Could OTT Enterprises and Telecom Operators be Win-Win?

24 October 2013 - A Workshop on Enhanced Cooperation in Bali, Indonesia

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     >> XINMIN GAO: Shall we start the workshop? Good afternoon. I want to welcome you to participate in our workshop on the OTT services. This afternoon, the workshop is sponsored by International Society of China and also co‑sponsored of China Association of Science and Technology. The purpose of this workshop is to find the eco system for win‑win model to develop the OTT services. You know, the OTT communications service is a term used to describe the deliver a real time communications services applications and futures over the top of the internet. So over the top of the internet so OTT service. I think in the recent years OTT services are world ride.

It's rapidly growing, including in some developing countries like China, Korea, Japan, and other countries. I think the internet's new application, new technology, has a web based social network and mobile applications and together with OTT services has dramatical change telecommunication service industries. Telecom provider views pressure and the challenge. They want to remain. They're competitive on the market and to remain ‑‑ to deliver more services and more innovations.

The new reason OTT provider companies are mainly internet companies. They're delivering more modern flexible and a more cheaper even cheaper services to customers.

The program is how to get ‑‑ operate telecommunication operators and the OTT providers to go to win‑win model. And how to get it. So our workshop is as we discuss and it's very important. I think this workshop will be beneficial for all, particularly for all the internet users and also service providers and OTT providers. Today, we have honor to invite some distinguished panelists. May I introduce the panelists.

On my right side is professor Xiaofeng Tao from China. He's a professor at Beijing University of Post and Telecommunications. And from my left side is Ms. Yang Jiang, vice chairman of Tencent Holdings based in China. They're the leading internet service companies in China. Also my right side comes from South Korea, Mr. Jihwan Park. He's a lawyer and also expert on this field. On my left side is from Iran, it is professor Shahram Soboutipour. It is hard for me to pronounce so I can brief it. So let's invite the first speaker, Mr. Xiaofeng.

He will give us an overall picture of the OTT service development situation and I think I ask all the panelists make their presentation no more than 15 minutes. Better is 10 minutes to finish the presentation and then we are open the floor for interaction for the audience and with the panelists. So I give the floor to professor Tao, please.

     >> XIAOFENG TAO: Thank you, Mr. Xinmin Tao. I'm Tao from the University of Post and Telecommunication. Today we ask telecommunication operators ‑‑ data shows that we're ready in the year of the mobile internet. For example, in China, the mobile internet has gained its popularity from the year 2009. It works well to the year 2012, people use to use mobile devices to get connected with internet. People go even further in the future. In other words, mobile communication is competitive industry due to its increasing demand and rapid development. Actually, mobile internet is an extension of internet. With mobile internet we don't have to keep staying with our cable. Instead, we can access the internet with mobile devices at home, on the sofa, working, in the vehicle, on the way and even in the subway.

Almost everywhere in the world. We are more chances to access internet with mobile devices. Services have been provided for mobile users, such as social network, online pay, online games and so on. The popularity of mobile internet results from the rapid development of mobile communication, especially the data transmission rates for the third generation mobile communication is about two megabytes per second. We're a fourth generation mobile communication is 100 megabytes per second. Next we will achieve 1 gigabytes per example. For example, we at the university, we established a network. In the year 2006 the rate is about 122 megabytes per second. in the year 2009, the rate is about 1 giga BPS ‑‑ in the year 2009. In the near future we will develop a network that's faster. For example, one gigabyte to 10 gigabytes. Besides, for local where it's local, area network LAN, can provide at least 100 megabytes per second now. The rate can achieve up to several gigabytes for a second. For example in the year 2014. So just one we call it LIFI instead of WIFI. We all it land communication. One can provide higher than 150 megabytes per second rate.

In summary, mobile internet already has the ability to support a high speed environment that can provide a high rate of services such as high television, radio, 3D TV, et cetera.

         Based on the rapid development of mobile internet some OTT services have been develop such high depth rate OTT services. With the popularity of mobile internet some lower byte rate but higher services have been developing as well. Such as real time communication applications and social networks. The OTT services is any services you can receive over the internet. It is not provided by your telecommunication operators.

The OTT services providers just utilize the internet established by the operators and charge the users for the provided accountant for the operator as a simple "Bitpipe." So OTT word can combine any devices access and services. For example, OTT can provide a connection between different devices such as cell phones, PCs, and televisions. Actually, in the year 2005, our university developed 1 OTT trial system which consists one intelligent with wireless success. The one desktop PC was well accessed. If the wireless channel is not good enough, radio can be redirected to the desktop PC from the network in order to get clear pictures or radios. Skype is also a kind of OTT services.

