MVAS is the Need of the Hour

Trai recently came out with consultation paper for the regulation of Mobile Value Added Services (MVAS) such as music, news, and mobile internet. “With a view to bring out all the aspects of the relevant issues and to provide a suitable platform for discussion, Trai has initiated this consultation paper suo-motu, focusing on future looking regulatory framework for provisioning of Mobile Value Added Services (MVAS),” says The Telecom Regulatory Authority of India in a statement.

The market potential for the mobile value added service in the coming years is calculated very high. Trai felt the need for developing a harmonized ecosystem for ushering growth in all segments of the MVAS, thereby enabling benefits to consumers and revenue generation for the service providers. “A well-developed framework will enable benefits to consumers, promote entrepreneurship and at the same time create additional revenue streams for the service providers,” says the Trai paper.

In the current scenario, the MVAS providers are not under any regulatory environment. This was specifically pointed out by Trai to indicate the lack of an appropriate and effective dispute resolution forum for MVAS providers resulting in small SMEs. The regulatory authority also felt that and start-up MVAS providers bearing the brunt of dominating players in the market. If they were to be licensed, they would be able to enjoy the adjudicatory process under the Trai act as licensees. Trai has proposed if the present licensing regimes such as UASL, CMTS, ISP are sufficient to cover MVAS providers or should there be a total different license framework?

One of the holdbacks of this eco-system has been the fear of the telcos that a 'open garden structure' will reduce revenues for telcos and they then will have to compensate for it by hiking charges for telecommunication services. Under the minimum tariff rate offered to the subscribers, the telecom companies are able to subsidize call rates to a low-level due to the revenues generated through value added services. Another reason has been that the telecom companies have been able to get the spectrum only on the basis of their subscriber base. Telcos pragmatically see no significance in development of more innovative and higher end MVAS products primarily because it will have no direct impact in the expansion of its subscriber base.

Revenue sharing between the telcos and MVAS providers is also an issue. The Trai has cited that according to various reports, telecom service providers typically retain the bulk of the revenue of around upto 60-65% from MVAS depending on the type of content that is being delivered to the users. The rest of the revenue is shared among copyright owners, content developers, content aggregators, and technology enablers. According to market reports, in case of content with copyright, the mobile service provider is reported to get 60% revenue. A technology enabler gets 15% while content developer and aggregator together gets 15% share in MVAS revenue.

“Adequate revenue share for VAS providers could make the market attractive for the entry of many entrepreneurs in the VAS business,” observes Trai. On the other hand, better margins from MVAS for telecom service providers could meet the revenue gap from core services and attract investment in the network expansion.

In an open access environment services and applications are decoupled from the network complexities, facilitating applications/content based services to be provided easily and also enabling third party application service providers to compete with the telecom service providers in the provision of services making the network more open. Trai has illustrated that open access can promote innovation and can lead to development of various applications depending on the customer needs.

Trai thoughtfully has also asked the question as to of the measures that are required to boost the growth of utility MVAS like m-commerce, m-health, m-education & m-governance etc. in India and has probed that if the tariff for utility services provided by government agencies through MVAS platform be regulated.

Trai has also said that though some of the services which are integrated on call-to-call basis such as caller ring back tune, SMS person-to-person will generally be in the domain of telecom service providers. However, the value added services such as music, games, news, entertainment, M-commerce etc. can be directly marketed by value added service provider. It will be desirable that consumers can access any content and service of their choice, and not be limited to just the selections decided by the telecom service providers. Open or non-restricted access allows a user to obtain content from any provider offering mobile content. This content can be accessed independent of the mobile service provider's platform, through a link to any of the third-party content provider, through a Web browser on the mobile handset, by sending a SMS or accessing IVR.

The Trai study elucidates that the initiatives to provide various services using mobile applications have already started in India, but they are very limited. The potential for utility MVAS can be leveraged to boost social and economic activities, governance, and enhance government citizen interaction. There is plenty of scope to develop and deploy Utility MVAS services in the country.

Assocham's report on MVAS has also been quoted by Trai in assessing the major challenges for the growth of utility MVAS. It says that the major hurdles are lack of government initiatives, lack of consumer authentication infrastructure, lack of micro-payments infrastructure, lack of regulatory framework or guidelines related to privacy, legal liabilities and dispute resolution mechanism, etc. In addition, some of the operational challenges encountered while deploying utility MVAS initiatives are also inability to ensure relevance of service by understanding consumer needs, inability to ensure keeping the products affordable and also in ensuring interoperability of applications across operating systems/network architecture so as to not incur incremental setup costs.

While there are plenty of challenges that face the utility MVAS space today, the opportunities are enormous, says the Trai paper given the increasing proliferation of mobile phones even in rural and remote areas and the rapid development of technology including the foray of 3G. Trai has asked the stakeholders of the telecom for the suggestions with reasons thereof for orderly growth of mobile value added services.

Archana Singh
archanasi@cybermedia.co.in