With the consultation process on creating a revenue sharing structure for the Value Added Services (VAS) well on way, it seems unlikely that these services would come under a regulatory regime. The Telecom Regulatory Authority of India (Trai) had last week initiated a consultation process to study a revenue share structure between them and the mobile access service providers
In line with the regulator’s policy of forbearance where in the regulator restrains from interfering or ‘meddling’ with the market forces, sources say that bringing the VAS services under a regulatory scanner might amount to interfering with the market forces.
In India the estimated revenue from mobile VAS is over 10-14% of the total revenue of mobile telecom service providers. The mobile revenue through VAS is expected to cross 30% of the mobile telecom service provider’s revenue in the next 5-7 years as revealed in various position papers.
However, VAS operators have been constantly complaining that since they provide various services such as content and other services like ringer tunes to mobile service providers, in the absence of a proper regulatory structure they are losing out on revenue to the mobile operators. “The telecom operators and VAS providers would need to look at the best practices in other countries and design a fair revenue sharing system where the content providers and content owners do get their due share in a transparent manner,” a Trai statement issued last week had said. Trai in its consultation paper has sought to discuss revenue share model in mobile value added services, value chain and its transparency.
Currently SMS is the highest percentage opf VAS revenues, followed by various entertainment services. However, in future the scope of VAS is expected to grow multiple times for various utility based services such as mobile commerce for mobile transactions and location
Trai had noted that the VAS industry in India was at a nascent stage and did not have a proper process or common benchmark or code of practice. There is no coordinated effort to make the industry grow and it also lacked transparency, as the consumers weren’t fully aware of the nuances of the services. Trai has also sought to allocate short codes for VAS in order to have uniformity amongst all the telecom operators and to enable branding of VAS.