Regulatory challenges of dealing
with QoS/QoE for multimedia
services in Latin America
Antonio Amendola
antonio.amendola@intl.att.com
@antonioamendola
May, 2016
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AGENDA
2
• DIRECTV now part of the
AT&T family
• Latin America multimedia
services landscape
• 6 key challenges of regulating
QoS/QoE for multimedia
services in LatAm
• Final considerations
DIRECTV now part of the AT&T family
Over 19M Pay-TV Subs in LatAm
~2,2M
~1.3M
~5.7M
~660K
~3M
~190K
3
• Over 19 million subs in 10 LatAm countries
• 16.5% CAGR in number of subscribers
• DIRECTV Play, online platform for sub in LatAm
• AT&T to launch 3 new ways to access and
stream DIRECTV content in the U.S. this year:
~250K
~570K
• DIRECTV, a subsidiary of AT&T since July/2014,
is a leading satellite pay-TV provider
• Presence in Latin America.
Subs. as of Nov., 2015
Mexico, Puerto Rico and Caribbean not included
• Over a wired or wireless Internet connection,
• From any provider, and
• From any device (smartphone, tablet,
Smart TV, streaming media hardware or PC)
DIRECTV now part of the AT&T family
4
AGENDA
5
• DIRECTV now part of the
AT&T family
• Latin America multimedia
services landscape
• 6 key challenges of regulating
QoS/QoE for multimedia
services in LatAm
• Final considerations
Latam fierce appetite for online content
Monthly hours
spent in Internet
North America
35.9
Europe
25.1
World
22.8
LatAm
21.7
Asia
17.6
ME - Africa
13.7
Region
LatAm Social
Network
Users as % of
Internet Users
6
LatAm
Monthly hours
Country spent in Internet
Uruguay
32.6
Brasil
29.4
Argentina
20.8
Peru
18.9
Chile
17.6
Venezuela
16.1
Colombia
15.2
Mexico
14.8
Region
Latin America
Asia
West Europe
North America
World
East Europe
Middle East and North Africa
%
78.42
73.19
70.89
64.64
63.55
54.47
38.59
Data as of 2013
Source: El Ecosistema y la Economía Digital en América Latina. Fundación Telefónica. 2015
• Users in Brazil and Uruguay
spend more time connected to
the Internet than European
users and world average.
• The number of LatAm social
network users as a % of Internet
users is the highest in the world.
• 84.5% of LatAm HHs with fixed
broadband access films/series
online (Business Bureau 2015)
• At least 10% of LatAm HHs have
cut the cord with Pay-TV services
(Business Bureau, 2015)
Unprecedented growth of OTT platforms
Netflix’s steep growth in LatAm
Main OTTs with presence in LatAm
Global Video Streaming Services
Subscribers in LatAm
Operator
(Millions)
Netflix
~7.3
Apple TV
~1.8
Amazon
Google Play
~3.1
LatAm Pay-TV curve
begins to stagnate
60,000,000.00
9,000,000.00
8,000,000.00
50,000,000.00
7,000,000.00
40,000,000.00
6,000,000.00
5,000,000.00
30,000,000.00
Country
Argentina
4,000,000.00
20,000,000.00
3,000,000.00
2,000,000.00
10,000,000.00
1,000,000.00
0.00
0.00
2011
2012
2013
Pay TV subs
2014
2015
Netflix subs
7
Source: Business Bureau and ABTA, NETFLIX, Digital TV Research. 2015
Brazil
Latin-American Video Streaming Services
Operators
Country
Operators
Arnet Play
Chile
Claro Video
Speedy on Video
Movistar Play
Cablevision VOD
Bazuca
Vesvi
VTR VOD
Qubit.tv
Directv Play
Cinema Argentina
Colombia
Claro Video
Conectate.gob
UNE VOD
Personal
Caracol TV
Directv Play
Directv Play
Claro Video
Mexico
Claro Video
Telecine
Cablevision VOD
Vivo VOD
Cinepolis Klic
GVT On Demand
VEO (Televisa)
Muu Globo
Total Play
Sky Go
Source: El Ecosistema y la Economía Digital en América Latina. Fundación Telefónica. 2015
AGENDA
8
• DIRECTV now part of the
AT&T family
• Latin America multimedia
services landscape
• 6 key challenges of regulating
QoS/QoE for multimedia
services in LatAm
• Final considerations
1. Structural
competition
barriers thwart
the effectiveness
of QoS/QoE
regulation
9
• QoS/QoE regulation is unlikely to increase
consumers’ welfare where dominant providers are
shielded from competition
• Some pay-TV markets in LatAm have barriers that
impede healthy competition and reduce consumer
choices:
• Regulatory restrains for pay-TV providers to provide
telecom services
• Regulatory asymmetries between platforms used to
provide multimedia services
• Anticompetitive use of exclusive “must-have”
programming (e.g. sports, local content)
• Anticompetitive bundled services
• Protection of local operators or state-owned providers
• Anticompetitive vertical integrations
1. Structural
competition
barriers thwart
the effectiveness
of QoS/QoE
regulation (Cont.)
