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February03

Can the battle against OTTs be won?

Spot the difference: Uber versus OTTs

I CANNOT, while following the ganging-up by MTN and Vodacom against Over The Top (OTT) messaging services like WhatsApp, Skype, Viber, and others, shake off memories of the South African meter taxis, last year, when they went into the same battles against Uber. 2ff30b7a4c4c496a875a7ccd1d0b8344

The similarities are striking; two mobile giants who dominate the field – Cell C wisely opted not to be part of this seemingly short-sighted battle – decided that they cannot stand the sight of anyone entering the field through smart, innovative, ideas to deliver a much needed service to customers.

 

Innovation is the engine of human progress

I suspect that this battle against innovation – which is really what this is all about; if it’s not greed and jealousy – will be lost in the same way that meter taxis could not beat the spread of Uber; it’s an unwinnable battle. Uber continues to face occasional skirmishes by traditional players who still use fingers to count their pennies in some parts of the world; most recently in Paris, France. But I suspect that Uber is here to stay, and so are OTT services. And there will be more such services over time because there is always some genius sitting in a small room or home garage somewhere in the world, trying to come up with clever ideas to make money.

Such people spend time looking for gaps in the way things are done without incurring excessive overheads. They study how people consume goods and services and how such goods and services are brought to the consumer. They also appreciate the old principle that consumers will always want the best for as little as possible. This is part of the slow, historic, evolution in production and consumption patterns. It began hundreds of years ago and will continue into the far away future.

Thanks to the magic of the World Wide Web, technological innovation and reach have become relatively cheaper. For many students, young unemployed people and communities in many developing parts of the world, OTT services are not a luxury; they provide easy, affordable, and exciting ways to connect with the world around them; including friends and loved ones from around the world. Any attempt to make it harder for them to access such services is likely to come against serious consumer backlash.

 

…and it is unstoppable

Despite the occasional skirmishes, Uber has continued to grow all over the world. It has opened  up new markets and drawn hundreds of thousands of new users who feel safer and enjoy the convenience of knowing what is happening, from following the movement of the cab before it fetches them until the end of the journey, culminating in an instant opportunity to rate the driver and receive a fare receipt right at the end of each trip.

It’s even more reassuring for many parents, including this writer, to be in a position to trace the route followed by the cab when one uses the service for transporting teenage children to visit friends or return home.

Lamenting OTT services in an exclusive interview with Business Times, Shameel Joosub, Vodacom’s CEO, had this to say, “[they] should be regulated in the same way as telecommunications operators, especially as there is a risk that these new competitors will threaten cellphone companies’ ability to invest in their networks.”

Really now? Cellphone companies might be restricted from investing in their networks for fear that some smart innovator might come up with a way to ride over them? They have to be seriously short-sighted and cowardly to let this happen.

Neither Vodacom nor MTN seem to consider the fact that thanks to OTT services, their customers have been spending a lot more money on the operators’ data services, as they cannot access OTT services without the underlying data network provided by the mobile giants. The mobile operators need to invest in new ideas in order to come with smarter ways to grow their income, including allowing OTT services to be used as honeypots for increased sales of their data services.

At pains to explain that MTN is not totally opposed to the existence of OTT services, the company said in a statement that it believes that the telecommunication operators and Over-the-Top operators can co-exist in an agreed and mutually beneficial relationship. It went on, “MTN is committed to establish an amicable relationship with OTTs.” I wonder if this “mutually beneficial relationship” implies possible ganging-up against the unsuspecting consumer, ending-up in increased telecommunication rates.

Refusing to share a platform with its two main competitors, Cell C issued a statement to say that it strongly believed that regulating OTT players could be to the detriment of the industry and consumer. The company’s CEO, Jose Dos Santos, chose to emphasise an approach that avoided regularisation in favour of an amicable approach to working with OTT players.

 

Need to find brand image preserving solutions

It is possible that, at some level, Cell C shares the concerns of MTN, Vodacom and other mobile service providers in Morocco and elsewhere; but using a threat of regularisation as a first step is hardly the way to go if they want to maintain consumer goodwill. These companies have to invest in innovation if they want to stay ahead. They have to think out of the box, keep it simple as it were, and come up with more clever ways to satisfy the ever evolving needs and preferences of their customers while keeping the overheads low.

Importantly, they should be mindful that while they’re busy trying to use the law to protect their turf, somewhere, in an isolated room or garage, new ideas are being developed to give them possible new headaches.

  • Posted by donvalley
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