If there was a mobile internet at the first beginning time maybe Skype would be more successful. On the other hand, the emergence of OTT has put forward an opportunity for the operators. In the left of the picture, we can see the trend of P2P and MMSA. About $13 billion are predicted in the year 2017 compared with the 2012. The direct picture shows the operator review and the profit. One operator, you can see, from the year 2010 and the year 2011, and 2012 and 2013, we can see in quarter, the first quarter to the third quarter of the year 2003, the profit was deceased by about 2 percent for the first time.

Compare that with that in Q1 to Q3, 2012. I think the reason for this formula is that OTT services belong to the ‑‑ maybe the real internet, I said the real internet where the telecommunication term is designed for the transitional services such as calls, messages and the data communications. OTT is for the mobile internet which is the combination of mobile power and the combination of the internet. However the internet and telecommunication has totally two different design philosophy. For example, for mobile communication, we try to quarter services guarantee but for internet, sometimes we use best effort. We try our best to support the services to the users. This is different.

On the other hand OTT also provides a great chance to the telecommunication operators. You can see from the third generation, 3G, year as operator has been sinking for applications to expand their services such as a voice high quality radio streams and 3D TV, something like this. Somehow, I think, OTT could be ‑‑ act as one of those applications for the telecom networks is newer and popular although it is ‑‑ through. Technically win‑win is important, I think. For example, between OTT services provider and operator, you can see the Telephonica partner with Facebook, Google, Microsoft in developing charges services. Operator also adapt to their system design to OTT services. Yesterday night, a lady also told me OTT services provider also optimize OTT services according to the characteristics of mobile communications systems. I think this could be good for us. As university I think university also could play a positive role. For example, our university has established 4G trial networked and is working on 5G network. OT applications can be tested. Our trial network then operators and OT services operators could optimize their design respectively according to our trial network, according to our feedback.

Okay. Thank you very much.

     >> XINMIN GAO: Thank you, professor TAO. You know professor Tao is a very famous high level researcher in China for the 4G. He led a lot of research projects in the university and some institutions. He has more than 50 patents in this field and they publish more than 100 papers and also he teaches a lot of graduates and post graduates and doctorate degree students. I think he gives us a very clear picture of the latest trends of the OTT services, particularly, after the internet ‑‑ the mobile internet is emerging. I so I think he covers a very good presentations. I think the audience or other panelists have some comments or questions, I think you can have a few minutes left for ‑‑ do you have some comments? Okay.

     >> PARTICIPANT: Operators Association of India. So I'm coming from the mobile operator's side. So there's no doubt that OTT is very popular and the uptick has been very fast. The fact the matter is that there's an increasing concern with the operator's as to how it to monetize your network. While OTT is eating away to that portion very significantly. The challenge we're seeing is that more similar applications, in fact some government departments may start considering for social and for G2C, government to citizens services using a similar model where you start paying for a spectrum with a high software laying out a network. I think we seriously want to see more win‑win emerge, but right now, I think, operators have a major concern.

The GSMA has tried to popularize their communication media suit called Join. It's not yet taken off. The base in which innovations are happening on OTT base is far outpacing what the telecommunication operators seem to be doing. How do we address that problem?

     >> XINMIN GAO: I see your question is on the purpose of the workshop. So I ask professor Tao to make a brief answer and maybe other panelists will answer your question.

     >> XIAOFENG TAO: Thank you. That's a big question but I'll just give you one answer. For 4G, currently, the operator, the mobile law, is optimized as a network. I think we design 5G network. We may be we should adopt some opinions from the internet OTT providers, and I think this is very important. Years ago we designed our 3G, 4G, many, according to our experiments in telecommunication area. For faster design, I think we should adopt some opinions from the OTT service providers as it is very important. Now for this year our government launched about 5G research. The first stage is about 1.6 billion. 0.016 RNB, it's the first stage.

     >> XINMIN GAO: Thank you. I think we continue the discussion with your question, okay. Also, I want to maybe after the panelists make their presentation, I want to hear from you on this stance, okay? Thank you. Now, our next speaker comes from Korea, Mr. Jihwan Park.

He's at the legal and legislation staff of the Open Korea. Member of the net and maturity user forum in Korea. As you know the Korea is also very OTT famous service, really successful. It's so called KakaoTalk. Mr. Park will give us about a lesson from case of the Korean OTT provider KakaoTalk services. I think he will give us win‑win model maybe should it happen. Now, Mr. Park.

     >> JIWAN PARK: Thank you for your kind introduction and also for the opportunity to join this workshop sharing here at IGF. My name is Jihwan Park. I'm a lawyer working for open in Korea. Open in Korea is a nonprofit organization based in Korea which campaigns for freedom of expression in cyber space, reform copyright regime, and proper government policies affecting users and well as service provider in the internet. Today, I would like to divide my presentation into three parts. The first part deals with the case of Korean telecommunication companies collided with the OTT companies and the second part, concerns with the brief legal analysis of the case.

