TRAI Recommendations on Licensing Mobile VAS: A Step backward?

Earlier this week, TRAI published the recommendations (link to pdf copy) for the mobile value added services industry and of all the recommendations made, the most important recommendation that needs further discussion is to bring the mobile value added services (MVAS) industry under licensing.

The recommendation to license is driven by TRAI’s declared aim of allowing new and innovative ideas to flower in the VAS business and smaller entrepreneurs to flourish. While a light touch “free” license regime may prima facie encourage innovation, the long list of security and other compulsory compliances that are pre-conditions of the license, and the cost of such compliance would be a disincentive to innovators and startups.

TRAI’s Recommendation

  • For allocation of Short codes to telecom service providers/licensees and licenced application service providers/content providers, a Short Code Council (SCC) will be set up by TRAI.
  • Short codes will be allotted centrally through a online web based system in accordance with the National Numbering Plan. Short codes will be allotted to both  ASPs and TSPs independently.
  • Short Code Council will also centrally manage the details of short codes allotted, type of service provided under short code, tariff for the service and hosting details for application services, which can be used by customers for discovering the services interactively.
  • Application service provider can launch the service only after online approval by the SCC. If the ASP/TSP/content provider wishes at a later date to run a new, modified or additional application/content on the same short code, TSP/ASP/ content provider shall update the same online for obtaining revised approval.
  • Appropriate fee, one time and recurring charges, should be charged for allocation of common short code by Short code Council so that only the genuine and serious content provider/ application  service provider/entity should seek the same.
  • The service through allocated short code should be made operational within three  months of allocation and intimated online about the date of operationalisation of the common short code by the concerned  Application Service Provider/ entity/telecom access service provider. If no such information is updated online within three months by  TSP/ASP/content provider for declaring the service operational, it shall be presumed that the common short code has not been made operational and nonutilisation of short code for a period of more than three months will  be subject to cancellation of short code and reallocation to other applicants.
  • Telecom service providers should open the common short code within a fortnight after the code is approved by the Short Code Council and update this information online with Short Code Council. The orders/ directions/regulations of DoT or TRAI, from time to time, as the case may be, shall be applicable in this regard.

TRAI also recommends licensing with a view to improve revenue share of the VAS providers in the future. IAMAI, in their note right questioned how licensing will help revenue share between two commercial entities and by what mechanism the relative share of each stakeholder in the long VAS chain will be determined. It may be recalled rate setting and revenue share fixing was never the “ask” of any of the stakeholders from the Authority. What was suggested was to look into an operator agnostic payment system for VAS services.

The clear silver lining in the recommendation is the idea of an independent and centralised agency to distribute and manage short codes. This has been a long- standing suggestion of the industry and comprehensively laid out in the recommendations. However, this can be clearly achieved without the overhang of a license. The second silver lining is tacitly mentioned and perhaps the strongest of recommendations is to clearly keep out over the top services [OTT], i.e., those services that are accessed through open Internet out of the purview of these recommendations.

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