India - licensing mobile value-added services

Trai favours licensor for mobile VAS providers

Value-added services (VAS) and mobile-content providers may soon come under a licensing regime. Security concerns regarding VAS have come to the forefront in the ongoing debate over security issues surrounding Blackberry services in India.

With the telecom ministry indicating possible rollout of 3G services from next year, the Telecom Regulatory Authority of India (Trai), in a consultation paper released on Wednesday, raised the issue of bringing content providers or aggregators called value-added services providers (VASPs) under the licensing regime.

It has also raised issues regarding licensing obligations for protecting copyrights, including digital rights management, and infringement of other laws.

In the paper, Trai said: "In such cases (the Blackberry case), a licensing and appropriate regulatory regime will provide clarity and the telecom operators need to source the content for value-added services from authorised, licensed or registered content aggregators in India."

At present, an operator has to intimate the licensor and Trai at least 15 days before launching the service. However, there is no licensing framework for content providers or content aggregators who provide these value-added services.

Given the advent of 3G and new generation network (NGN) services in the near future, Trai has invited suggestions from stakeholders by June 30.

All services beyond basic voice calls and fax transmissions come under the category of VAS, also called enhanced services, which include ringtones, caller tunes and SMS services. In India, the estimated revenue from mobile VAS is over 10 to 14 per cent of the total income of mobile telecom service providers. This is expected to cross 30 per cent in the next 5-7 years.

Due to the declining average revenue per user as call rates become cheaper, the service providers are expected to shift their focus from expansion of the subscriber base to VAS, which have the potential to generate huge revenues.

Trai has said that there is a need to adopt new technology for the success of VAS. There is also a need for consolidation and to win the confidence of investors, particularly foreign investors.

VAS, which will be provided through NGN, 3G and broadband wireless access, will require foreign technologies and investment, the regulator has said.

Also, with the coming of new models like the mobile virtual network operator (MVNO), the telecom operators and VASPs would need to look at the best practices in other countries and design a fair revenue-sharing system, it said.