Roundtable on
Role of Proposed VAS Guideline in Localized
Citizen Service Creation and Economic
Development
Fahim Mashroor, SVP, BASIS
Outline
Current Context of VAS Industry in Bangladesh
VAS and Citizen Services
Challenges for VAS Service Development
What is the Need for Licensing?
Proposed VAS Licensing Guideline
Other Country Examples
Implication of Proposed Guideline on VAS Industry
Mobile Landscape of Bangladesh
Currently Over 90 Million Mobile Users (over 50%
penetration)
Annual Revenue of Mobile Industry approximately Tk. 20,000
crore
Average Revenue per person over Tk. 2,000 every year
Mobile revenue is predominantly Voice based.
Less than 4% Non Voice Revenue (one of the lowest in the
world)
3 Major Type of Content/Application Services
Information (one time request, monthly subscription,
IVR etc.)
Entertainment (Ringtone, CRBT, Music, Games etc.)
Transactional (mobile ticketing)
Digital Content and Application Service for Citizens
that could be Accessed by Mobile
Health
Education
Livelihood /Employment
Agriculture
Financial Services
Government Services
Mobile Value Added Service Value Chain
Current Regulatory Framework
Bangladesh Mobile VAS (MVAS)/Content Providers industry is young and
evolving. MVAS providers are not regulated or licenced and mainly they act as
service partners of telecom service providers.
The telecom service providers are the core in the value chain as they own
network infrastructure and have a large customer base.
VAS providers aggregate different type of content and enable the content
suitable to be transported on mobile network.
Telecom service provider and VASPs enter commercial agreements for
provisioning of MVAS. There is no standard format of agreement
Telecom service providers being the core of the MVAS value chain, usually
dominate in finalizing the terms and conditions of the agreement.
Connectivity
The Content Owner/VAS Provider (VASP) follows up
with the respective MNOs (Mobile Network
Operator) for opening and connecting the Short-code
to the VASP systems
VASP communicates with each MNO individually and
agrees on revenue sharing percentage
On the other hand, VASP agrees on the revenue
sharing percentage with the Content Owner
MNOs individually open the short-code in varying
times and connect it to VASP system
2 Type of VAS Delivery Model
On Deck (Branded Service) for its own network
user base
Odd Deck (Non Branded Service)
Outline
Current Context of VAS Industry in Bangladesh
VAS and Citizen Services
Challenges for VAS Service Development
What is the Need for Licensing?
Proposed VAS Licensing Guideline
Other Country Examples
Implication of Proposed Guideline on VAS Industry
Challenges of Mobile VAS Industry
Lack of Motivation for Innovation (for Content Providers)
Incentive
and Low ROI
Accessibility
Transparency
Idea Protection
Product and Business Development Flexibility
Lack of Focus with Flexibility (for Telecom Operators)
Very small part of revenue (compared to Voice revenue) for
operator
Supporting Management ownership and continuity problem
Challenges of Mobile VAS Industry
Problem (Cost and Hassle) with Connectivity with all
operators
Cross Operator accessibility of services
Incentive & Low ROI
Mobile Operators dominate the VAS market
to a significant extent by
determining VAS service fees
by
selecting VAS Provider according to their
existing relationship
by
excluding content providers
who do not generate sufficient
revenues or who provide similar
non-branded VAS services that it is
offering as its own branded service
Revenue Sharing Scenario
For Branded Service
Operator
Content Provider/Application Developer
Technology Enabler/Aggregator
Content Owner
65-80%
35-20%
10-15%
10-15%
For Non-Branded Service
Operator
Content Provider/Application Developer
Technology Enabler/Aggregator
Content Owner
50-60%
50-40%
20%
20%
Innovative Young Entrepreneurs are not joining because of
Lack of Financial Incentive
Transparency
As per the industry feedback, there are often differences in
billing between the MIS of telecom service providers and the
MVAS providers. Often, there is a lack of transparency in
statistics of content transactions, absence of credible systems to
address disagreements and grievance redressal mechanisms.
In the absence of a system validating the number of data
downloads or transactions between MIS of telecom service
providers and the MVAS providers, the account provided by
the service provider may prevail due to higher bargaining
power. This may lead to differences in the actual revenues
earned between telecom service providers and the MVAS
providers.
Why License?
One of the key arguments in favour of a licensing
regime for value added services is to ensure that
consumers interests as well as the interest of smaller
VASPs are safeguarded.
The licensing will allow the independent MVAS
providers to seek interconnection with QoS from
telecom service providers.
As a licencee, MVAS providers can also approach
Authority for resolving their issues.
