The impact of OTT on telecommunication services provided by operators in Senegal

Size: px

Start display at page:

Download "The impact of OTT on telecommunication services provided by operators in Senegal"

Dorcas Daniels
6 years ago
Views:

1 The impact of OTT on telecommunication services provided by operators in Senegal SAWAS Marrakech Sonatel Wholesale Division - Birago Diene Moctar Beye

2 Introduction : Digital world is now a reality, bringing disruptive business changes (1/2) Our telecommunication sector is currently in a disruptive path, with the development of broadband and the creation of numerous applications and contents The so announced data tsunami is already here, the digital era is now a reality We, Telco's, do not enough monetize our network assets & our customers bases, our major strengths, through profitable data offers bundled with innovative services While our core voice and SMS revenues, fixe as mobile, are decreasing vertiginously, While we can t stop investing a lot to make our networks support the data tsunami, with the required quality of service The business model is completely changing with many new players, many new services, new usages, new know how...

3 Introduction : Digital world is now a reality, bringing disruptive business changes (2/2) The OTTs, (Viber, Whatsup, Apple, Google ) are one those players, the most threatening for our business On the top of our infrastructures and customers we are taking care of with huge investments, the OTTs are offering contents & applications, often bundled with devices, using huge amount of bandwidth, collecting revenues but paying nothing to the Telco operators and to the governments Their impact is huge, on our business, on our states governments finances, on legal and security matters, and this presentation will focus on all these aspects and will give ideas on possible solutions, based on what have been done so far in some countries. The presentation will be in 4 parts : The impact of the OTTs on the voice & SMS telecommunication services The estimated financial loss for the operators and the governments Legal and regulatory issues raised by the OTTs business model What to do? Strategy and actions against or with the OTTs?

4 Agenda The impact of the OTTs on the voice & SMS telecommunication services The estimated financial loss for the operators and the governments Legal and regulatory issues raised by the OTTs business model What to do? Strategy and actions against or with the OTTs?

5 Disturbingly, the threat in Senegal is due to the importance of international activity in the business model of operators AUPU incoming international calls in Africa (VOIP + CT) % 58% Revenu international In terms of average traffic per capita, Senegal occupies the 3rd place of international incoming calls (TDM+VOIP). This situation can be explained by its powerful diaspora in addition to the quality of Sonatel network and it s partnership policy. It takes to Sonatel more tens billion dollars per year that strongly contribute to the balance of payment and to the export of services from Senegal, tax excluded.

6 The increasing adoption of OTT applications by our customers negatively impacts the incoming international traffic as well as SMS. resulting 16% decrease of incoming international traffic between 2011 and % of Internet users are active users of OTT VoIP solutions incoming international traffic Sonatel undergoes every year a decrease of 20-25% Tigo and Expresso displays -20% -25% And 23% of decrease on mobile originated SMS traffic to International between 2010 and 2014 VoIP Instant messaging

7 The OTT bypass : the development of a new form of fraud that ultimately threatens the viability of the international segment. In order to take financial benefits from their use, the OTT plan to break into the wholesale market and become terminators for international calls. In 2013, Viber filed a patent application in the United States for a method to connect OTT and TDM networks as to become " terminator for international calls". Diagram of the OTT fraud bypass

8 Agenda The impact of the OTTs on the voice & SMS telecommunication services The estimated financial loss for the operators and the governments Legal and regulatory issues raised by the OTTs business model What to do? Strategy and actions against or with the OTTs?

Operators are investing significant amounts to renewal their infrastructure that OTT overload with a huge impact on QoS and without any compensation Sonatel investments (Billions FCFA) Inv.

9 Operators are investing significant amounts to renewal their infrastructure that OTT overload with a huge impact on QoS and without any compensation Sonatel investments (Billions FCFA) Inv. In billions network Others Total Evolution of bandwidth (megabyte) Youtube alone currently represents 20% of Sonatel data traffic; this traffic, with the arrival of the new players in streaming video, double by one to two years OTT not involved in the operator investment, and use their infrastructure cannibalizing their services.

10 Sonatel strongly contributes to tax revenues of the state, unlike the OTT which escape all forms of tax assessment in Senegal. En Mds de FCFA CAGR State taxe paid by SONATEL % State taxes paid by the OTT Over the period , out of 1 franc xof of sonatel revenue, about 0.4 francs of taxes were paid to the state. Over the same period, OTT such as Viber, IMO, Whatsapp, Tango... haven t paid even one dime of taxes to the State of Senegal. Not only the OTT cannibalize the voice and sms operators in addition to the bypass, but they also greatly threaten the viability of the sector and the contribution of operators to state revenue.

