Trai has floated a consultation paper on mobile value added services and is debating whether to bring it under a license regime. I believe that bringing it under a license regime will definitely not go well with the industry and one can attribute multiple reasons. First, the cost of manpower has been increasing with each passing year. Second, the cost of infrastructure has been increasing and that is putting an additional burden on VAS companies. Third, mobile operators are squeezing VAS players for a lower revenue share in order to boost their top line and bottom line. Fourth, VAS providers need to focus on product innovation and increasing its geographical reach. All these require huge investments and the big question is whether VAS providers will get enough cash to focus on innovation after they part with the government.
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VAS, being a fragmented market has not been able to come together and now with Trai debating it to bring under licensing regime, it is high time VAS players come forward and form an association of their own. When other industries within telecom have done it, I do not see why they cannot stand together.
Presently, different VAS players have different views and there is no common view of all VAS players which is detrimental to the growth of Indian VAS industry. With the formation of an association they can fight their problems cohesively and also future problems can be tackled more effectively helping them to focus on business and innovation.
All this can give them more buying power and help them to negate license regime. The best way to tackle the existing problem is that the VAS players should come together and come out with self regulation so that there is self discipline and no forced activation of VAS services is undertaken by any player. The players can also set up grievance redressal mechanism which helps them to make amends and take the industry forward.
The self-regulation mechanism set up can be similar to that of self regulation practised by different industry verticals like: broadcasting, advertising, and cinema. And all these bodies have been there for a long time and have also been effective.
Japan is one country which has done pretty well in terms of creating VAS ecosystem and presently has more than 10,000 companies under its fold. The success of Japanese companies can be attributed to two main factors. First, there is no licensing for VAS players and second, the payout by operators are in the range of 75-80% to VAS players. India needs to emulate the Japanese model for creating VAS ecosystem as it will help in seeding entrepreneurship among young generation and they can look forward to mobile applications in a big way. This will open up new opportunities not only in the Indian market but also the global market and will help in creating lot of job opportunities. But for all this to happen we need to create a sound base and the time is right now.