TRAI recommendations of Mobile VAS: 1 step forward, 2 steps back

11 months after the Mobile VAS Consultation Paper was out and six months after the last Open House discussion took place, TRAI has finally published the recommendations for the mobile value added services industry on 14 May 2012.

 

Without going into the merits of each recommendation, IAMAI is of the view that the set of recommendations are self-contradictory and defeats the purpose with which the consultation paper was published.

 

The most important recommendation is to bring the mobile value added services (MVAS) industry under licensing. The same document clearly mentions that not one important stakeholder group supported the idea of licensing, only some individuals did. The idea of licensing, however light touch, goes against the overwhelming feedback that the Authority had received on the original consultation paper, and also against democratic and consultative spirit which otherwise defines TRAI’s consultation process. Also, the idea of licensing does not have precedence in TRAI’s earlier “recommendations” on VAS.

 

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.

 

Licensing is also recommended with a view to improve revenue share of the VAS providers in the future. However, it is not clear 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.