craving they are also developing of having a share of the second bite that these #GreedyCravingCrybabies want.

    I think that Jose’ will be quite pleased to know that I’ve now activated a Trace Mobile SIM which is on the Cell C network; and I will be seeing to it that in the same way that a #FillUpTheDome can work wonders for a Cassper Nyovest;

    I am going to mobilise every artist that wants to be on Trace Urban to join in the war against the #GreedyCravingCrybabies – and have them influence their followers to join Trace Mobile in support of Cell C.

    The other clowns in government also entertaining these #GreedyCravingCrybabies will no doubt be making careful consideration of how this can impact on their popularity going into the coming local government elections.

  8. Jannie van Zyl on

    I don’t think VC ever said anything about wanting the OTTs to pay for infrastructure. If I recall that was Yellow.

    As to encryption, SPDY as pushed by Google and co. is going to create havoc for governments around the globe. ‘Africa Spring’ much? 🙂

  9. Vodacom and MTN wanting to regulate OTT (e.g. Whatsapp, Google Talk) because it is allowing customers to avoid their rip offs on SMS.

  10. Jannie van Zyl on

    You really need to think about this a bit more.

    How would regulating WA make people use more SMS’?

  11. Vusumuzi Sibiya on

    Your points;

    >>1. Legal Intercept – and;

    >>2. QoS

    …are BS, because if OTTs didn’t comply they would not be able to get the market share they have and be so popular and convenient for consumers; in many cases they provide a far superior service to that offered by the #GreedyCravingCrybabies

    The only point that is worth consideration for government is;

    >>3. Taxation

    …and that doesn’t need the involvement of the #GreedyCravingCrybabies and can be addressed accordingly through existing laws and regulations that are in-place.

  12. Jannie van Zyl on

    So you are saying all OTT players providing communication services in south Africa comply with local intercept laws?


  13. Vusumuzi Sibiya on

    Name the ones that don’t… so that the provisions already available through law-enforcement can deal with them accordingly.

  14. Jannie van Zyl on

    WhatsApp, Telegram and many others. In fact I do not know of a single one that provides unencrypted breakout points in SA.

    You’re welcome to correct me. But you really have no clue, right?

  15. You miss the point.

    The reason they jumped up was initially because their revenue from SMSes declined. Now with those services offering voice calls as well they are in panic mode.

    Effectively the regulation of it will allow the networks to control whether or not these apps can use the protocols to make calls over data connections instead of GSM

  16. Vusumuzi Sibiya on

    What I do know is that we have always had law-enforcement, prosecution and a justice system.

    Now do I need to tell you what you need to do with entities or individuals who break the law…??? Seemingly;

    >>you really have no clue, right?

    And that’s where the problem is… you are wasting taxpayer money as well as time that should be spent on fixing SAPO and attending to the digital dividend chasing something that would not be enforceable when;

    >>WhatsApp, Telegram and many others – show you the middle-finger.

    If you are hoping to then work with MTN, Vodacom and Telkom to go against net neutrality and the consumer; then the government is going to pay dearly for that mistake.

    I’m actually quite glad that MTN and Vodacom’s duopoly colluding mentality is also going to be taking down Telkom with them in the war against #GreedyCravingCrybabies

  17. Greg Mahlknecht on

    >I don’t think VC ever said anything about wanting the OTTs to pay for infrastructure. If I recall that was Yellow.

    Perhaps it was, but that’s just one of many invalid or pointless arguments.

    Not sure what extra SPDY brings to the equation, it’s wrapped in the same SSL pipe as regular HTTPS afaik. Once the comms is end-to-end encrypted, no amount of intercepts, tapping in to raw fiber backbones, getting companies to give up the encrypted data stores will do anything. And they shouldn’t. No government anywhere in the world has put forward a good case as to why there should be encryption backdoors for legal interception.

  18. Greg Mahlknecht on

    I agree with you here – Apple and Microsoft are taking particularly hardline stances here. As they should. Although it’s well known they COULD provide legal intercepts (Tim Cook flat out lies about the fact they can’t) they are managing to convince the US government they can’t.

    MS is taking it one step further, fighting the US government in UK to make sure there’s no loophole created that could cause one government to collude with another to get through these backdoors.

  19. Charley Lewis on

    The mobile operators know full well that policy is the prerogative of the Minister, and that regulation is the prerogative of ICASA….

  20. I am very suspicious of Jannie’s comments as he works for Vodacom and is mot likely trying to secure their revenue by bringing all sorts of issues with OTT services like WhatsApp. All i know is that the whole world is on WhatsApp and it works. If there is tax issues with WhatsApp, i am very sure that SARS is very capable of dealing with OTT players. MNOs like Vodacom and MTN must take a chill pill. SMS is dying, no one wants to go back to SMS once they have used WhatsApp.

  21. mmittee’s statement and how it frames the reasons for the hearings:

    Parliament, Thursday 14 January 2016 – The Portfolio Committee on Telecommunications and Postal services is set to look into the complaint of mobile networks regarding “Over-The-Top” (OTT) services, and the challenge these services pose on revenue of cellphone giants.

    Mobile operators are requesting that Parliament consider passing a policy or regulations of data services on mobile networks such that they generate revenue for carrying the data services on their bandwidth infrastructure.

    The meeting where stakeholders will be given a hearing by the Committee will happen on Tuesday, the 26th of January in Parliament. The Chairperson of the Committee, Ms Mmamoloko Kubayi, said the Committee is always ready to listen and engage every member of the South African society.

    Stakeholders that are expected to attend include network operators, relevant ICT bodies and the Internet Service Providers.


  22. Vusumuzi Sibiya on

    >>Mobile operators are requesting that Parliament consider passing a policy or regulations of data services on mobile networks such that they generate revenue for carrying the data services on their bandwidth infrastructure.

    Yep! that’s what it’s always been about…

    …getting a second bite out of the data which the consumers have already paid for; which BTW, also expires as predetermined by the same MNOs whilst one can have all sorts of data stored in the form of audio, video and files on ones mobile device without it ever going sour or smelling off.

    Don’t know of anyone who would be happy to get their Big Mac from McDonalds with a chunk bitten out, just to support Eskom; and McDonalds would have to make the same consumer pay the costs to provide a burger that meets with their QoS if a #GreedyCravingCrybabies requests where to also be granted to an Eskom.

  23. The biggest problem that Vodacom and MTN have is that OTTs can offer services that until recently they believed were the exclusive God-given “right” of the likes of Vodacom and MTN.

    The real problem for them is that OTT is a viable complete replacement for GSM. i.e. mobile voice networks

    They do not need GSM to operate and can function completely independently of them so long as there is an internet connection (WiFi and terrestrial). e.g. Whatsapp can do voice calls and media and text messaging.

    This is a replacement for GSM calls, SMS and MMS – the 3 cash cows that Vodacom and MTN are built on.

    What this means is that Vodacom and MTN are being forced to move towards becoming ISPs as opposed to GSM companies.

    Even if on the off-chance they succeed with this nonsense, there is ultimately no way to stop this.

    It’s just another case of the dinosaurs of industry not being sharp enough to change ahead of the curve.

    Just look at Naspers.

  24. Me and my family left VC 6-8 years ago, have never looked back. Made and still making use of the smaller, newer players : Virgin Mobile, Cell C and Telkom Mobile. Never been happier, and saved mountains of moola.

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