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Why The TRAI Is Seeking Fresh Comments On Regulation Of Mobile Non-Voice Services

What has changed in the last three years, since the Telecom Regulator first decided to not license mobile Non-Voice services (Value Added Services / VAS), that the TRAI has begun a consultation process again? The question we’ve heard a few times from industry executives (since Thursday, when the TRAI issued a consultation paper) is, Who is driving this agenda?

Download the consultation paper here.

Reasons For This Consultation Paper on VAS

Responses to the questions for consultation answers to the following questions in the consultation paper, to be submitted by 12th August 2011 to Rajkumar Upadhyay, Advisor (BB & PA) at advbbpa@trai.gov.in or srobbpa@trai.gov.in, or Mahanagar Door Sanchar Bhawan, Jawahar Lal Nehru Marg, New Delhi -110002. MediaNama urges to you send your comments, to ensure that a wider set of independent views – and not just those of specific companies – are taken on board. The questions and reasons for consultation:

  1. Whether the current provisions under various licences (UASL, CMTS, Basic and ISP) are adequate to grow the MVAS market to the desired level? If not, what are the additional provisions that need to be addressed under the current licencing framework?
  2. Is there a need to bring the Value Added Service Providers (VASPs) providing Mobile Value Added Services under the licensing regime?
  3. If yes, do you agree that it should be in the category of the Unified Licence as recommended by this Authority in May 2010? In case of disagreement, please indicate the type of licence alongwith the rationale thereof.
  4. How do we ensure that the VAS providers get the due revenue share from the Telecom Service providers, so that the development of VAS takes place to its full potential? Is there a need to regulate revenue sharing model or should it be left to commercial negotiations between VAS providers and telecom service providers?
  5. At the same time, how do we also ensure that the revenue share is a function of the innovation and utility involved in the concerned VAS? Should the revenue share be different for different categories of MVAS?
  6. Do you agree that the differences come up between the MIS figures of the operator and VAS provider? If yes, what measures are required to ensure reconciliation in MIS in a transparent manner?
  7. (i) Does existing framework for allocation of short codes for accessing MVAS require any modifications? Should short codes be allocated to telecom service providers and VAS providers independently? Will it be desirable to allot the short code centrally which is uniform across operators? If yes, suggest the changes required along with justification.
    (ii) Should there be a fee to be paid for allotment of short code?
  8. Is there a need to provide open access to subscribers for MVAS of their choice? If yes, then do you agree with the approach provided in para 2.46 to provide open access? What other measures need to be taken to promote open access for MVAS? Suggest a suitable framework with justifications?
  9. What measures are required to boost the growth of utility MVAS like m-commerce, m-health, m-education & m-governance etc. in India? Should the tariff for utility services provided by government agencies through MVAS platform be regulated?
  10. Any other suggestions with reasons thereof for orderly growth of mobile value added services?

Not that the TRAI mentions in the new consultation paper that the previous recommendations are yet to be accepted by the government, so it’s not that responses to these will be accepted as well. In that context, MediaNama readers should keep in mind that several of TRAI’s recommendations have not yet been accepted/acted upon by the government, and policy decisions are in a limbo, including those on SMS Spam, Internet Telephony and MVNOs.

According to the consultation paper, the TRAI has given the following reasons for beginning the consultation process again:

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– Growth in Data Services: The authority claims that total number of wireless subscribers who have subscribed for data services has increased more than 12 times from 31.30 million at the end of March 2007 to 381.40 million at the end of March 2011. (Ed: there’s no way of telling what exactly TRAI counts as data users, but it probably includes mobile VAS subscribers, which would be a wider subset than just Mobile Internet users).

– Government services rollout plans: National e-Governance Division (NeGD) under Department of Information Technology, Government of India, is already working on setting up a Mobile Services Delivery Gateway (MSDG) for providing various government services seamlessly to citizens.

– Potential for growth in Mobile Services: following the allocation of 3G and Wireless Broadband spectrum, and the rollout plan for the National Broadband Plan, through an open access optical fibre network. The authority also believes that a migration to NGN could change the existing service providers’ business models, and the service independence from core network in case of NGN could encourage Value Added Service Providers to launch innovative services and sector specific solutions. “A sizable number VASPs providing many innovative applications & value added services could emerge and traditional network service providers may become pure access providers. This could change the business model of the existing telecom service providers to an extent, which may require regulatory measures.”

– Industry requirements for MIS & Consumer Protection: some industry stakeholders favour licensing for MVAS providers, which should include fair & transparent revenue share, dispute resolution mechanism, transparency in Management Information System (MIS) reconciliation and protection of content Intellectual Proprietary Rights (IPRs), and one stakeholder has said that licensing of MVAS providing services such as banking, finance, health, news and current affairs will enable the authorities to ensure quality of content and protect consumer interests. Others have said that there have been no material changes in the industry scenario since 2009, except that the market has become more competitive.

– Interconnection Benefits Of Licensing: The licensing will allow the independent MVAS providers to seek interconnection with QoS from telecom service providers. As a licencee they can also approach TRAI/TDSAT for resolving their issues. On the contrary it is argued that looking at the large number of entities involved, some of them being very small, it may be difficult to bring them under licensing regime. Further bringing these small entities involved in MVAS value chain will unnecessarily burden them with the various obligation attached to a licence. At times this may be counterproductive and suppress innovative entrepreneurship.

– Improved revenue shares could help grow the market: Telecom service providers justify their revenue share with 3 costs – cost of building the market (i.e. entry & licence fees, branding, customer acquisition etc.); cost of usage of the infrastructure, interconnection and finally cost of billing and collection, and content providers/content aggregators (VASPs) complain and express their concerns that they do not get adequate share as telecom service providers retain large share of revenue earned through mobile Value Added Services. The return on investment (ROI) of VASP is not unattractive, not enough to encourage faster capital investments required to grow the VAS industry to the desired level. Adequate revenue share for VAS providers could make the market attractive for the entry of many entrepreneurs in the VAS business.

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Like we mentioned earlier, the question people are asking is Who is driving this agenda. Given the context of the issues that the TRAI mentions, it’s probably better to dwell upon – “Why not?” and “What if…”


We’ll share our comments submission to the TRAI later this week, and also share an overview of what happened the last time around the TRAI did a consultation on VAS.

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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