MTN boss derides OTT 'free riders' - TechCentral

MTN boss derides OTT ‘free riders’

Ahmad-Farroukh-640

MTN South Africa CEO Ahmad Farroukh

MTN is not prepared to spend billions of dollars building advanced telecommunications networks just so that “over the top” (OTT) providers can get a “free ride” by competing with the company using that same costly infrastructure. There has to be some sort of quid pro quo, says MTN South Africa CEO Ahmad Farroukh.

Farroukh tells TechCentral that mobile operators and OTT players — they include companies such as Google, Facebook and WhatsApp — have to reach a “certain understanding”.

“I laughed when I saw one of the operators zero-rating one of these very famous apps,” Farroukh says, in a dig at rival Cell C. “This same app will launch voice [calls]soon.”

Cell C announced last week that it will offer free access to WhatsApp, the popular instant messaging service, on a promotional basis from next month. WhatsApp will soon allow its users to place free calls through the app, using Wi-Fi networks or mobile operators’ data networks.

Cell C CEO Jose Dos Santos said the move was driven in part by a need by mobile operators to embrace rather than fight OTT players.

Farroukh says a balance is needed, describing the way OTT players use mobile operators’ networks today as “unfair”. He attended a forum in Dubai recently with OTT players from North America and operators from Europe, the Middle East and Africa. “It almost turned in a fistfight.”

He says OTT providers routinely accuse the operators of being greedy, when, in fact, the reverse is true. He says the companies accuse operators that fight back of being against free speech, which he denies. “We are not saying we have to deny OTT access, but the OTTs should be fair,” he says. “This access has a cost.”

WhatsApp will soon allow its users to make phone calls over the Internet

WhatsApp will soon allow users of its popular app to make phone calls over the Internet

The best option is for these companies to work with the operators in “defining access and how everyone can be fair in this sense”. Should OTT providers pay operators for access? Not necessarily, says Farroukh. “But there should be a certain formula.”

This issue can’t be resolved by any one operator and has to be dealt with through global forums such as the GSMA, an industry body that represents the world’s mobile operators. It will take years, Farroukh predicts.

MTN won’t block access to services like WhatsApp, even if they eat into the operator’s revenues by launching voice services. “If they launch, we’re not going to lose 50% of our voice revenue the next day. This will not happen overnight.” He points out that operators will still benefit from data spend.

Farroukh, who is a former CEO of MTN in Nigeria, took the reins at MTN South Africa last month. “There was a need for us to have a fresh look at the South African market… This industry and this market are going through a complete transformation. If we are not able to catch this transformation at the right time, we will be left behind.”  — (c) 2014 NewsCentral Media

32 Comments

  1. Um, they not free riding when you charge your users for the data they use to access those services. If your customers use more data for things like voice calling over those apps, they will have to buy more data, which you already sell at a profit no doubt.

  2. So what MTN are saying is they are worried they can’t afford their current lifestyle and consumers must keep coughing up and not allow technology (which made them their money in the first place) to evolve and give us a cheaper/better/convenient/flexible option.

    How do I cancel my 5 contracts which are mostly used for (expensive) data in that case?

    Time we start putting our own wifi’s up and just circumvent the providers complaining? I’m happy to break out anyone using whatsapp and messenger services over my DSL which is also powered by MTN as it’s too slow for any real usage……

  3. So MTN is against Net Neutrality, just like their greedy counterparts in the States. MTN, I pay you for a data connection, and I expect you not to interfere with it, and not to charge anyone else again for the usage of that data connection. If you can’t accept that, I will find somebody else with their heads screwed on, or simply avoid using 3G data services in the first place.

    What’s ironic, is that MTN has been getting a free ride off the backs of consumers for almost 2 decades now with their high MTRs, fat profit margins, anti-competitive behaviour and bullying tactics. Now that THEIR free ride is over, they need to find a new way to have a go at consumers, because an attack against OTT providers is an attack directly against consumers. Makes me sick.

  4. perciousjackson on

    Sounds like Gwede or Mac need to step in here with a spin…. what happened to free voice…. we want it all for Mahala.

  5. I think MTN is going to fight a losing battle here. Its very similar to the record companies that lost out to music piracy when mp3’s became so readily available. The record companies had to find other ways of generating revenue. (streaming, etc.) Whats going to happen when IS builds its wireless netwrok across cities? Users will end up using ADSL data instead of mobile data. This is on the horizon. I got a feeling that MTN is caught up in a cycle where their profilts were so high and they are trying to protect their margins, at the expense of innovation. They should start thinking differently. What worked yesterday, may not work tomorrow.

