Indonesian Regulation Management Recommendation for Over-the-Top Services Astari Nandhiasa
Sigit Haryadi
School of Electrical Engineering and Informatics Bandung Institute of Technology Bandung, Indonesia
[email protected]
School of Electrical Engineering and Informatics Bandung Institute of Technology Bandung, Indonesia
[email protected]
Abstract—this paper derives Over-the-Top (OTT) regulation analysis. OTT services have gained popularity worldwide and started to replace conventional telecommunication services. The propositions in this paper are deemed necessary as the concepts to protect operators in Indonesia from the eroding revenues caused by OTT services without harming the user. Keywords—OTT; regulation; operator.
I. INTRODUCTION The rapid growth of Internet and technology stimulates innovations in many fields, including telecommunication technology. Nowadays, it is not a rare sight to see telecommunication media or mean that operate using Internet. This phenomenon is also caused by the demand for fast – and sometimes real-time – information exchange, whether it is for the social purpose, business purpose, or individual need. The trend of fast information exchange gave birth to business chances for service and application developers. The new generation of Internet-based telecommunication services has gained popularity worldwide, as the Internet technology has been known for more than a decade and used all over the world. Conventional telecommunication services mainly focus on information exchange in the form of voice and message. The new telecommunication generation allows users to use Internet for more experiences compared to the one offered by conventional services. Users are now able to transfer picture, video, and other multimedia contents easily without additional charge. The services, provided by non-Internet Service Provider (ISP), are called over-the-top (OTT) services [1].
II. OTT SERVICES’ EFFECT ON TELCO Over-the-top services are services developed by third party outside the Telco operators. Unlike the conventional telecommunication services, over-the-top services are Internetbased services that offer Quality of Experience (QoE) to their users.
There is a wide range of over-the-top varieties, and they could be clasified into communication service and content service. Some of the communication over-the-top services are WhatsApp, Skype, WeChat, LINE, and KakaoTALK. Meanwhile, some of the popular content services are Netflix, Hulu, NOW TV, and TRPC. Those clasified into communication services became the new challenges and threats for Telco. Conventional telecommunication use the concept of Quality of Service (QoS). In that concept, services and access are fully controled by Telco. The development of conventional telecommunication is service-centric where Telco operators develop their networks to compete with each other. On the other hand, OTT players put QoE as their selling point that shows end-users the new possibilities and experiences in telecommunication. OTT players also make their applications accessible, thus could be accessed using any gadgets and devices. The development of OTT is experience-centric where end-users’ satisfaction is the main objective. Due to the new experiences offered by OTT, end-users deem OTT as the state-of-the-art telecommunication media with new and more interesting features compared to conventional telecommunicaion services, hence the popularity. OTT allows users to share data, location, picture, video, and contact information. Not to mention the accessible free Voice over Internet Protocol (VoIP) and messages. Before the spreading popularity of OTT services, Telco’s revenues were dominated by phone calls and Short Message Service (SMS). Those were the most known telecommunication media and the factors of Telco’s golden era. With the emersion of VoIP and chatting services, end-users shift into using less phone calls and SMS and use more OTT instead. The popularity of smartphones also contribute in augmenting the usage of OTT. Telecommunication experts around the world forecast Telco condition after the shifting trend of services used by users. J. Ure (2013) in “Telecom Regulatory Affairs Asia” predicted the following effects of OTT rapid growth [4]: •
In 2016, OTT users will be 18% of the global mobile subscription base in total
978-1-4673-8434-6/15/$31.00 ©2015IEEE
•
By the end of 2013, OTT messages send by users will reach 41 billion per day
•
In 2020, social messaging applications will cost operators $86 billion
Accessing OTT for media purposes (e.g picture or video transfer) requires big amount of bandwidth. It causes telecommunication traffic to be dominated by data traffic since end-users use OTT to access media content. With the rapid augmenting usage of OTT, should Telco operators not increase the bandwidth, users might eventually notice the decelaration in Internet speed. That is why there is a continous demand for bandwidth and traffic capacity. To keep up with users’ demand and to keep the network’s quality, Telco operators spend a lot of costs for network optimizing the network and enhance traffic capacity. One of the methods for network optimization is building new infrastructures. In reference [5], a research conducted by TeliaSonera showed that the cost required for data infrastructure construction is five times more than voice infrastructure. Meanwhile, the revenues gained from mobile data is only onefifth compared to revenues gained from voice services. This data indicates that developing infrastructures is not a long-term solution for facing the challenges of OTT. New strategies and solutions are necessary to cut Telco’s infrastructure development’s cost and maintain the network’s quality at the same time. Moreover, since OTT operates using Internet, OTT players do not pay billing infrastructure to Telco operators. This implies that OTT services do not contribute in escalating the revenue of telecommunication operators. End-users are not charged for accessing OTT either. Free access of OTT results in disproportion between the expenditure and revenue generated by Telco. While users keep demanding for more broadband and bandwidth, telecommunication operators ought to spend big amount of expenditure to maintain network quality. This goes on without the proportional revenue growth caused by the eroding usage of conventional telecommunication services and the increasing usage of OTT services.
