NBTC warned over OTT move

Legal experts raise issue of jurisdiction

Teens and young adults often find the mall is a great place to watch streaming video. Experts on OTT are doubtful the regulators' plan to control internet content is viable. (EPA photo)

Thailand's move to control foreign over-the-top content (OTT) service providers by making them set up local entities is putting the government on rocky ground as there are no legal provisions for this, legal experts said this week.

No country has regulated its OTT services yet. This means Thailand would become the first to do so if the National Broadcasting and Telecommunications Commission (NBTC) goes ahead with its plan, said Paiboon Amonpinyokeat, founder of P&P Law Firm.

Many are experimenting. European countries regulate the electronic communications services, and the information society services, while in the US the Federal Communications Commission keeps tabs on online video distribution.

But one of the key challenges in regulating OTT services is that the internet is borderless, so service providers can set up their entities anywhere in the world, said Dhiraphol Suwanprateep of Baker & McKenzie Ltd.

He said the NBTC lacks jurisdiction to force foreign players to set up entities in the country as there is no related law in Thailand they must comply with.

"Generally, business operators have a right to operate online services freely. Whether they set up a local entity or not is their choice," he said.

Thai regulators can deal with those who operate from foreign shores by using existing frameworks including international treaties and diplomatic channels, he added.

"Obligating them to establish a local entity is a new issue. It could raise concern about extra-territorial jurisdiction, and is in contradiction with international free trade," Mr Dhirapol said.

Setting up local units is financially cumbersome and it can take months for a foreign company to get the necessary licences from the Commerce Ministry, he said.

This could deter some players from entering the Thai market, according to some critics of the NBTC's plan.

Mr Dhirapol said the move, which would involve collecting taxes from the OTT service providers, may not help level the playing field. If traditional services are struggling to compete the government should lower their annual fees or deregulate them instead, he said.

Regulators around the world are struggling to deal with incoming OTT players with disruptive business models, said Bunyati Kirdniyom, director of Vriens & Partners, a Singapore-based advisory firm. Too-swift regulation could kill innovation while tardy implementation may put the OTT service providers beyond the scope of regulators, he warned.

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