Code for VAS - TRAI draft recommendations aim to give a fillip to value-added services

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Code for VAS - TRAI draft recommendations aim to give a fillip to value-added services

February 15, 2009

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To give a fillip to value-added service (VAS) providers, the Telecom Regulatory Authority of India (TRAI) has released the "Draft Recommendations on Growth of Value-Added Services and Regulatory Issues". Based on the comments received from industry stakeholders during public consultations, TRAI has drafted its suo moto recommendations on VAS – including mobile VAS – to be provided on 2G, 3G and next-generation networks (NGNs).

Currently, VAS providers are neither regulated nor licensed. TRAI believes that there is a strong need for uniformity in various licences and for amendments in various access service licence agreements to pave the way for the growth of VAS, particularly in mobile 2G and 3G.

The recommendations are in two parts. One looks at establishing a relationship amongst VAS providers and telecom access service providers. The other concerns the registration of VAS providers under the other service provider (OSP) category, with the Department of Telecommunications (DoT). This also includes the finalisation of arrangements for allocation of common short codes (CSCs).

Today, VAS such as MMS, ringtones and GPRS are offered beyond standard voice calls. These offerings add to phone usage by subscribers, thus allowing operators to drive up their average revenue per user. According to TRAI, India's VAS market has been growing at over 10 per cent of the total revenue of mobile telecom service providers. Revenue from mobile VAS was to the order of Rs 59 billion for the year 2006-07. At this growth trajectory, VAS revenue is expected to touch over Rs 250 billion by 2009-10. Meanwhile, mobile revenue through VAS is expected to cross 30 per cent of the mobile telecom service providers' revenues in the next five to seven years.

To tap the full potential of the VAS market, TRAI believes that telecom operators and VAS providers need to be concerned about the quality of content, consumer education and transparency in provisioning and charging of services. In this context, TRAI's recommendations will pave the way for more competition and orderly growth of VAS, which will eventually benefit the user.

TRAI's key recommendations are:

The need for uniformity in various licences and amendments to various access service licence agreements, to pave the way for growth of VAS, particularly in mobile 2G, 3G and NGN environments.

No separate category of licence for VAS.

Registration of VAS providers or content aggregators who wish to have CSCs allotted to them by DoT under the OSP category. All the preliminary and general terms and conditions of registration of the OSP category would be applicable. TRAI has formulated specific terms and conditions of OSP registration for VAS. These include the provision of registration for existing telecom access service on a licensed service area or on an allIndia basis, and obligations relating to encryption, security, etc.

As the National Numbering Plan administrator, DoT should make appropriate arrangements for the allocation of CSCs for VAS, and should also develop the concept of a fee for allocation of CSCs.

Telecom access service providers should provide independent content providers with fair access to telecom infrastructure, and maintain transparency in their VAS management information system (MIS) for reconciliation.

For reconciliation of the MIS and calibration of the MIS between the access service providers and the VAS/content providers, TRAI is of the view that this should form part of the mutual negotiations between the access service providers and VAS/content providers. This will bring confidence in the VAS value chain and improve the reconciliation process. In the "On Deck" model, where VAS providers market the services they offer, mutual negotiations for revenue sharing will be the norm.

VAS providers in the "Off Deck" model may decide and levy charges for content.

Access service providers may be mandated to publish their access charges for VAS provided under the "Off Deck" model.

TRAI might subsequently issue guidelines on consumer best practices to protect the interests of consumers.