In what is the most significant set of recommendations for the Mobile VAS and mobile content ecosystem yet, the Telecom Regulatory Authority of India (TRAI) has published a set of draft recommendations that favour transparency and fair-play and, as a consequence – the consumers. A detailed look at the draft recommendations, implications and issues:

Key among the recommendations is the concept of “Other Service Provider” for value added services that exist off-deck – and operate outside of the mobile operators WAP site, SMS Consumer Services. These include services provided by Indiatimes 58888, STAR 57827, MyToday, SMS GupShup, Mobile gaming services like GreyStripe and Hovr, and indeed, the open web. OSPs will not be licensed, but will have to register.

Some Conditions for OSP registration

A Company may apply for more than one registration, which is location specific. No licence fee is applicable, but there is a processing fee of Rs. 1000 to the DoT. The registration is valid for 20 years, and maybe extended by 10 years at a time.

— The registration for operation of Value Added Services shall be made on non-exclusive basis.
— They’ll have to use common short codes and consumer practices in line with the DoT guidelines.
— OSPs shall not normally employ bulk encryption equipment; encryption equipment will need the approval of the mobile operator. Encryption higher than 40 bits will need permission, and the decryption key will need to be given to the DoT.
— Privacy Binding on OSP to maintain confidentiality of consumer data.
— Off deck players can only charge for content. They are not permitted to collect charges/ revenue for access/carriage charges related to telecom access services.

Revenue Share

— On Deck: the revenue share shall be the result of a negotiationbetween the operators and content providers/VAS companies.
— Off Deck: Telecom operators may be mandated to publish their access charges for value added services provided under “Off Deck” model.
Implications: The key recommendation here is the separation of content from carriage. The carriage charges have been arbitrary – as one content owner famously said – it’s like a toll charge that is based on the value of goods (content) that I’m carrying, and not a uniform fee. More on this later – the separation of Content from Carriage is our theme for 2009.

Fair Access

— The TRAI has recommended the setting up of Common Short Codes allocated by Department of Telecom or a other single nodal agency authorised by them. All short codes allotted by the operators to a VAS company shall be published on their website, and intimated to the Department of Telecom.
Implications: Traditionally, short codes on their network have been owned by the operator, which means that every year, short code owners have had to get them renewed. An operator can, and we’re told they have, delayed renewals of licenses as a strong-arm tactic. Which Short Codes being centralised, the short code owners – many of them content providers – have relatively more freedom.

— Operators shall not block mobile portals to GPRS or WAP subscribers. There will be no selective blocking of mobile portals or short codes.
Implications: The open mobile web shall truly become open for those in India. There have been instances of access to sites like twitter or VoIP applications like Fring and Nimbuzz being blocked by mobile operators. One company that does benefit from this is Netcore, whose MyToday service has been blocked in the past, and more recently, new signups to their service were not allowed by Airtel.

Transparency of rates and billing: separation of content from carriage

— The telecom operators will need to maintain transparency of management information system (MIS) in respect of value added services.
Implications: A long standing complaint of content owners has been that Telecom operators have maintained transparency in billing. We’ve been told by content owners that the total number of downloads have not been audited, even not shared on a letterhead, checks have been given as many as 2 years late. In their defence, some VAS companies have suggested that to maintain the billing for billions of transactions is a nightmare and there are mistakes that can be made. However, with a regulation that pushes for transparency, operators will have to shape up.

— Telecom operators will have to publish their access charges applicable to the consumer for various content based services, including publishing of carriage fees. for “off deck” services.

— Telecom access service provider shall not be permitted to bundle charges in tariff plans for telephone call (voice), non-voice messages and bearer services with the charges for value added service provided in the off-deck model.
Issues: there needs to be some clarity on this – access to the mobile web is a bearer service, and data charges apply. Does this mean that operators cannot charge data charges for off-deck services?

Content Regulation & Liability
The value added service providers regarding content are subjected to content regulation guide lines of Information & Broadcasting Ministry and Information Technology Act, 2000 and Cable Television Networks (Regulation) Act, 1995, Indian Copyright Act etc. The content regulation shall be as per law in force from time to time. There should be consistency in the treatment of content across all kinds of media including printed, digital/multimedia to avoid any discrimination. Any damages arising out of default on the part of OSP shall be sole liability of the OSP – not the telecom operator, which is fair.
Issues: What happens in case a user access pornographic content on the mobile web? Those companies may not be registered in India and hence not liable. Furthermore, what happens if a mobile advertising network registered or operating in India is monetizing access on some of these sites. Whose liability is it – since the content does not belong to the advertising network in question? How will communities, with user generated content, be affected. Take a case of defamation on an international mobile social network…like the anti-India groups on Orkut.

Certification & Monitoring of VAS Services

— Self Certification of VAS by Operators: The telecom operators will have to self-certify value added services. This will ensure that there isn’t a delay in launching new Value Added Services.
Issues: There is no mention of whether this applies only to On-Deck services. The TRAI needs to clarify whether this covers off-deck services, which it should not.

Issue Of Accountability
In case there is a violation of these recommendations – who is the authorized to resolve disputes. Readers may remember that during the TRAI Open House discussion on Mobile VAS (our detailed coverage of stakeholder positions here), Rajesh Jain, MD of Netcore had called for clear guidelines and a mechanism for settling disputes. In case of the TRAIs draft recommendations – what happens if the billing isn’t appropriate – will every OSP have to approach the TRAI for dispute resolution? In that case, they should expect a flood of requests for dispute resolution.

In case you have any comments, please do use the comment form. We’ll aggregate comments on the recommendations in a separate post.

Note: These are draft recommendations. Regulation is an iterative process, and one should expect modifications. 

Coming up next: Setting up of Common Short Codes
Related: TRAI Open House Discussion On Mobile VAS – Off-Deck vs On Deck, Licensing, Interconnection , Dispute Resolution and Revenue Share Threshholds