The last part relates to the consequences of the case and a very simple win‑win strategy.

Firstly, I would like to introduce the KakaoTalk case in Korea in 2012. In May of 2012, KakaoTalk as you already know, a message service provider with more than 20 million daily domestic users launched the voice talk. The OTT service mVoip major mobile carriers such as KT and SKT, announced that they would block the service unless extra network usage was paid. The telecom companies also claimed that the OTT service, the KakaoTalk voice talk causes data traffic congestion and what they're doing is free riding on their network. KakaoTalk claimed that there's no evidence that mVoip services did traffic congestion.

It creates discrimination from foreign free mVoip services like Skype or Viper. Korea Communication Commission which is regulatory body of Korean communication had allowed telecoms to discriminate the access to mVoip based on the tiered data feed. KTNS actually blocked the law institute data plan user not using the mVoip services which provoked an immediate backlash from users and neutrality advocates. I think the blocking mVoip arbitrarily allegedly infringes the existing norm, the competition law. Korean competition law stipulates that no enterprisers shall commit any acts of trading with a certain transaction partner by unfairly taking advantage of his or her competition in trade. I think the blocking mVoip service without proper ground is abusing their competition in trade. Several engines including Open in Korea filed a lawsuit against telecommunication company and coat of Korea will find whether the telecom's action infringed the competition law of Korea or not.

Telecom's blocking mVoip service without any ground also infringes new norm regarding neutrality. As we already know the architecture of internet had based designs on end to end principle which mean that the intelligence of networks shall be found on its ends or edges, not within the network itself. This has been regarded as the driving force that brings out the innovation and development of the internet.

The concept of neutrality as you have already known that inferred from these internet design principals so it means the network provider should trade all data equally in their networks and they should not discriminate user type of content and type of attached devise. So there are global movement for preserving the neutrality. Some countries likes Netherlands or Chile demanded the law. The US, as you have already known, approved open internet rule in 2010. Korea is now in progress of establishing the guideline for that neutrality. In Korea, net neutrality user form which I am a member of the forum, actually participated in the setting new norm regarding neutrality representing user's interest. The user forum launched in May of 2012, the last year, the 11 NGOs voluntarily joined as well as users and experts.

And by doing some public lectures, discussion forums or at the issue center campaigns regarding that neutrality and user forum, actually participating in setting the norm. Finally, I will elaborate on the consequences of the case in 2013 and suggest user oriented win‑win strategy. Firstly, telecom ‑‑ Korea telecom's introduced new data plans but still the users are buying 3G data plan which is blocking the mVoip service entirely but their new data plan, the current company has introduced and the new data plans are as follow. The highest tier plan allows its free SMS plus unlimited voice call, and there is no restriction of mVoip service.

Even the lowest tier data plan that telecom's restrictively. Secondly, telecom jointly launched the Service named Join which is the messaging service with 3G or 4G network or WIFI which has a function of file sharing and messaging and video sharing and voice call only through 3G or 4G data network. But the service is only available exclusively in the model incumbents.

Finally, telecom's launched the real LT service which is targeting on the voice talk of KakaoTalk and it means the voice over LTE, that voice calling that enables the voice calling over LTE, the 4G network, which has the equivalent mechanism with mVoip service. This service is only available now between the same mobile carrier users.

I would like to finalize my presentation by suggesting quite a simple win, win strategy, oriented to users. Firstly, telecom should not discriminate service arbitrarily. The blocking service arbitrarily, infringes the existing and new norms regarding the neutrality. Let users choose service between the service of the telecommunication companies such as Join or Real LTE and the service of OTT company then the innovated service will survive in the market. Secondly, the prerequisite of making the new norm, user participation should be guaranteed unless the user's interest heartly be taken into account. That was my presentation. Thank you for your attention.

     >> XINMIN GAO: Thank you, Mr. Park. You're a very interesting to introduce the latest trend of the KakaoTalk and what is happening in Korea. Maybe I have questions for you. Could you please in more detail the describe the functions of the KakaoTalk. What kind of service do they deliver? How do they charge for any user and also operators, how do they charge the KakaoTalk services.

     >> JIWAN PARK: KakaoTalk user do not pay fee to the mobile carriers. They only buy the 3G or 4G network. The telecommunication companies do not charge the user of KakaoTalk.

     >> XINMIN GAO: The telecommunication provider charges KakaoTalk only by data flow or traffic flow or ‑‑ only data flow, okay. Okay. Do you have some questions or comments?

