MTN South Africa CEO: No “Free Ride” for OTTs

Ahmad Farroukh, the CEO of MTN South Africa, in a conversation with reporters this week characterized the current relationship between OTT service providers and mobile operators as “unfair”—meaning that MNOs spend huge sums of money creating and maintaining mobile networks, which OTTs then use to take business away from them. In particular Farroukh expressed skepticism about competitor Cell C’s decision to offer its customers free data for the popular messaging service WhatsApp (as a promotion next month). “We are not saying we have to deny OTTs access, but the OTTs should be fair,” he said. “This access has a cost.” Farroukh says that while he does not believe that the cost should necessarily be paid directly by the OTT providers, some kind of global-level must eventually be worked out, perhaps through the GSMA, the organization that represents all mobile operators. Writing in these pages about the developing OTT challenge, we have often stressed the need for MNOs to accept the inevitability of OTTs’ appeal to consumers and do their best to embrace the phenomenon rather than fight it. MTN, for one, is most decidedly not taking that approach. Farroukh is right to draw attention to the imbalance in the equation whereby operators make all the investment in the networks without which OTTs cannot function, while the OTT players themselves make none. Farroukh’s pugnacious attitude is apparently shared by a number of MNO decision-makers; he recalled a recent forum in Dubai at which representatives of international operators and OTTs almost came to blows. What action could be taken by MNOs that want to fight? While OTT executives have gone on record accusing MNOs of restricting freedom of expression, Farroukh is not suggesting that mobile operators ban OTTs from their networks. Such a policy would be difficult to implement in any case. Nor is he insisting that MNOs try to get OTTs to pay for access on an operator-by-operator basis. Wisely, we believe, he is simply urging his fellow MNO executives to work together to put pressure on OTT players—which after all are fundamentally dependent on mobile networks—to reach some sort of agreement, presumably to defray the costs of infrastructure development or otherwise even up the ledger book. What form that arrangement will take is still unclear, but if the Farroukhs of the mobile world get their way, operators will be able to do better than simply collecting revenues from OTT-induced data consumption. The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx