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The benefits and challenges with the use of Over the Top Platform

The benefits and challenges with the use of Over the Top Platform
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Part 1 of 4

In this set of articles we will set out an overview of the benefits and challenges associated with the use of Over the Top Platform (“OTT”) and how different countries (i.e. the United States of America ((the “US”)), the United Kingdom ((the “UK”)), the European Union (the “EU”) and Australia) have sought to address these issues through regulation (or lack thereof).

Of the four territories (USA, the EU, the UK and Australia) we considered for the purpose of this article, the USA is the only territory in which there is specific video OTT service regulation. In the other territories there has been discussion about regulating OTT services, including various proposals, but currently there are no specific regulations.

The Federal Communications Commission – FCC (as defined below), being the US regulatory authority splits OTT services into two groups:

1. Multichannel Video Programming Distributors (“MVPDs”), e.g. Comcast, DirecTV, Charter, Dish Network, Verizon Fios, etc

Regulations include different rules depending on whether the MVPD is cable or non-cable and there are rules governing the following areas: franchising and licensing; effective competition; program access; must-carry and retransmission consents; protection of exclusive broadcast distribution rights; public interest programming; access to multiple dwelling units; and over-the-air reception device regulations.

2. Online Video Distributors (“OVDs”), e.g. Netflix, Amazon Video (Amazon Prime), Hulu, etc

Generally speaking US regulations include the Open Internet Order which prohibits broadband internet access service providers from blocking lawful content, services, applications, or non-harmful devices, subject to reasonable network management. The order also prohibits broadband internet access service providers from favouring some traffic over other traffic in exchange for consideration or to benefit an affiliated entity.

There are also other non-regulatory conditions that affect both MVPDs and OVDs.

What is OTT?

OTT stands for over-the-top and is also referred to as “value added”.

OTT services, refers to the service we use over the network and these services are being used by a wide range of consumers/users without actually realizing it. This means that the term OTT does not refer to a particular type of service but to a method of provision, namely provision over the open internet. The provision generally occurs independent of the internet access provider in control (“Network Carriers”) or distribution of the service.

Despite the fact that there is no widely accepted definition, OTT content normally describes broadband delivery of video and audio services without a multiple system operator being involved in the control or distribution of the content. OTT started from online streaming TV programmes or videos and it has extended into other services such as instant messaging services by using smartphone apps.

OTT Platform in broadcasting content is the audio, video, and other media content delivered over the internet without the involvement of a multiple-system operator in the control or distribution of the content.

OTT in Television/Video is the term used for the delivery of film and TV content via the internet, without requiring users to subscribe to a traditional cable or satellite pay-TV service.

For more clarity, OTT video is video transmitted via the internet that bypasses traditional cable/linear distribution.

OTT communications are those delivered by an application that is run over-the-top of another carriage service, and can be accessed using any compatible internet access device. The most popular examples of OTT services are mobile phone or computer apps that provide:

• messaging (i.e. Whatsapp, Facebook Messenger, iMessage),

• voice call services (i.e. Skype, Facetime), and

• video or audio services not provided by the phone or internet provider (i.e Netflix, YouTube channels and Spotify)

It’s worth highlighting that OTT providers are not the content owners but the Network Operators. At the same time, they are independent and separated from the Network Carriers.

OTT services have risen in popularity since 2012, and operators are continuing to feel the impact on their bottom-lines. The pace of digital disruption that is transforming the TV industry is accelerating. The evolution in terms of the OTT has led that every major TV operator has launched or is in the midst of launching and scaling up their direct-to-consumer streaming offerings. Consumers now have more choice than ever as there are over 200 OTT services only in the US market.

Read part 1: What is Over the Top Platform?

Read part 2: What are the potential benefits of OTT?

Read part 3: The challenges and considerations of OTT?

Read part 4: The regulatory positions of OTT - a global view