Services such as WhatsApp and Facebook that run “over the top” (OTT) of networks like Vodacom and MTN must face greater regulatory scrutiny in South Africa.
That’s the argument put forward by Vodacom CEO Shameel Joosub, MTN SA CEO Mteto Nyati, and CEO of Orange Horizons Sébastien Crozier.
The debate about regulating WhatsApp in South Africa was rekindled when Nyati took issue with the fact that the service was extracting benefit out of an industry without investing a cent.
Nyati called for the Independent Communications Authority of South Africa to “level the playing fields” between operators and OTT players.
Joosub spoke about WhatsApp in Vodacom’s recent earnings call, saying that regulatory authorities need to look at implementing some rules and regulations for OTT players.
“It needs to be carefully considered from a regulatory perspective,” he said.
He also hinted at taxation, by asking where services such as Facebook are getting advertising revenue from.
MTN and Vodacom did not provide concrete feedback when asked to clarify their remarks.
“MTN believes operators and OTTs can co-exist within a mutually-beneficial relationship. MTN is committed to establishing an amicable relationship with OTTs,” it said.
Vodacom said it had no further details to provide on the matter.
Intercepting messages and paying taxes in South Africa
Orange Horizons CEO Sébastien Crozier said the issue is simple: OTT players like WhatsApp need to pay local taxes, and must comply with local regulations.
“When an operator says that OTT players have an advantage in terms of not paying local tax and living in a fiscal paradise, they are right,” said Crozier.
In Europe, there are examples where governments forced OTT services to comply with regulation – like when all Apple iTunes purchases in Europe used Luxembourg’s VAT rate of 7%.
Regardless of where you bought apps or content in Europe, all taxes flowed to Luxembourg, said Crozier. Governments and regulatory authorities got together and insisted that Apple comply with local regulations, which it did.
In South Africa, the National Treasury implemented regulations – which came into effect on 1 June 2014 – requiring 14% VAT to be paid on all electronic goods and services sold.
The second regulatory issue around OTT players that must be addressed is security, said Crozier.
If an OTT service like WhatsApp offers communications services, it must comply with laws like RICA.
RICA requires operators to have systems in place that let the government intercept communications on their networks, provided an interception order is presented to the network.
“It is not about the battle between OTT and operators. It’s a question of sovereignty. Governments must have access to this information for the security of its citizens. There is no discussion about it.”
