7 July 2017

A flattery of sorts – how EU legislation could impact OTT services

The growth in OTT video services such as Netflix, Hulu and Roku has been stratospheric. And as with many industries, once they reach a certain size or influence in people’s lives, policy makers and regulators lean in for a closer view. Ovum estimates that the number of monthly active users for chat apps will exceed 2.3 billion in 2017 worldwide. With WhatsApp, recently joining the likes of Skype, Apple’s Facetime and Viber to offer video calling to its 1.2 billion users it’s no great surprise that these types of services are under closer scrutiny.

The much anticipated European Commission proposal for the European Electronic Communications Code (The ECC) has been issued in response to innovations and developments in technology, market structures and communication networks as well as to end-user, both consumer and business, demands. Significantly for providers of OTT services, the ECC deems OTT communications services as Electronic Communications Services (ECS) and therefore potentially subject to the same regulation as telecoms providers.

So what does this mean for OTT service providers?

First off, it’s important to note this is still at proposal stage and will undergo a series of consultations and further changes before it enters the process of becoming legislation. So for now, nothing changes.

Secondly, OTT providers should consider speaking with their telecoms partners to help manage and navigate the proposed new changes in OTT regulations. Depending on these conversations and subsequent negotiations once the legislation comes into play, companies may adjust their pricing model and service proposition to align their bottom line and revenue performance with the new reality.

Thirdly, if the regulation follows the new ‘roam like at home’ mobile charges legislation, service providers are likely to see an increase in usage as European consumers take advantage of the ability to view streamed content even when travelling abroad as part of their standard data plan.
For now, OTT services can expect to see a hike in their usage across the EU, with people taking advantage of the new roaming charges, as well as the support for more public wifi provision.

But what is clear, is that the OTT industry is being considered a significant part of the industry by regulators, who will likely be put under pressure from competing telcos to consider them as equals.