Opposing to bring the value added services under any regulatory scanner, service providers, Bharti Airtel Ltd, Reliance Communication (Rcom) and Tata Teleservice Ltd(TTSL), have asked the Telecom Regulatory Authority of India(Trai) not to regulate value added services (VAS) or interfere in the revenue sharing between mobile operators and VAS providers.
The move assumes significance, given the dipping ARPU?s because of lowering tariffs which means that VAS would be the revenue growth driver for the Indian telecom industry in future, and bringing in a framework to determine the revenue sharing model would deeply affect the revenue potential of mobile operators. Currently, the VAS revenue constitutes around 14% of the total revenue of mobile operators and this is expected to jump to as much as 30% in the next five years.
Rcom has opposed to branding these services as ?Premium Rate Service?, since these services, by the name itself, are premium and not basic or utility services and globally governments typically intervene and regulate prices, if industry is providing utility service.
Bharti has pointed out that if a service has enough market pull, service providers actually pay higher revenue shares ranging between 40-60%. Moreover, one also needs to account for the cost, which an operator incurs, on VAS services, keeping in mind that only 2 out of 10 services launched actually succeed but the service provider spends on all the launched services and the returns are achieved only though the 20% of the services.
Explaining its opposition to recommending any revenue sharing model, Rcom has said that, the Indian telecom sector is one of most competitive sector in the world with the presence of 11-13 facility-based operators in each service area. The competition would further enhance with the implementation of 3G services operators and if the government plans to open the Mobile Virtual Network Operator (MVNO) route and in such a competitive scenario there is no need for the government to decide the revenue share arrangements between service providers and content providers as the content providers would have enough options of service providers.