III. NET NEUTRALITY have been many discussions among There telecommunication experts about net neutrality. Even so, there is no absolute definition of net neutrality. Every expert has his own definition, yet they have the same point of opinion. Daniel J. Weitzner (2006) affirmed four indispensable attributes of net neutrality [6]: •
Non-discriminatory routing of packets
•
User’s right to choose and decide on service levels
•
The liberty of producing, developing, and using services that never existed before without the
obligation of asking for network operator’s approval •
Non-discriminatory peering of backbone network.
Tim Wu (2013) stated that net neutrality is the key point in comprehending the principle of network anti-discrimination regime, that is by presenting users the liberty of accessing network applications, and give the application developers the equal right to provide them [7]. Weitzner and Wu both defined net neutrality as the Internet’s feature where Internet is a neutral platform without any discrimination to data packets. The other key point of net neutrality deduced from Witzner and Wu is the term net neutrality refers to the right of both users and developers to use and augment new services without the necessity to inform the incumbent. Even though net neutrality is necessary to protect the user’s right, it becomes a challenge to regulator. Internet has become an indispensible supporting pillar for many areas, such as education, economy, and health. Without net neutrality, those activities would not be as accessible as the current condition. However, net neutrality makes it difficult for regulator to watch over Internet for any harmful content. Therefore, net neutrality will be one of the factors considered in managing regulations regarding OTT. IV. INTERNATIONAL TELCO STRATEGIES Accessing OTT services use more bandwidth and capacity than the Telco basic services. In the telecommunication industry reality, there have been significance eroding revenues, increasing traffics, and higher costs. Many strategies have been proposed and implemented by Telco to overcome this threat [9]: Blocking OTT. Banning OTT services and throttling data by Telcos to control proliferation of OTT services. Value-based pricing. Operators can develop retail pricing propositions that are customers centric and unconstrained by regulations on bundling or restrictions on rebalancing. Operators will need to develop innovative pricing models to accompany new service. Telco app. Orange’s “Libbon”, T-Mobile’s “Bobsled”, China Telecom’s “YiChat”, Swisscom’s ”iO” etc., are some of the new voice/messaging app services launched by Telcos to counter the competition from OTT services. Most of these services offer free voice and text with a strategy to limit users to use rival OTT Partnership with OTT services: More and more Telcos are also exploring partnership opportunity with OTT players such as 3, Verizon with Skype, Reliance with Whatsapp, Airtel with Facebook, etc. and benefit from their traffic. Such partnership gave illustrated that OTT also represents an opportunity for Telcos to monetize popular apps by providing them to customers as an incremental value-added service.
V. OTT REGULATION ANALYSIS With the eroding revenue of Telco operators, worldwide telecommunication regulator needs to establish countermeasure. Without the OTT-related regulation, operators might face difficulties in raising their revenue due to disproportion in infrastructure development expenditure and revenue as explained before. The regulations initiated should be able to protect Telco so that they have the chance to compete with OTT players. The basic principles in establishing the regulation should cover the concerns of both telecommunication operators and OTT players. The other principle considered is net neutrality, that emphasizes the right of using, creating, and developing any services as Internet is a neutral platform without any discrimination. Therefore, we propose the following concepts. First, blocking OTT should not be allowed. The development of OTT is an important part of innovation in technology. Every developer has the right to create any revolutionary service without the need to inform the incumbent. This concept is also consistent with the definition of net neutrality. Blocking OTT would violate the right of OTT players, since the right of creating and developing new telecommunication services is not limited to telecommunication operators only. User’s liberty to use any telecommunication service of his own choosing would be guaranteed too with the existence of this concept. Hence, banning OTT services should be prohibited. This concept is suitable to be implemented in Indonesia due to two factors. The first one is Indonesia is one of the countries that has a lot of Internet and OTT users. With its 7.357 billion citizens and 2.2 billion social media users, Indonesia contributes 3.7 billion users who use mobile platform. The cost of blocking OTT for that amount of users would cause disproportionate cost. The second factor is Indonesia is not ready yet for developing the technology that could block OTT services. Second, OTT players should pay reimbursement for the infrastructure billing to the operators. It is necessary for the regulator to monitor and register traffic and bandwidth used to access OTT services. Those data could be used to determine the amount of compensation OTT players should pay to the telecommunication operators. By establishing this regulation, operators would gain revenue that conforms the cost of bandwidth used by users to access OTT. However, this concept requires close watch by regulator to obtain the data of OTT services accessed by users to later determine the bandwidth used. This might be considered as violating the privacy of users, because that means the regulator registers everything that they access. Countries with strong influence of the government could implement this regulation. Nevertheless, for the other countries, additional regulation is necessary to protect the privacy of users. Indonesia as a democratic country does not approve violation of human right – in this case is user’s privacy in accessing technology. Therefore, this concept is not suitable to be implemented in Indonesia.