     >> PARTICIPANT: Maybe many people will have some questions how KakaoTalk has the business model for monetizing some benefit. Basically, nowadays, KakaoTalk over lines this kind of new services has become a platform for another of the top services. For example, online games. Online game is launching over the KakaoTalk talk applications services attached by the service and also KakaoTalk is providing another private place for users to decorate the homesite. So users could items for decorating their homesites. So in this way, indirect ways, they can get some money.

So it's business model is quite different from the existing telecommunication companies but nowadays, more and more telecommunication companies and other competitive of the top service applications developers are feeling there. More and more KakaoTalk platform is becoming basic platform of the top services. So it is predominating the whole market of application services. So it has become a serious threat to other competitive application services. That's the fact, thank you.

     >> XINMIN GAO: Will you please introduce yourself.

     >> PARTICIPANT: I'm also open member and as one we're grappling with the government bad policies regarding neutrality so that's why I have some understanding about how KakaoTalk has their own business model. Thank you.

     >> XINMIN GAO: Thank you. Okay. Mr. Park, do you have some more? Okay.

     >> PARTICIPANT: Thank you for the very, very impressive talk. I'm asking for after the operator released new data plan, is there any impact on their user scale and does that mean the high level users increase or the people who just give up the OTT service?  

     >> JIWAN PARK: Because high tiered data plan is so expensive. It's more than about $100 per month. So people tend not to take the top tiered unlimited service plan. But there are still a lot of ‑‑ they still use the OTT service as well after the launch of the new data plan.

     >> PARTICIPANT: So I think it's kind of discrimination on the OTT service provider. So you mean the final consequence of the lawsuit, that means this kind of discrimination action is kind of legal?

     >> JIWAN PARK: Can you elaborate more on your question.

     >> PARTICIPANT: I mean, so you mean, this is a suit case and the final consequence is the operator release their discriminate data plan or you just imagine a very expensive within hundred dollar plan only those people can use OTT service.

     >> JIWAN PARK: No, No. The lowered tiered data plan user can use the service restrictively as well as the top tiered data plan user.

     >> PARTICIPANT: Okay. So they need to pay more data fees.

     >> JIWAN PARK: But the mVoip service, the lower tiered data plan user cannot use fully the mVoip service.

     >> PARTICIPANT: Okay. Thank you.

     >> XINMIN GAO: No more questions. Now, I would like to invite our next speaker to come from China. Mr. Yang Jiang. Mr. Yang Jiang have you worked in the software center of ministry telecommunication China and Siemens and the local Siemens network. He has over 30 year working in the telecom industry. He will talk about the OTT services in China. It's a very famous OTT service micro chat. So we will welcome Mr. Yang Jiang to make a presentation.

     >> YANG JIANG: Good afternoon ladies and gentleman. I'm Yang Jiang from China Tencent Company. At first, I would like to introduce my company and use several numbers. Tencent has several number ones in China. Instant messages QQ is number one. Now, it has mostly active accounts has reached 819 million. Social network system QZone, like Facebook is numbering one. Now, the QZone has monthly active users has reached 626 million. The web portal QQ.com is number one. It has the most service traffic now and also the online gaming is number one. It has the biggest market share and the users has reached 8.4 million.

So, you know, that Tencent is the leading provider of the internet services. Now it has another beside those four number one, Tencent has another one that's mobile App most frequent use the mobile app. We see it and chat. The Korean people mentioned the KakaoTalk talk. So now Tencent is one of the biggest OTT enterprises in China. But today's topic, could OTT win‑win with operators? I would like to describe it from three aspects. Let me introduce it from the first part current status of China mobile internet. China mobile internet market is growing very fast. From the left, you can see that by the end of this year, the smart phone base is estimated that the number will reach 538 ‑‑ almost the top of the number of last year. Now, the smart phone number in Indonesia is also growing very fast. The other right side, the chart, we can see that people now use mobile phone to access internet has exceeded the people who access the internet through PC.

So with fast development of smart phone, mobile phone app became developing highlight. From this chatter at least the list is the first 15 app on the mobile phone. We can see the instant the message rank first. About 84 percent users has used instant messages app on their mobile phone. I have to mention here that no more than 71 percent of China mobile phone users ‑‑ so my second part I will introduce the fast emerging OTT. Weshing is a new way to connect. It can use voice chat and you can send text chat, you can have group chat, and also you can send some animated emoticons customized. We think will launched in 2011. Within 34 months, the users has exceeded 500 million over the world. Compare it with the instant messages QQ that we developed in the PC era. It took seven years to reach the similar scale of users. So we can say that in the mobile internet, it's more easier and the faster to develop the mobile app users. With the fast emerging OTT ‑‑ also in China, the operators are facing big challenges. Could OTT win‑win with operators?

