Saturday, 21 June 2008

TRAI’s Proposal for Value Added Services

TRAI released a consultation paper on Growth of Value Added Services and Regulatory Issues on 28th May, 2008. Consultation paper focuses on the approach for the growth, regulatory guidelines and terms and conditions in respect of licensing and provisioning of Value Added Services. The telecommunication services today have moved beyond their fundamental role of voice communications to a spectrum of non-core services, which in telecommunication parlance is called Value Added Services (VAS).In times to come people will buy mobile phones or any end user terminal device not just to remain connected for access but to express themselves in a variety of ways. Value Added Services are provided either directly by the telecom operators or by a third party Value Added Service Providers. 
In India the revenue (estimated) from mobile Value Added Services is over 10 to 14% of the total revenue of mobile telecom service providers which is expected to cross 30% of the total revenue in the next 5-7 years. Today SMS constitutes major portion of the VAS revenue. While entertainment services have become popular with the consumers, there remains a scope for utility based services like location information, mobile commerce (M-Commerce)for mobile transactions etc. The service providers will shift their focus from subscriber base expansion to Value Added Services, as these services have the potential to generate good revenue for the telecom operators.

The Value Added Services industry in India is at nascent stage and does not have a proper process or common benchmark or code of practice. There is no coordinated effort to make the industry grow and it also lacks transparency as the consumers are not fully aware of the nuances of the services. But considering the market potential for value added services in the coming years and the multiplicity of value added services that the Next Generation Network (NGN) and 3G will offer, there is a need to harmonize the licensing/regulatory framework for ushering growth in all the segments of the value added service 
Issues that determine the Growth of Mobile Value Added Services: 
Handset features: for Value Added Services consumption consumer need feature handsets or terminal devices which enable the easy access and display/storage of contents. 
GPRS connectivity: GPRS is capable of providing rich information and online delivery experiences. 
Copyright Protection: to encourage the content producer/creator and protect their copyrights, the need is to have stringent regulatory framework. This will encourage the branded content at lower cost and will create trust among various stakeholders in the value chain. 
Regulatory Framework: there is need to develop/adopt new technology, bring consolidation in the industry and confidence in the investors particularly foreign investors. 
Mobile Commerce (M-Commerce): in the Indian context, transaction based Value Added Services are still in a very nascent stage that too in metropolitan/major cities. 
Consumer education and protection measures: there is need to bring greater transparency and awareness about the usefulness of Value Added Services and their usage among telecom consumers. 
Revenue sharing arrangements in the Value Chain: the telecom operators and VASPs would need to look at the best practices in other countries and design a fair revenue sharing system where the content providers/content aggregators (VASPs) and content owners do get their due share in a transparent manner. 
The key issues raised in the consultation paper : 
• Need to bring uniformity or clarity in the licensing conditions of mobile telecom operators/access service providers with regard to provision of value added services. 
• The licensing obligation of telecom operators. 
• Need to bring content provider/aggregators called Value Added Service Providers (VASPs) under the licensing regime. 
• The scope of licence and other terms and conditions for the licensing Mobile Value Added Services including new/enhanced services in 3G, Next Generation Network (NGN) Environment. 
• The licensing obligation for protecting copy rights.
• The regulatory framework for content regulation. 
• Allocation of short codes for Value Added Services, in order to have uniformity amongst all the telecom operators and to enable branding of Value Added Services. 
• Revenue share Model in Mobile Value Added Services Value Chain and its transparency. 
The Authority has invited the stakeholders to respond to the issues raised in this consultation paper by 30th June, 2008. The full text of the consultation paper is available on TRAI’s website:


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