Third, establishing the paid and non-paid mechanism for the interconnection. In the current, end-users are able to access OTT without surcharge. With the implementation of paid and non-paid mechanism, end-users would choose whether to pay charge (paid mechanism) or use the free access offered by operators (non-paid mechanism). Paid mechanism is superior to non-paid mechanism in the term of QoS; less latency, jitter, and packet loss. Meanwhile, since non-paid mechanism OTT focuses on QoE of the service, there is no guarantee of the QoS. The direct impact of paid mechanism perceived by endusers is the better quality of Internet connection, hence increasing the effectiveness of OTT service itself. Paid mechanism also opens the chance of partnership between telecommunication operators and OTT players. New features of OTT could be developed with access limited to paid mechanism interconnection. The exclusive access is profitable to all the parties: Telco gains more revenue from the additional charge, OTT players are able to develop new features to gain popularity and profit, and end-users are able to exchange information more efficiently and gain more experiences with the features offered by OTT services. Paid mechanism is acceptable for end-users who wish for better access and features compared to the current OTT services. As a developing country, Indonesian users demand telecommunication media that mostly support business purpose and individual need. Paid mechanism offer services without advertisement every time the users access them. It is one of the superior feature of paid mechanism to provide more efficient service for the users. Meanwhile, non-paid mechanism does not block advertisement in the services, as it is one of the methods for OTT players to gain revenue. Fourth, operators provide bandwidth levels for users to choose and purchase. The access limitation for every user is determined by the purchased bandwidth level. This is the implementation of capacity-based concept, where user is charged for every amount of capacity used. In capacity-based charging method, once the user overconsume or exceed the capacity limit, a new fare would be charged to the user. Nonetheless, bandwidth-level concept offers different approach regarding overconsumption. In bandwidth-level concept, user only need to purchase more bandwidth to be able to access the Internet without additional charge or degradation of Internet speed. In November 2015, Telkomsel, the largest mobile telco in Indonesia, claimed up to now has 143 million customers throughout Indonesia. Of that amount, a total of 140 million subscribers using prepaid SIM cards. Telkomsel provides three prepaid services, namely Sympathy, Ace, and Loop. The whole layanyan it generates average revenue per customer (average revenue per user / ARPU) Rp 40,000. While the postpaid service, available only kartuHALO, and the number is very small compared to prepaid subscribers Since Indonesia’s Telco is dominated by pre-paid users, this concept is also fitting for users who do not wish to shift into post-paid mechanism. There is no shifting procedure needed for users, hence the ease-ofuse. Users pay for exact bandwidth that they consume. As for the users who cannot afford purchase more expensive
bandwidth level, there is the option of lower bandwidth level. The consequence of lower bandwidth level is the lower speed of Internet and the bandwidth provided. Disproportionate cost of operators for maintaining network quality with the high traffic caused by OTT usage would also be reduced.
better features of OTT service and the domination of pre-paid users in Indonesia. REFERENCES [1]
VI. CONCLUSION The growth of telecommunication technology provokes the development of Internet-based information exchange media, including OTT services. With its always accessible feature, OTT becomes a new threat to conventional Telco services. Countermeasure in the form of regulation is indispensable to protect the telecom operators while considering net neutrality principle. Four concepts for the regulations were proposed: (1) Blocking OTT should not be allowed; (2) OTT players should pay reimbursement to the telecom operators; (3) Establishing the paid and non-paid mechanism for interconnection; and (4) Operators provide bandwidth levels for user to choose and purchase. For the regulation management in Indonesia, the most fitting concept is the collaboration of implementing the paid and non-paid mechanism and providing bandwidth levels for the users. The collaboration supports the demand for new and
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