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Comments on TRAI Paper on MVAS Growth Recommendations

January 21st, 2009 · 17 Comments

TRAI recently came out with a paper outlining draft recommendations for the growth of Mobile Value-added Services (MVAS) in India [TRAI press release, TRAI paper]. Here is NetCore’s response sent to TRAI:

At the outset we would like to congratulate TRAI for having made extremely well thought out recommendations that will be far-reaching in their positive impact on the growth of VAS in India.

However, we would like to draw your attention to just a few issues that, we believe, still requires more detailed clarifications. These are listed below:

1)       The key issue considered is ‘Issue 9 – whether there should be regulation on revenue share model’. In the debate on pricing models there is mention of the mandatory revenue share model whereby TRAI can specify a maximum revenue share that the operator can charge. Netcore is of the opinion that it would be good if TRAI specifies separate revenue shares for each of the services in the off-deck as well as the on-deck model. It has been suggested that the same should be left to discussions between operator and content provider but, as we all know, one party has much more bargaining power than the other so the negotiations can never be bilateral. This is why TRAI needs to intervene. TRAI cites the roadblock to doing this as the lack of mandatory licensing for VASPs. We believe that smaller VAS and content players will be more than happy to register as ‘OSP – VAS’, provided this would ensure them of a reasonable revenue share.

2)       In addition to access, one of the key services that Telecom providers can give to other players is access to billing services. Although this is mentioned in the document a few times, the obligation of telecom operators to provide this service to off-deck providers at reasonable revenue shares is not spelt out clearly. Netcore would like to appeal to TRAI to make further clarifications on this very important point. The ability to collect money (through operators) from subscribers will energize content and VAS providers to come up with new and innovative services further accelerating the growth of VAS. This will encourage a lot of VAS companies to undertake their own marketing, customer support as well as brand building. For billing services there could either be a revenue share or a fixed price defined by TRAI. This will also spawn healthy competition in the market and hence ensure consumers/subscribers get the best pricing possible for value added services. This will help a larger number of subscribers to avail of such services.

3)       In off-deck model, Telecom providers will be mandated to publish access and bearer charges. Again this could become a problem if the charges published are high because these will add to the end-user price. Also end-users will need to be educated that they will be paying the sum of the two charges – VAS + access – and it may well be that the high access/carrier charge may make the service unviable. This is once again an argument in favour of TRAI setting the revenue shares for all services provided by the telecom operator.

4)       Common short code services Chapter II clause (xvii): VAS and content providers should be asked to keep DOT informed about additional services that they propose to release on existing short codes rather than asking them to seek approval for each such new service. Once DOT is informed it should be assumed that the service can be made operational after 15 days unless an objection is raised. The process of seeking approval will delay the launch of new services and introduce unnecessary bureaucracy.

5)       Common short code services, Chapter II clause (xxiii): While we welcome the introduction of short codes at different price points and also Toll free short codes, we would like to seek an additional clarification. Over the years, short codes have become automatically associated with premium services. This has led to the interpretation in some quarters that free information alert (push) services of the type provided by Netcore (MyToday Dailies) cannot be offered on short codes. Netcore would therefore like to have an explicit clarification that users may indeed opt-in for free information alert (subscription) services through short codes. If a VASP is able to subsidise the cost of service via other revenue sources e.g. advertising, lead generation etc. and in turn is able to offer free service to the subscribers then this will be in the best interest of a consumer. Since these are opt-in services it will help build multi-revenue streams rather than just burdening the subscriber to pay for every service he/she wants to subscribe to.

6)       Chapter II, Clause (iv)(d) and para 3.9.3(ii): The argument that reconciliation and calibration of MIS systems should be part of the negotiation between Telecom providers and VAS providers, in order to bring confidence in the MVAS value chain and improve the reconciliation process, is flawed. Telecom access providers have much more bargaining power than smaller players like VAS and content providers so this will not lead to the effect that TRAI is looking for. Ideally online access to MIS should be made available to VAS providers, but technology wise this could take a long time to be ready. In the meantime MIS and reconciliation will always be subject to dispute.

7)       At the open house, one of the key issues raised was that of dispute redressal. The TRAI draft recommendations document is completely silent on this topic. Netcore is of the opinion that a healthy ecosystem cannot be created unless there are quick and effective mechanisms to settle disputes. Netcore would like to urge TRAI to add some recommendations in this regard.

8)       Another issue that needs clarification is one of NDNC vs. Opt-in. Netcore pioneered opt-in services and the industry today is moving steadily towards ‘opt-in’ as the best method of offering services (Airtel information alerts, Google SMS channels and even TRAI’s DND service some of the services that have already started). In the light of this it becomes important for TRAI to issue a clarification to the effect that ‘Opt-in overrides NDNC registration’. Every subscriber should have the option to register under NDNC and hence protect himself from un-solicited communication. However a subscriber who has registered under NDNC yet has the right to opt-in to any service voluntarily. Due to lack of clarity, currently subscribers under NDNC are not allowed to be offered services even if they have voluntarily opted-in to a service.

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17 responses so far ↓

  • 1 rajeevnath // Jan 30, 2009 at 1:59 am

    Hi sir,

    I would like to appreciate ur efforts on this matter. its really useful for budding entrepreneurs like me who has lot of faith in mobile industry(esp MVAS) .

    TRAI DND is like “either u accept everything including the rubbish or u reject everything including diamonds” hope there will be a change soon..


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