The impact on the operators can be analyzed from two aspects. One is the pressure on the network because OTT generated much more traffic. We call it signaling storm. The other is the pressure of their income operators income. So the revenue of voice and the SMS or MMS is in decline even though there was an increase in data revenue but it wasn't enough to offset the loss of voice and SMS income by OTT. Also, the operators are afraid of popularization. This is a word I created. Meaning the water and gas companies give us the product through their pipe line. The operators will need to measure activity and charge customers for use of their data pipe line. But I don't think facing these challenges, the nightmare for operators to operators is the end of the world.

Actually, we all have the solutions. For the pressure on their network side, I don't think that's only OTT enterprise problem. You know?

There are four factors to influence the network resource consumptions. First, as the smart phone ‑‑ wait a moment. The smart phone generates connections to the cloud server in order to send the ‑‑ to receive messages. But for IOS, the user can have the older app on their phone to use one connection but android is different. The worst case for android is that almost every app could send to each dedicated connections. So from company they show the data for the android devices, it could have the three times much more signaling traffic then IPhone.

So as the devise vendors, they should have standardized the usage of IP connection and the notification message. And the formal part for the operators, I think, they could upgrade their network to the broadband to 3G, 4G and to get more network resources.

Therefore, telecommunication ‑‑ supply such as Wowway Networks and CTE, they can also have some good radio link ‑‑ radio resource management to optimize it. As OTT application developer, we can also optimize the service logic and IP connection usage. Anyhow, the four parties have the same game. That's to seek and to keep the personal user experience.

We work together to try our best to reach the win,win, win, win, win ‑‑ five wins, not two wins, but five wins besides the four parties and the fifth party is the users. And the long term sustainable industry ecosystem. I have described this before, the OTT inference on the revenue structure of telecommunication operators that's obvious. The revenue, this is about China mobile, the revenue. It's in decline but the data traffic grows a lot.

So facing the challenges there are three scenarios of the reactions from operators. First, is that weaken ATT, try to restrict the OTT enterprises. The second one is to co‑operator with OTT. The third one is build telecom's own OTT. In China, China mobile and China telecom use number three. The third one. Build telecoms or OTT. China mobile build efficient and China telecom build ‑‑ they cooperate with another internet company.

The Tencent company support the second scenario, cooperator with China Unicom. I can give you an example how we can develop a win‑win scenario. In August of this year, Tencent and China Unicom launched sim‑card, they delivered to the users with five privileges. Four ‑‑ one is that they can give the users group chat privilege. Usually, people can get the maximum people group chat is 40 but for this with sim‑card users that they can the maximum people of group chat can be 150. Also, they can get some emoticons privilege. With the sim‑card, they can use some special emoticons.

Third, develop the payment privilege. They can get 1.5 percent discount privilege for prepaid charge. And the fourth privilege is discount the formal charge. China Unicom offer the beta traffic privilege for the 500 megabyte data with only ‑‑ so what kind of benefits could the China Unicom and Tencent get from this corporation. First, it has to build a brand that the OTT and operators can have the collaboration to release a charges issues that we've seen from the users. Second, it can have lead to the users experience. For China Unicom, it's not only increasing their data revenue but also attracting more subscribers, training from other operators.

For Tencent we seen usage and have to extend new services. Besides all benefits, Tencent can also get huge benefit that it has to increase Tencent e‑commerce business because and PIPAY are the channel to sell the sim card.

So this kind of cooperation between Tencent and China Unicom, shapes competitive advantages. From my presentation, I think you know my answer to the ‑‑ could OTT and operators be cooperating. My answer is definitely it can. Thank you.

     >> XINMIN GAO: Thank you, Ms. Yang Jiang. She clearly answered your question. Could we win‑win model, yes. And already started. Tencent with China Unicom and also, I think, Ms. Yang Jiang said that he said now it's the operator and OTT provider. They're competing in the three scenario. First, operator charge or block the OTT service like in Korea, huh? That use that as an example. Secondly, with partnership, make a partnership between the operators and the OTT service is like China, Tencent has done.

The third one is operator, they launch their own OTT services like China Telecom and China Mobile. But I think in case of China, the micro chat is launched by Tencent only 15 months the android user increase from zero to 500 million. This competitiveness already is over other competitors, including China Telecom and China Mobile.

So it's amazing because their services not only are free charges for user but also it's delivering innovative services, that are very modern, very flexible, very easy using. So I think it's a Tencent micro chat OTT service is a very successful case in China. So maybe you have some questions or some comments? Okay, please.

