In Short:
OTT players like Meta, Netflix, and Amazon have been using telecom networks for free while carriers invest in infrastructure. GSMA director suggests commercial agreements between parties. Telecoms seek revenue sharing to support 5G rollouts from large traffic generators like Netflix and Amazon. OTT market expected to reach $1.039 trillion by 2027. Telcos argue for fair share to support network investments. Granryd highlights need for more capacity and upgrades. Fair share charges critical for network sustainability.
OTT Players Should Clinch Commercial Accord with Telecom Carriers: GSMA Chief
According to Mats Granryd, director general of GSMA, over the top (OTT) players such as Meta, Alphabet, Netflix, and Amazon have been benefiting from telecom carriers’ capital expenditure to accommodate increasing data traffic without contributing financially. Granryd emphasized the need for a commercial agreement between OTT players and telecom carriers to ensure fair competition in the market.
Background
The ongoing debate between telecom service providers and OTT players, especially large traffic generators (LTG), has intensified as telecom companies seek a fair share from OTT players for using their networks. The rise in data consumption due to growing content consumption requires OTT players to share costs for 5G network rollouts and expansions to support the data surge.
Market Growth and Impact
Leading OTT players like Netflix, Amazon Prime Video, Disney+, HBO, Hulu, and YouTube
Future Outlook
As data demand is expected to quadruple in the coming years, telecom carriers require more capacity and upgrades, yet revenue is not commensurate with the investment. Granryd dismissed claims that a fair share agreement would stifle innovation, stating that top OTT players could afford to contribute to the network sustainability without hindering startups.
Compensation Mechanism
The proposed fair share charge aims to ensure the sustainability of telecom networks by ensuring that top traffic generators compensate network service providers. Granryd suggested a revenue-sharing model akin to other industries, such as the cab ride app Uber, to enable fair contribution from OTT players like Meta and Amazon.
