How not to make a regulation

How not to make a regulation

OTT TV has changed viewing habits, altering the TV advertising business, subscriptions and consumer engagement.
OTT TV has changed viewing habits, altering the TV advertising business, subscriptions and consumer engagement.

In a world in which big and small companies are quick to cry foul even against a good regulation, policymakers face an uphill battle in attempts to catch up with technological change. Regulation is still a dirty word in today's business lexicon.

Such is the case with the National Broadcasting and Telecommunications Commission's (NBTC) attempt to rein in over-the-top (OTT) operators. The regulator's efforts to force giant OTT platforms to register on its system backfired badly and efforts to create a regulatory framework were quashed.

A new framework is being devised. According to an NBTC resolution two weeks ago, the regulations should be up and ready to go within 90 days, after the drafting and hearing stages conclude.

The NBTC's month-long struggle with Silicon Valley has raised a few questions. Does the commission have a clear definition of the OTT sector it pretends to govern? Can it properly balance consumer well-being with prevention of illicit content and competitive concerns? Can it realistically hope to constrain American corporations with valuations in the hundreds of billions of dollars?

Mistakes from the beginning

OTT is used for the delivery of content, applications and services via the internet. Those include mobile VoIP apps (Voice over Internet Protocol, i.e. phone service over the internet), mobile instant messaging, online video and TV, film, music and much more.

The OTT platform puts a lot of pressure on the businesses of traditional telecom operators.

The rise of OTT services is creating critical challenges to regulators globally in terms of how to set a proper policy to govern the content and operations of OTT operators and platform providers.

The NBTC floated the idea late last year that it was considering measures governing OTT, emphasising it needed to handle "improper content", especially for video streaming on social media, and create fair competition in the TV industry.

The move to regulate OTT seemed clearer when the NBTC board in April resolved that video-on-demand provided by OTT operators falls into a category of broadcast business.

The board in April also approved setting up a subcommittee to determine regulatory policy to be led by Col Natee Sukolrat, NBTC vice-chairman.

The resolution focused on all parties related to video streaming over OTT platforms, but the industry wondered why the NBTC did not create a framework for all OTT businesses as well as what kind of laws the regulator would use for oversight.

The NBTC subcommittee insisted it would regulate OTT business under existing laws -- the NBTC Act, Broadcasting Business Act and Communication Radio Act.

The subcommittee later declared OTT business was clearly categorised as a TV broadcasting service that did not use frequencies, similar to existing cable TV and satellite TV services.

The body took only two months to conduct discussions and hold hearings with several focus groups before announcing a regulatory framework was completed on June 22, the same day the new NBTC law was published in the Royal Gazette. However, details of the regulatory framework have never been submitted to the NBTC board for approval, nor passed a normal regulations-making process.

Col Natee said the subcommittee had full authority to conduct and address the framework without it being approved by the board. The subcommittee did not want to issue the framework as a regulation because it would take too long for endorsement.

The subcommittee ordered OTT operators and platform providers to register themselves with the regulator by July 22, or 30 days after the framework was announced as completed.

In the meantime, the NBTC attempted to sanction unregistered OTT platforms by forcing ad agencies and the top 50 online spenders to stop doing business with them. Three companies did not register -- Facebook, YouTube and Netflix.

The subcommittee's actions were seen as a one-man show driven by Col Natee, which spurred the concerns of many parties, including the prime minister, who was worried the move would negatively affect the economy and thus needed to be reviewed.

On July 5 the NBTC board decided to scrap the previous process including the July 22 deadline. The board assigned the subcommittee to work on a new regulatory framework that would take 90 days to get off the ground. That time frame covers 30 days for drafting the revised framework and 60 days for public hearings.

But the NBTC's failed show of force the first time has left many wondering whether this new attempt will suffer the same fate.

Besides the ambiguous nature of the first framework, a fundamental conflict among the board members caused the initial attempt to fail. There is no guarantee a new OTT regulation will be workable.

Taxation outside NBTC remit

OTT services have become increasingly popular as traditional media declines. OTT TV has changed viewing habits, altering the TV advertising business, subscriptions and consumer engagement.

To properly implement OTT regulations, the objectives of the regulations should be clear. Is the goal to control content and/or create fair competition?

Many countries have failed to control content such as hate speech or fake news in cyberspace. The European Commission's attempt to regulate OTT video services provides some context.

After a two-year study and consultation, the EU's executive body requested content platforms sign up to a voluntary code of conduct that commits them to actively and swiftly remove illegal hate speech such as racial abuse.

No country has settled upon a regulatory regime for OTT video service yet. One reason is jurisdiction because OTT is virtually operated and delivered via the internet, which is global by nature. This makes it difficult for each country to impose their own OTT regulation.

For taxation, each country is developing its own conceptual system for OTT as there is not a global best practice on OTT regulation yet.

In Thailand, unregulated content on OTT platforms and state benefits from taxation are two reasons behind calls for regulation. However, controlling improper or illegal content via internet networks and taxation are handled separately by Thai state agencies.

The Computer Crime Act gives the Digital Economy and Society Ministry full authority to govern illicit content on internet networks, collaborating with the Technology Crime Suppression Division to take action against any illegal or harmful content.

The NBTC governs only the licences awarded to internet service providers and mobile operators, meaning its harshest penalty is revoking a licence.

Income tax issues are handled in cooperation with the Revenue Department, together with other units of the Commerce Ministry.

Although there are no current rules obligating OTT businesses to pay taxes, the Thai government is certainly interested in creating such laws. Any successful regulation is likely to need the cooperation of public agencies and regulators to address the context of OTT business, based on the advantages and disadvantages to the public.

While the services and content offered by OTT companies have become part of their everyday life, do Thais care if an OTT regulatory framework will work?

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