An Over-The-Top Approach to Internet Regulation in Developing Countries

Oct 24

By Jyoti Panday

Increased smartphone usage and availability of wireless broadband has propelled the use of Internet based platforms and services that often compete with similar services based on older technologies. For example services like Facebook, Skype and WhatsApp that offer voice or video calls over the Internet compete with traditional SMS and voice calls over telecom networks. Such platforms have gained in popularity particularly in developing countries because calling over the Internet is far cheaper than making calls on telecom networks. Online video streaming and TV services like Netflix and online similarly compete with traditional broadcasters and network providers.

These online applications and services are transforming traditional sectors and changing the economic landscape of the markets. The increasing popularity of such apps and services, often referred to by telecommunications regulators as “Over-the-top” or OTT services, brings new regulatory challenges for governments. Historically, most of these services have not required a licence or been required to pay any licensing fee. As the use of such services picks up in developing countries, governments are rushing to create rules that would subject OTT providers to local taxation, security, and content regulation obligations—often under pressure from telco incumbents who are seeking protection from change and competition.