11 Estimated shortfall between 2016 and 2020 operators and states, 3 scenarios Worst (1) No regulatory action for OTT. Explosion of the by-pass OTT Ineffective marketing campaigns. Monitoring tools ineffective VoIP traffic. -15% of decrease per year of international incoming revenue. Base (2) No regulatory action for OTT. OTT bypass under control. Effective marketing actions. Performance monitoring tools of VoIP traffic. -15% of decrease per year of international incoming revenue Best (3) Blocking OTT. OTT bypass eliminated. Effective marketing actions. Performant monitoring tools of VoIP traffic. + 4% of increase per year of international incoming revenue. What are the expected impacts and loss of earnings for the Group and the States of our countries where we are present?

12 Summary of the shortfall accumulated in for operators and governments of our countries on part of the only operator Orange. Billions of XOF Sénégal Mali Guinée Bissau Operators s loss of earnings ,5 11,7 Governmentsshort Sénégal Mali Guinée Bissau fall On state taxes 85,2 57,4 31,8 3,3 On payables 158,2 dividends Total 243,4 57,4 31,8 3,3

13 Agenda The impact of the OTTs on the voice & SMS telecommunication services The estimated financial loss for the operators and the governments Legal and regulatory issues raised by the OTTs business model What to do? Strategy and actions against or with the OTTs?

14 Legal and regulatory issues caused by the OTT OTT offer the same services as the operators (voice, SMS, content...), but: are not subject to licensing under the Telecommunications Code don't have any contractual obligation with telecommunication operators in terms of interconnection. Therefore, exercising unfair competition to telecoms operators and violate the Code provisions in Articles 1.2 and 8. OTT cause national security issues: inability to apprehend the criminals who communicate via OTT channel there is no formal way for justice to compel OTT to Senegal's state authority to provide users information. OTT cause issues of personal data violation : OTT hold much personal data they can use at any desired purpose without risk of being sanctioned by justice, the violation of the secrecy of communications by OTT gets out of the States, OTT may send advertising pushs users without prior permission from the CDP.

15 Agenda The impact of the OTTs on the voice & SMS telecommunication services The estimated financial loss for the operators and the governments Legal and regulatory issues raised by the OTTs business model What to do? Strategy and actions against or with the OTTs?

16 The challenges in conclusion From , only in the international segment, the activity of OTT risks losing Sonatel 256 billion FCFA 164 billion in Orange Mali, Orange Guinea 78.5 billion and 11.7 billion in Orange Bissau. This net loss induces a significant shortfall for states in terms of tax revenues and dividends for Senegal in particular where the impact is estimated to billion FCFA. The activity of OTT is unfair competition for operators (they offer the same services without being subject to the same obligations). Which is a violation of the telecom code. The activity of the OTT also poses security problems for the state and the citizens of Senegal and violates of the protection of personal informations. Facing the OTT problem, some countries have adopted rules along the lines of a regulatory and tax fairness between all players offering the same services Telecom: A competing service, same rules. Faced the threat posed by OTT on the sector and Senegal s economy, combined actions of regulatory, technical and marketing are proposed.

17 Regulatory approach over the OTT Some examples of treatment of the OTT issue Country approach IMPLICATIONS OTT China France VoIP is considered a basic service, reserved for duly licensed operators Ongoing investigation - OTT (Skype in this case) could be classified as an operator, in which case it would be subject to the same rules as the other operators. OTTS usually blocked if they are not allowed by the regulator. Symmetric regulation for OTTS that offer VoIP. South Korea Internet connection is neutral but with flexibility. Operators can set a price for services dedicated to premium users of OTT (premium payable by the costumer). United kingdom Germany The differentiation of service and traffic is accepted. All VoIP providers are subject to the same rules. Shapping is accepted if there is no partnership with OTT. Symmetric regulation to OTTS that offer VoIP. UAE The VoIP service offering is subject to license. OTT services are blocked in the United Arab Emirates.

18 Some guidelines Regulatory Discussions with the regulatory pushing them to take action along the lines of a "regulatory equity" between operators and OTT (ongoing). Build argument for the State authorities to raise awareness of the OTT problem and take appropriate actions or measures.. Develop abundant offers to reduce tariff arbitrage in the national market. Marketing an ITN Testing libon and renewing the corridor offers : sim mundo, jokko Sensibilize and Threaten the partners suspected to deal with viber in Strengthen the management of VOIP penetration with detection solutions and fraud solutions. Sharing experience with orange MCOs on the control of VIBER IN

19 Thanks

MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are the leading provider of mobile communications services in Guatemala, providing communications, data,