If you’re wondering about why the TRAI issued a rather stringent directive on subscription to mobile Value Added Services last month, and why it is considering licensing/registration of mobile VAS, here’s an indicator:

Milind Deora, Minister of State for Communications & IT has disclosed in the Indian Parliament, that the TRAI received 672 complaints last fiscal year, between 1st April 2010 and 21st March 2011, specifically pertaining to mobile VAS. Complaints included those regarding activation of value added services, including ring tunes on their mobile handsets by service providers without their explicit consent.

Our Take: Just 672?

Now if you’re thinking that 672 complaints in a country of millions of mobile subscribers is a small number, you’re right: it is. But think of all the complaints that don’t make it to the TRAI, because there isn’t a proper complaints mechanism.

The TRAI regulations, that require that all services activated through an service provider initiated call or during pre-call ring-back announcements (both voice as well as automated) need to be validated through SMS or e-mail or FAX or in writing within twenty four hours of activation is harsh, because it ignores a significant segment of the user base that does not know English and hence cannot confirm subscription by SMS’ing ‘Yes’. This will push a lot of subscribers out of the VAS ecosystem – many of whom might need services in Indic languages. Voice based services, in particular, have a much larger reach than text based.

But this was bound to happen, much like the stringent guidelines issued for SMS Spam regulations. Many in the mobile industry have brought it upon themselves, both telecom operators and VAS companies, by cheating customers:

– False billing is a norm, this is also why many customers don’t want to keep too much money in their prepaid account, and telecom operators reacted to that situation by introducing negative billing (where customers with zero balance were allowed pay, and the amount deducted from their recharge).
– Circulation of ‘revenue positive numbers’ (numbers with money in the prepaid account) to VAS companies is not unheard of, and much of this happens because of the pressure that circle heads are put under to deliver on targets.

We’ve heard that two telecom operators have tried to address this issue: we’ve published notes from a notification that Airtel sent out earlier, and have heard that a similar notice was sent out by Tata Docomo as well.

Given the context of the SMS Spam regulations that were never enforced, I wouldn’t be surprised if these are delayed as well, but if things don’t improve, and consumers continue to be cheated, regulation will be enforced, and licensing could well stifle the growth of the ecosystem. I think the telecom operators should be held responsible for this – in the end, it is their customer, and their responsibility to ensure that their vendors stay in line.

Related:
TRAI: Telcos Will Need Explicit Subscriber Consent For Activating & Renewing VAS Products
Airtel Issues New Guidelines For Billing For Subscription Services
Why The TRAI Is Seeking Fresh Comments On Regulation Of Mobile Non-Voice Services
Digital Service Provider: Rethinking The Current Online And Mobile Services Value Chain