ARGENTINA PAY-TV MARKET PLAYERS
Provider
Subs
Share
Cablevision
~4.5 M
41%
DIRECTV
Supercanal
~3.0 M
~780 K
27%
7%
Telecentro
Others
~730 K
~2 M
7%
18%
TOTAL
~11 M
100%
Source: Subscriber figures as of September, 2015. Business Bureau
•
DTH providers banned from
providing telecom services
•
Telephony providers banned
from entering into the PayTV market until 2018
COLOMBIA PAY-TV MARKET PLAYERS
Provider
Subs
Share
AMX/Claro
~3 M
37%
DIRECTV
~1.3 M
16%
COLOMBIA:
UNE
Telefonica
~1.3 M
505 K
16%
6%
•
Others
~2 M
25%
TOTAL
~8.1 M
100%
PERU PAY-TV MARKET PLAYERS
Provider
Subs
Share
10
ARGENTINA:
Movistar
~1,4 M
50%
AMX/Claro
~300 K
11%
DIRECTV
~246 K
9%
Others
~865 K
31%
TOTAL
~2,8 M
100%
•
Pay-TV providers subject to
higher regulatory fees than
telecom providers
Risk of potential
anticompetitive bundling and
cross-subsidization
highlighted by OECD
PERU:
•
Market challengers with
small shares
2. Some wellintentioned
QoS/QoE
regulations stifle
investment and
harm consumers
• Unreasonable QoS/QoE regulation reduce operating
margins required to invest in innovative services and
deployment of networks
• Some unreasonable QoS/QoE requirements imposed
on pay-TV providers in LatAm are:
• Prohibition on advanced billing
• Prohibition to have separate online interfaces for
subscribers and potential clients
• Impediment to offer subscribers a retention offer before
they decide to cancel the service subscription
• Obligation to continue providing the service to
delinquent subs for a certain period of time (1-2 months)
• Prior cost-benefit assessments are necessary to
assure that benefits outweigh regulatory costs
11
3. Rigid QoS/QoE
regulation
hinders the
innovative pace
of IP-based
services
• Skyrocketing consumption of mobile broadband
services, applications, and content impose network
management challenges to service providers
• Since 2007, the traffic of mobile data in AT&T’s
network has increased 100.000%
• Flexible regulation is key for network providers to
provide high-quality service to customers
• Net Neutrality regulation should not impair providers
ability to manage network traffic
• Regulation should not impede subs from getting the
type of services and quality that meets their needs
• Prior approval for the development of new solutions
or service offerings stifles innovation and investment
12
4. Regulatory
asymmetries
between
traditional
services and
video apps
13
• A fair balance is required between allowing the free
development of new multimedia services and
assuring a leveled playing field to compete
DIRECTV pay-TV bill
(With all information required by regulation)
NETFLIX bill
(Unregulated)
5. Duplication of
requirements in
the presence of
multiple
regulators and
control agencies
• Complex regulatory structures give rise to
duplication and inconsistencies in the definition of
QoS/QoE standards applicable to each service
• LatAm pay-TV service providers are subject to the
monitoring and control powers of at least 4 different
authorities
• Some countries like Colombia, for example, maintain
3 different regulators (CRC, ANTV, ANE) which
regulatory and control competencies have not yet
been clearly defined
• In 2014, the OECD recommended Colombia to merge CRC
and ANTV into one convergent regulator
14
6. Pay-TV pirate
services elude all
forms of
regulation and
provide low
quality services
• 29% of pay-TV HHs in LatAm are being served by
pirate providers
Source: Business Bureau and ALIANZA, 2015.
• In addition, 110 million unique users of the ~222
million Internet users in LatAm, use pirate sites to
access IP infringing content
Source: NetNames, 2015.
15
AGENDA
16
• DIRECTV now part of the
AT&T family
• Latin America multimedia
services landscape
• 5 key challenges of regulating
QoS/QoE for multimedia
services in LatAm
• Final considerations