  6. Very well said! I was thinking along much the same lines when reading the article. In fact, the “music industry” set themselves back probably 10 years by fighting (or trying to anyway) the trends by introducing DRM etc. instead of embracing the reality and working with the technological trends…the horse had already bolted…the genie was way out of the bottle!

  7. Greg Mahlknecht on

    Yeah, I think Ahmad is confused. If they were offering cheap uncapped bandwidth, and everyone was watching Netflix and Youtube over it all the time, then, there’s an argument for both sides and his points have some merit. But in the case of mobile data where every byte is (over-)charged for, his views are just plain stupid.

    I also find it funny that he laughs at CellC for zero-rating Whatsapp and as a consequence, voice calls, when he is on record in another article today at saying that Voice calls will soon be free. When he’s finished having that little argument with himself, perhaps he can tell us who’s wrong – Ahmad from 2 hours ago or Ahmad from the present?

  8. Whine, whine, whine. These guys have lived in a comfortable mobile cocoon for far too long. It’s time they got out in the real world a bit, where the rest of us work for our money.

  9. “It almost turned into a fist fight”? Wow. Dramatic! Wonder who would win that fight? OTT is here to stay. They have the mass market albeit that VC and Mtn have a huge base too. Tricky predicament. I think there is a massive OTT elephant in the telco boardrooms right now, not being addressed. Perhaps because the gloves may come off?

  10. I think this is a case of the technology changing faster than the bosses brain.
    Think again, mate!

  11. Thats a laugh – The cellphone operators have had 20 years of free ride on the back of the internet. I know – go back to selling voice only and leave the internet and data business for the ISPs. Oops, can’t do that – the ISPs have all been killed by the cellphone syndicate in cahoots with the government.

  12. Cellphone operators are a protected corrupt industry, instead of going after OTT apps, lets rather open the cellphone industry and do away with protective selective licensing. Bring on Wifi, with roaming, its already happening. In the USA the new home internet wifi comes with a second channel for public hotspot, in every home, soon cellphone oerators will cease to exist, so squeal all you like on your way to the slaughter house..

  13. Ofentse Letsholo on

    It’s fine, they also laughed at Cell C when it started the mobile price war and look now where MTN is. MTN likes doing catchups instead of leading, it’s fine Mr Ahmad Farroukh.

  14. Maybe they should just go ahead and retrench all the staff they want to retrench… it may help with their profits

  15. “He points out that operators will still benefit from data spend.” And how true we no this is! Poor service at rip off prices.

  16. This. Where has Farroukh been the last two years? They have been laughing way too much and not competing enough. See what that brought them.

  17. @Ahmad Farroukh: If you haven’t realised that there is nothing to be done about OTT, then you shouldn’t be MTN’s CEO. It’s simple, we only want to pay for data and yes, we’re going to make free calls using that data. If you don’t like it and you try to stop us or make it harder for us to use OTT, then we’ll leave for another network. Adapt or die, end of!

  18. Do the right thing on

    Clever comment Mr farroukh , trying to make a case for your absurd argument, you guys including vodacom didnt complain about mixit, now when you see the potential of OTT(whatsapp) and how its eating into your revenues you guys are s%^$ scared.The reality is that these OTT service providers are goung to buy you guys out in the near future as they require your infrastructure to fully roll out their APPS, but we as consumers need to be weary as its a double edge sword , a monopoly on data could bite us in the proverbial.

  19. Shannon Naicker on

    Divide and conquer. Its about time we the customers get the benefits. Mobile network profits are reducing by the month hence the worry. The only free riders are the mobile networks who have overcharged south africans for 2 decades. I say go OTT Providers and ICASA.

    The times, they are changing

  20. Tuesday Is Soylent Green Day on

    What’s unfair is how the networks milked the consumer for decades on SMS costs. Now suddenly the tables have turned and they are crying “Foul”?

  21. Can’t we regulate these fat cats? Hundreds of other countries have affordable flat-rate data and calls, where is ours? Why are we the most expensive country in the world to connect to the internet? Do you not realise the overseas investment that’s lost due to us being uncompetitive?