Time to Get Real: How Streaming Giants Are Sucking the Life Out of Telcos

South Africa’s telcos are getting a raw deal from the streaming giants. While they’re busy delivering high-quality entertainment to your doorstep, they’re leaving our telecoms operators to foot the bill. It’s time to call out these unfair practices and demand a fairer deal.

Professor Petrus Potgieter, an expert in decision sciences, agrees that it’s high time telcos started getting paid for their hard work. "The big picture here is that the broadband providers have a high-cost investment model with high fixed costs," he says. "They’re heavily regulated, but the content providers are not."

Potgieter points out that while telcos are saddled with onerous coverage obligations, they’re not getting a fair share of the profits. "The content providers enjoy the immense protection of copyright, and no one ever discusses this," he says. "They’ve been hugely successful in leveraging copyright into profitable business models online, and the ‘value add’ has gone to them, not the access providers."

But Potgieter isn’t just advocating for a handout. He thinks it’s time for telcos to get smarter about how they do business. "Regulated per-gigabyte fees could make sense," he says. "Icasa might want to consider regulating the market in the same way it regulates call termination rates."

And what about mergers and acquisitions in the telecoms sector? Potgieter thinks it’s time for the Competition Commission to get out of the way. "The Commission is a bit fanciful about the effect these mergers would have on the market," he says. "South Africa has a healthy and competitive telecoms market, and there really is no need to be concerned about mergers, unless it’s Vodacom and MTN that are doing the merging."

So, is a market solution possible without regulatory involvement? "Possibly not, given the asymmetry in bargaining power [between operators and content providers]," Potgieter says. "But it’s time for telcos to get real about their costs and start demanding a fairer deal."