MAJOR HIGHLIGHTS OF
PROPOSED VAS LICENSE
GUIDELINE
Proposed VAS Licensing Guideline
Other than the Licensee any other
Network/Solution/Platform Provider, ICX, NIX Operator
shall not act as a Telecom VAS Operator. The existing
approved contents offered by Network
Operator/Solution/Platform owner shall have to be ceded
to the Telecom VAS Operator licensees. [Section 8.8]
Proposed VAS Licensing Guideline
The Licensee shall have the access and interconnection of its
approved short-codes with existing single point of
Interconnection Exchange (ICX) and National Internet Exchange
(NIX). This will help to avoid the hazard of individual
connectivity with all operators, other related service
providers and overseas content providers which may have
connectivity through NIX over IP. [Section 8.1]
The Licensee will be allotted a short code from the Commission
which can be accessible from all the subscribers of different
operators. The arrangement of interconnection to a single point
network/solution/platform provider will be the responsibility of
ICX and NIX. [Section 8.7]
All Network/Solution/Platform Provider will provide
fair access to their infrastructure to the Licensee.
[Section 8.2]
The services being Open-Access model,
Network/Solution/Platform Provider shall not block
web/mobile portals to a data plan
(EVDO/GPRS/WAP etc.). The operators will remain
fair and unbiased in terms of providing access and
thus will not be selective blocking of mobile
portals or short codes. [Section 8.2 (i)]
Proposed VAS Licensing Guideline
Other than the infrastructure-access fee mentioned in these
Guidelines no other fees or charges or revenue sharing
model would be applicable upon the Licensee by the Network
provider. [Section 8.2 (iii)]
Network/Solution/Platform Provider shall publish the bulk
charges for Licensee for accessing its infrastructure (bulk
rates of SMS, IVR, IN Access, USSD, API, physical E1, etc.). The
charges for accessing all categories of infrastructure resources
shall have to be published after the approval from the
Commission. [Section 8.2 (iii)]
Proposed VAS Licensing Guideline
Telecom VAS License will be issued only to the
Bangladeshi entities (resident citizens, Non-resident
Bangladeshi (NRB), proprietorship, partnership firm,
company, society) registered with the Registrar of
Joint Stock Companies and Firms, Bangladesh.
[Section 7.1]
Outline
Current Context of VAS Industry in Bangladesh
VAS and Citizen Services
Challenges for VAS Service Development
What is the Need for Licensing?
Proposed VAS Licensing Guideline
Other Country Examples
Implication of Proposed Guideline on VAS Industry
Other Country Examples
Licensing provisions for Value Added services are
available in Singapore, South Africa, Malaysia, Bahrain
and some African countries.
In Singapore, value added network services are
permitted under class license.
In Malaysia, there is a provision of both individual
license and class license for Application Service
Provider and Content Application Service Provider.
Case in India
Current Eco-System in India (in terms of market situation and
regulatory framework) is very much similar to Bangladesh
In January 2011, ASSCHAM (Associated Chambers of
Commerce and Industry of India) published a report
prepared by global renowned consulting firm Deloitte titled
Mobile Value Added Services (MVAS) -A vehicle to usher in
inclusive growth and bridge the digital divide . In that
report, one of the specific suggestion was to recognize
MVAS players by the telecom industry through Licensing
under the OSP (Other Service Provider) license
Case in India
The Deloitte report and subsequent industry pressure prompted TRAI (Telecom
Regulatory Authority in India) to open up a public consultation process on the issue
of VAS Provider Licencing. In July 2011, TRAI initiated the consultation process by
asking a number of questions that include (among others) -
Is there a need to bring the Value Added Service Providers (VASPs) providing Mobile
Value Added Services under the licensing regime? If yes, do you agree that it should
be in the category of the Unified Licence?
How do we ensure that the VAS providers get the due revenue share from the Telecom
Service providers, so that the development of VAS takes place to its full potential? Is
there a need to regulate revenue sharing model or should it be left to commercial
negotiations between VAS providers and telecom service providers?
How do we also ensure that the revenue share is a function of the innovation and
utility involved in the concerned VAS? Should the revenue share be different for
different categories of MVAS?
Case in India
After long consultation process (almost one
year), TRAI on May 14, 2012 published it
recommendation report and one of the major
recommendation is
The Authority recommends that the
Application Service Providers should be
covered under Licensing through
Authorisation. (para 2.26)
Outline
Current Context of VAS Industry in Bangladesh
VAS and Citizen Services
Challenges for VAS Service Development
What is the Need for Licensing?
Proposed VAS Licensing Guideline
Other Country Examples
Implication of Proposed Guideline on VAS
Industry
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