     >> PARTICIPANT: First, thank you very much for Ms. Yang Jiang's explanation on China Unicom's case. It seems to be very excellent. There is some questions regarding the kind of bundle services. You know, I'm not so sure how much ‑‑ of market power China Unicom has in China's mobile market. And also prepaid service has how much portion of what a market power has, I'm not so sure. But depending on such a market proportion, such kind of bundling service could have some problems in terms of competition regulation perspective.

You know, that kind of bundling of a telecom plus application service and specific applications services like chatting services and online services but a specified services can be effectively bundled with the existing telecommunication services. In that case, if such a telecom has a higher proportion of market power, it could control the whole application market.

So it could make some serious warnings to other competitive application service providers. So how this kind of a problems could be sorted out and have we any ‑‑ these kind of issues are being addressed?

     >> XINMIN GAO: I think the proportion of the China Unicom market share in the mobile services I think still radio law. Yeah, smallest in the mobile operators. According to the bundling services, I think, maybe Mrs. Yang Jiang can explain. It's just the bundling the basic service still is no charge. No charge, micro chat, but you charge something, then they deliver the service. Maybe in the package here they have some additional services to android user. So I think it's no any problems. It's my opinion. Maybe Ms. Yang Jiang can expand more.

     >> YANG JIANG: Yeah, I know you're concerned because China Unicom is the smallest operators in China among the other two ‑‑ among the three operators, so I don't think that's a problem bundling issue.

Just now, I expanded corporation case, I think that we're just exploring ‑‑ you'll never know if it's successful or not but we try to push on the win‑win direction to go. Okay. Thank you.

     >> XINMIN GAO: More comments? Okay.

     >> PARTICIPANT: The Operators Association of India. To your point about the android users greater portion of the signaling channels versus the IOS system, so have taken it up with android or Google to reduce that load on the network or is it left to Google or to android developers.

     >> YANG JIANG: Yeah, you ask a very good question. In fact, you know, android, the operating system, is open. So for each developer, maybe there's some many different scheme and it's very difficult to organize them to form the same platform to ask every app to send the connection signal at the same time. So I think maybe somebody ‑‑ I wish Google could do something. I hope so.

     >> XINMIN GAO: Okay. Maybe do you have more questions, maybe we have to find the panelists to finish their presentation. We will open a general discussion. You can raise your question later. Now, we invite the next speaker, it's Mr. Shahram Soboutipour. He comes from Iran. He's in charge of the Iranian ICT Guide Organization, Director of the International Affairs. I saw Mr. Shahram Soboutipour's name card. He's also cofounder of the portion IGF. No more? Okay. So I think Mr. Shahram Soboutipour will give us some analysis of the different system model between OTT and telecommunication. So now welcome Mr. Shahram Soboutipour.

     >> SHAHRAM SOBOUTIPOUR: Good afternoon, everybody. Thank you. My name is Shahram Soboutipour. I'm from the Iranian organization or ICTS Organization of Iran. It is an AGO which covers the whole private sector of ICT activists. I'm also active in consulting several companies and organizations regarding ICT business models. Well, speech will be a little bit different from our colleagues. We're looking for some models of win‑win corporation within with Telecoms or OTT service providers. But there's an echo here. Oh, sorry. I would like to go somehow negative, but finally, I assure you there is a positive thing in this.

Would I would like to talk about the experience we had in our country as a developing country and compare it to those stories that we had already behind ‑‑ besides me. So I go ‑‑ I would like to have a flashback of the story. Actually, once upon a time in Iran, there was a Telecom companies which had the monopoly of all communications services and for users across the country. It was over 20 years ago. And then after a few years, internet IPOs in my country. Then gradually, a few years later we saw services that operated on that internet infrastructure which their competing the services offered by that Telecom company. It was the beginning of a challenge between the telecom service provider and the internet service providers and this challenge continued and continued and increased as well as any other country that we know until the time that the Telecom service provider understood that he's losing ‑‑ it is losing its monopoly ‑‑ it's monopoly on the communication services.

So there was no choice for them to go and put pressure on the new services and try to ban them. Of course, in every country they have tried to ban. They were trying to ban or block them or charge them for the services. So it continues and continues until the time that they found that there is no way to continue this kind of blockage. The voices are increasing against these actions.

So there was a very, very slight change of model of blockage in this situation. It happened after the privatization of the Telecom company. Even after the privatization we didn't face any change in this situation. There was a change in the face, actually, but we didn't face the change in the core ‑‑ on the whole case and on the whole problem.

The problem this time came to the regulations and this Telecom company used as a leverage to limit this the service providers. Also at the same time they were using some of the powers that they have from the old time, which was the power of the pricing and there was some power behind this Telecom company which used laws and regulations to restrict the work of this new service provider, the new OTT service provider. This is the dark side I can say. So what is the win‑win model? I think I would like to compare two scenarios that has happened in developing countries or maybe not just developed country. In developing countries, they would ‑‑ there is a barrier. There is a barrier in mind of these Telecom services, there is a traditional thinking that they should keep their facts going and going with the current model. And the current model is the traditional telecommunication services. They don't want to change the business model. I think this is the problem.

