MUSIC STREAMING AND ‘ZERO-RATING’ CREATE NEW REGULATORY CHALLENGES

MUSIC STREAMING AND ‘ZERO-RATING’ CREATE NEW REGULATORY CHALLENGES
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 The role of telecommunications companies has changed greatly in recent years. Whereas in the past, telecom firms were simply providers of communications services, today, they are becoming embroiled in issues related to content and are having to act as entertainment intermediators.

Network ‘neutrality’ issues

The ‘technological neutrality‘ challenge, seen by regulators as a principle to be properly implemented by operators, has now evolved to become ‘network neutrality’. While the technological neutrality requirement was relevant for inter-operator and operator-regulator relations, the newer network neutrality requirements apply to third parties and include operators, customers and content providers.

Operators, who, in the past provided infrastructure and traditional telecommunication services, such as voice and SMS, are now serving as data networks and service providers. They have become a form of gate-keeper and intermediary for the content transferred from content providers to consumers. The regulators’ role now is to ensure that operators act fairly and do not discriminate against either content providers or customers.

Playing to a different tune

The challenge in doing this is highlighted by the rapidly accelerating growth of data volumes and increasing demand on the available spectrum, which, as a result, is becoming a scarce and ever more expensive resource.

One of the biggest causes is streaming. According to IFPI’s Global Music Report 2018, streaming has become the single largest revenue source for music with 176 million users of paid streaming services contributing to year-on-year growth of 41%. Streaming now accounts for 38.4% of total recorded music revenues.

Operators across all the major global telco groups have adapted accordingly, introducing ‘zero-rating’ to allow customers to use select audio and video streaming services without using up data from their monthly allowances. At the same time, these offers are being closely watched by regulators for compliance breaches in line with EU network neutrality regulation.

Ensuring compliance

Already, one regulator raised objections regarding one such service from Deutsche Telekom’s known as StreamOn. In this case, the regulator noted that data transmission rates were reduced for customers on certain tariffs, meaning they could only stream videos in SD. Consequently, DT had to change the conditions of the service in order to comply with the network neutrality regulation.

A similar breach occurred in the Czech Republic. Here, CTU took issue with O2 over the provision of Spotify as a zero-rated service. The problem here was, Spotify was still available to customers even when they had used up all of their data allowance and were unable to access any other data services. According to CTU, if an operator sets a data limit, it must not treat any service preferentially to the detriment of all other content. Clearly, in this case, the zero-rating offering was restricting the use of other services and O2 had to change the terms of the service in order to comply with the network neutrality regulation.

As these two examples show, trends in technology and consumer behaviour are clearly disrupting the way in which telecoms operate their business and it’s important that we have the methodology and tools, such as Open Nettest, in place to deal with new challenges as they occur. Only then can we prepare for those challenges and implement the processes to address them effectively.

 

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Published on: May 15, 2018


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