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TRAI To Start Consultation On VAS Regulation; Unbundle The Mobile Last Mile

On the sidelines of the IAMAI Digital Summit, TRAI Chairman JS Sarma apparently told reporters that they are going to issue a consultation paper on the regualtion of mobile Value Added Services, reports Dow Jones
This, of course, isn’t the first instance of Value Added Servicesbeing considered for regulation. Services being made available through Telecom Operators for sending SMS services recently were significantly limited by a regulation related to telemarketing. In 2009, the TRAI had issued a fairly forward-looking consultation paper, only to backtrack afterwards.

Our analysis of TRAI’s last Common Short Code plan:
– Consultation: TRAI Suggests Common Short Codes Plan, Telecom Operator Integration Mandated
TRAI Fails To Deliver On Mobile VAS Promise: Drops Key Provisions

Note that these recommendations were not accepted by the Department of Telecom

Unbundle The Mobile Last Mile For Services

Our take on the regualtion of VAS is as follows: if VAS companies are indeed going to have to register to offer services, and come under regulation, then that must be because they’re licensing government resources directly, in a free, fair and competitive environment.

Currently, the TRAI regulates telecom operators in India, who in turn impose their own rules on VAS services: this is possible since Telecom Operators are held accountable for services being offered to customers through them.

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We believe that if VAS operators are to be regulated, then they must be in a position to license telecom resources directly from the government, or license them from Telecom Operators in a free, fair, structured and transparent manner. In other words, the TRAI should consider unbundling the mobile last mile for services (essentially the data pipe), and allow companies to offer services directly to subscribers through a clearly defined offerings, and them be directly held accountable for it. Let there be a standardised rate for billing services, for data usage for services, rates for setting up a voice portal. Give companies the option of choosing to do revenue share deals, or adopt structured plans.

This will not only open up the VAS ecosystem to fresh investments in direct to consumer services, but also hold them directly accountable for service offerings, instead of putting the onus on telecom operators – who receive a bulk of the blame for false billing and provisioning of services without authentication, which is rife in the VAS business.

The Telemarketing regulations put restrictions on the open ecosytem (which had abused the privileges it had), and a regulation of VAS will further constrain the industry. An opening up of the mobile last mile – which allows any VAS company to buy telecom resources without having to bow to the operator cartel, or for that matter, regularly have to negotiate on revenue shares regularly with “Supply Chain Management”, would be a welcome move.

We particularly liked the Common Short Code plan proffered in the last draft regulation for VAS, which would give ownership of the short codes to anyone who wants it, instead of having to license short codes one by one, from each telco.

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