They should go and change their thinking. There are win‑win models. I don't want to comment but all of my colleagues here expressed several of them. For example, new data plans that Mr. Park told about this, bundling, you talked about this and also offering various services in addition to the normal Telecom services.

Change of business model to work on traffic, this is something that I would like to make more pressure on this. I think the main barrier of the Telecom service providers right now, those were just thinking traditional is that they do not have long‑term thinking. In long‑term     thinking, they should focus on new services, focus on new business models that they can change to provide and keep their profit and continue their business as successful as it is right now.

Well, actually, I would like to summarize here and I will be happy to answer your questions regarding my experience in my country. Thank you. Thank.

     >> HARRY SUSTANTO: Thank you for the opportunity. My name is Harry Sustanto. I'm from a telecom provider in Indonesia. I think that I understand or I have learned sharing from Korea and China. Well, I think the situations may be different from one countries to our country. In China and in Korea, for what we just heard, the collaboration with Telecom providers and OTT players is open. The possibility is there.

In what I would like to hear from your opinion from the panel is in the situation where the market is totally different, where provider has not strong position as compared in China and Korea. In China and Korea, it may be two or three Telecom operators. Here for example in Indonesia, we have more than five.

So the market ‑‑ the position for the operators in the market is different as compared to China and also in Korea. Second thing, so maybe the domestic OTT players or application provider is not as strong in Indonesia as compared to China and also Korea. The fallibility of the applications and players. Also, the language is slightly different. My understanding is that China and Korea had to have a specific way of writing words compared to ‑‑ in Indonesia we're using more Latin. So that is one thing. So how is the panelist see the situations in the market where the operator is not as strong as in China and Korea and then also, the applications providers specific particular specific uniqueness in Indonesia is not as unique as in Korea and also in China.

So maybe, I can ask or have further explanation from Mr. Park or maybe from Yang Jiang.

     >> XINMIN GAO: Thank you for your question. Your country hosts the IGF events very nice reception. So I want to thank you. The panel, I think your question is maybe very difficult to answer because I don't think panel know the Indonesia market very well. But I actually ask my panelist to briefly answer you in principle. Okay? Then we have another panelist from Russia so I have to keep some time for his presentation. So maybe Mr. Park, maybe you can brief response to this question.

     >> JIWAN PARK: So I will briefly answer that question. Regarding the net neutrality where there are legal regulation or government intervention is needed or not could depend upon each country's market situation. Unfortunately, Korea's market situation is oligopolistic and like the Indonesian situation. But taking into account that the global nature of the internet and the end‑to‑end principle, we may think that there's some kind of global discussion on this, the net neutrality issue. So there are a lot of global movement to put that neutrality as a norm in each country. So I think there will be a dynamic coalition on that net neutrality tomorrow morning here in IGF Bali. I think the session will be very helpful to understand more about that neutrality.

     >> XINMIN GAO: You want to say something? Maybe you wait a moment, okay. I think, Ms. Yang Jiang, you can answer many question later. Now, I want to invite our last panelist from Russia, Dr. Mikhail Komarov. He comes from Russia National Research University School of Economics. Maybe Dr. Mikhail Komarov, you make a very brief presentation, yeah, okay. Because the time we're running out. Okay. Thank you.

     >> MIKHAIL KOMAROV: Thank you, very much chair. Thank you very much for the invitation. It's a pleasure being here. So I will try to do it as short as possible. So in terms of win‑win strategies. I think it's necessary to keep in mind about some trends going on around. Trends for internet of services and new trends of things integration. The thing is that YouTube mobile let's say technologies implementation, massive implementation ‑‑ we actually move to another area when we have data driven approach. Which means that is actually how internet of services. That's the base. We're talking about data driven approach.

Another approach is that services should me massive but there should be customer centricity in terms of service development and service delivery.

So first we have data driven approach. Second, we have personalization, but in terms of massive market. The third one, we're talking about third party ‑‑ for the services. Actually, it's in my opinion, we're not talking about service providers or Telecom providers earning money. We're talking about third party providing connection between service providers, Telecom providers, and customers.

The thing is that it's the same question when we're talking about win‑win strategy. It's the same question as, you know, what is the stakes and what we're tracking right. When we're talking about services we're talking about infrastructure for service delivery. That's why we have Telecom providers, right? But now, we live in service economy which means it its not just infrastructure, its service which users and customers ‑‑ which they use which means that they would pay for service to someone, to the company delivering the service to you. So we're talking about service providers.

