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Digital Service Provider: Rethinking The Current Online And Mobile Services Value Chain

While mulling over the comments that MediaNama should submit in response to TRAI’s questions for consultation on mobile Value Added Services (you should submit your comments independently as well), I was wondering about what should be an ideal scenario for a service provider and a consumer. At present, the mobile service delivery ecosystem operates in the form of mini monopolies: the access service provider owns both access to consumer and billing integration, and it is a collection of closed ecosystems. At the same time, the ideal, open access, open billing ecosystem is the Internet.

So, given a choice, how should we rejig the ecosystem to provide more choice to the customer, and more options for both access and billing to the service provider? An independent Digital Service Provider should be able to provide services and content to the customer through multiple modes of access, and also provide her with multiple options of billing. In addition, given issues with reconciliation of accounts with access service providers, in my opinion, three key changes in the value chain are necessary:

1. Separate ownership of identity from provisioning of access: at present, short codes are owned by the access service providers on mobile. Resources for provisioning services are typically hosted with the access service provider, and not independently, like in case of servers for hosting websites. A common short code registry would work the same way as an Internet Domain Registry works – through a Domain Name System (DNS), point the short code to the service independently owned by the Digital Service Provider.

–  Allow Digital Service Providers to own their identity (common short code), and not be dependent on mobile operators for renewal of contracts
– Like an online domain registry, allow anyone to buy a short code and/or long code, and launch a service across telecom and fixed line operators. Will lead to more services being provisioned on voice, leading to greater innovation and competition
– Help make provisioning of services ubiquitous: allowing Digital Service Providers to provide services across platforms. We view content and services as digital, and not independently mobile or Internet. Digital services should take the form of the platform they’re delivered on.

Infographic for MediaNama by: Pixelguy.in

2. Separate billing from access: at present, if a customer goes through a telecom operator, the cost of purchase is much too high because far too much money is deducted . The access service provider (and correct me if I’m wrong) ends up paying a license fee to the government on non-voice transactions, for what is essentially a billing service.

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– By separating billing for content and commerce services from access (voice and non-voice) services, you would end up giving the customer a ubiquitous price across multiple payment options and (hopefully) ensure that the revenue earned by the Digital Service Provider post transaction remains the same. At present, there are instances where customers are charged differently for content across different access modes, because of differences in fees charged by access service providers.
– By separating the cost of access from cost of service/content, you can ensure that the access service provider gets paid a standard amount for the access service (as per a fixed-line-broadband or a pay-per-use-3G-data plan), and the content owner/service provider gets paid separately for the service/content. This way, the access provider only makes a specific transaction fee, instead of a proportionate ‘revenue share’. The revenue share regime invariably leads to services being priced in a manner that is typically unfair to the service provider and/or content owner.
– Allow customers to pay for services according to multiple billing mechanisms also allows for increased competition in billing, instead of the mini-monopoly /cartel situation that currently exists on mobile. This way, a customer can access a service on mobile, but pay using, say, his fixed-line telephone bill, a credit card, or an independent cash card. This makes billing ubiquitous.

3. Provide verification of billing: apart from separating billing from access, it is important to put in place a regulatory regime for verification of purchases. For digital payments, the Reserve Bank of India has put into place two mechanisms – firstly, a two factor authentication system online, which involves going through bank gateways for completion of payment and using NetBanking or either of Verified by Visa or Mastercard Secure to make the payment; and an Interactive Voice Response system for verification of payment on mobile.

Benefit: While this might initially hinder some customers from making payments on the mobile, we believe that adopting measures prescribed by the RBI will invariably lead to the decline of false billing, thus giving customers more confidence to subscribe to services, and also provide verifiable reports on purchase.

So, what do you think? Do feel free to critique, or suggest improvements to this structuring.

Also read:

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Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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