The rapid growth of over-the-top (OTT) streaming media in Southeast Asia has prompted considerable discussion among regulators about industry promotion and collaboration, consumer protection, as well as the economic contribution and impact of OTT services.
All of these issues received an airing during a valuable side meeting at the recent Asean Telecommunication Regulators' Council (ATRC) meeting in Bangkok.
There is no universally agreed upon definition for the vast range of services that fall under the umbrella of OTT services, which generally refers to any service delivered via the internet. These include communications (delivering audio, video and other media), social media platforms and products, media and entertainment services (such as movie streaming and TV on-demand), and e-commerce (marketplaces, fintech, transport services and more).
Increased access to broadband internet, as well as rapid digitisation and disruptive technology, have driven the increasing popularity of OTT services among consumers and given small businesses access to a global marketplace. Startups and content creators across Asean now enjoy easy access to a wide range of relatively cost-efficient creation and distribution platforms, content and services. Many OTT services are available at no cost to the end user.
Therefore, when considering regulation for OTT services, it is vital that the diversity and dynamism of the ecosystem be considered, and that any proposed regulatory frameworks should be appropriately tailored, flexible and adaptable to ensure continued innovation.
POLICY SUPPORT
The economic benefits that OTT services offer Asean entrepreneurs and small businesses cannot be overstated. For example, an Asia Internet Coalition (AIC)-Thammasat University study on the impact of the OTT industry in Thailand estimated in 2016, local OTT players generated 36.8 billion baht in value and created 29,500 jobs as part of the online content development industry, significant at this early stage of industry development.
More broadly, OTT services such as online travel (vacation rentals), online media (subscription music and video-on-demand), as well as ride-hailing and food delivery have contributed significantly to the internet economy. The country is on track to become a US$43-billion internet economy by 2025, the second largest in Southeast Asia, with the regional internet economy projected to exceed $240 billion in the same period.
Given the tremendous opportunities for digital platforms and services to power economic growth and development, Asean policymakers overseeing OTT should focus on helping local businesses to get online, ensuring the right policy frameworks are in place to support their growth.
Given the diversity of services known as OTT, any "one size fits all" regulation that is unilateral and overreaching is likely to hamper the development of a thriving OTT ecosystem.
One such proposal raised at the ATRC meeting was for an Asean OTT revenue collection framework. While the AIC recognises that tax revenue collection is a national priority, our firm view as an industry is that a tax on OTT service providers will significantly hinder innovation and growth. Small businesses and startups will likely bear the brunt, given that most Asean members are just beginning their digital transformation journeys.
Looking at the complexities of cross-border internet services, it would be a bold and somewhat impractical move for any country to implement its own stand-alone, cross-border tax structure. Instead, Asean governments could consider working multilaterally to create a consistent and harmonised tax approach through multilateral organisations such as the OECD, which is developing new digital tax rules that will be presented for adoption internationally by the end of 2020.
WHERE TO NEXT?
The AIC encourages a forward-looking policy approach that incentivises local companies to leverage OTT services to expand beyond borders. A recent Economist Intelligence Unit report recommended that Asean governments enhance collaboration with industry and create more platforms to facilitate regular public-private sector engagement to help spur their digital economies.
Dialogue enables open discussions that address current and emerging issues, while policies that are the outcome of public consultation ensure that growth opportunities are fully captured and risks collaboratively managed.
The ATRC Stakeholders' Consultative Dialogue, ongoing since 2017, is an excellent example of industry-government engagement that supports the digital economy ambitions of Asean. It promotes more inclusive policymaking that will enable OTT-driven growth and innovation across the region.
For Asean to capitalise on the tremendous economic, cultural and social benefits that a robust digital economy brings, governments will need to think long-term and consciously shape policies that will maximise economic growth potential for sectors such as OTT.
Instead of creating barriers that are likely to kill momentum, efforts should be focused on working together with industry to help more small businesses and consumers connect and reach new markets so that local economies can benefit from the tremendous value that OTT services can deliver.
Jeff Paine is the managing director of the Asia Internet Coalition (AIC), www.aicasia.org