In terms of win‑win strategy, yeah, from Telecom side, it was already well‑explained by colleagues from the panel. For the Telecoms we have data, we have traffic, special data plans, right? For the service providers, we have subscription and you some useful services for the customers.

Anyway, we all, in terms of OTT, in terms ever Telecom providers, both depend on ‑‑ they both depend on, you know, their customer and they usually are the same customers for them. But customer pay one amount of money for the infrastructure for the service delivery and another amount of money for the particular service. That's where we have the boundary of problem not coming from Telecom providers because Telecom providers they were first, you know, introduced to the customers as their communication service providers, right? But from more from internet service providers, from OTT side companies, because they're interested in having their own infrastructure for the service delivery. That's actually where regulations apply. So in terms of monopoly, in terms of competition, and competitors in the market.

That's where we have the third party appearing at the same time. The third party trying to be neutral, you know, from the Telecom operator side and neutral from service providers. Let's say marketing part probably is that, you know, the third party which would be responsible for their proper service delivery and profit distribution between Telecom providers and internet service providers. So that's my, you know, short opinion. Thank you, very much.

     >> XINMIN GAO: Thank you. Thank you, Dr. Mikhail Komarov, for your contribution. Now, I think we have a very limited time but I still want to open for discussion and for remote participants. Maybe from the remote side are some questions, comments? Yeah? Please. Okay.

     >> This question comes from Mr. Kazuki. He's from Center for Global Communication in Tokyo. The question is for speaker from Tencent. When you talk about OTT and infrastructure one of the assumptions that they should play independently. If both parties collaborate it may be a win‑win game for two players. But it doesn't work the way for OTT players. So I just wonder if it can be a real solution for OTT and network problem, thank you.

     >> YANG JIANG: Not only win‑win between operators and OTT players, but also should win between OTT enterprises. I think there are many, many, OTT enterprises now in China and they deliver different mobile app and for the similar application, maybe their relationship is kind of a competition relationship. So I think for the different mobile app maybe it may be the not because of what for this session, the topic is the relationship between OTT and operators and then now Weshing is a new way to communicate and that has made some challenge to the operators. But other OTT app may be have some different situations. So here, I think, we just focus the relationship between the kind of app may generate some substitution of the traditional operator services such as voice and SMS & MMS. I'm not sure if I answered your question, no more questions? Okay. On sight, please.

     >> PARTICIPANT: Thank you, Mr. Chair. I would like my question to the speaker from Korea and China on the relations between OTT and Telecom operators. You know, when we're talking about the battle between OTT and Telecom operators, we're not able to analyze ourself from the discussion on the decline of the Telecoms because generally the telephone business is declining after the other business is growing very fast. And when we are talking about the decline of the revenues, at the same time we're talking about the declining of income for government because the government takes the taxes regulatory charges from licensing, from the operators and of course, the government would ‑‑ they don't like their income decreasing. In this case, can you tell me, is the government able to impose what they call ‑‑ in this case because we at OTT and Telecom, they're doing the business between the state jurisdiction. Can they force it to win‑win solution or whatever. Thank you.

     >> XINMIN GAO: Thank you, for your question. Maybe Ms. Yang Jiang will answer in more detail later. According to my knowledge, China government still staying aside from the operator and the OTT providers. In the research, no action yet ‑‑ any action yet. So no restriction and no charges for the taxing of the taxes from operator, No. No actions yet. I think maybe in the near future, maybe some new regulation regime will happen, I believe.

     >> YANG JIANG: In China, not only, I think operators is to stay on the companies. They pay taxes to government. Tencent is a private company, although we're published in Hong Kong stock market and we also pay a lot of tax to the government. So I don't think the government will make any discussions. It depends on the taxes who pay them much more or more or less. This is a trend, in fact. The technical trend also, a global trend. Everyone knows that. For Tencent, you know, we have a lot of users on the PC side. We're just now imagining the instant messages QQ is very successful.

Why we're still developing another mobile app we chat, that's because we have to face this change to the mobile internet era. Operators are the same. Maybe before they rely a lot on their traditional services, voice and SMS but maybe in the near future they will shift their revenue to the data.

     >> XINMIN GAO: Okay. Well, I think because now really four, five, we have to close our workshop. I think the topic on the ecosystem for operator and OTT service is a very new challenge for all the parties in telecommunication industry, not only for operators but also for government, for regulators. So I think the workshop is a very interesting and very successful. So I would like to thank all the panelists who presented here for their wonderful contribution and their presentations. Also, on behalf of the Internet Society of China, I thank all the participants here. Stay with us to join this workshop. Thank you, again.

 

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