• Sunday, February 25, 2024
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BusinessDay

Regulatory framework for VAS market

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No doubt, the introduction of the Global System for Mobile Communications (GSM) in Nigeria 12 years ago, has not only transformed the telecommunication sector, it has, in fact, impacted significantly in the nation’s economy in a multiplicity of ways. Apart from enhancing personal and corporate communications and generally improving quality of life across the country, it has increasingly contributed to Gross Domestic Product (GDP) growth as well as diverse employment. According to the Nigerian Communications Commission (NCC) the contribution of the ICT sector to GDP is anticipated to rise to about 15 percent by 2015, a situation that would be achieved through government’s structured investment and regulatory intervention. It is in this regard, that the NCC’s plan to develop an industry-driven regulatory framework to strengthen the mobile Value-Added Service (VAS) market is a welcome development.

The tremendous growth in the Nigerian telecom industry, has given rise to the evolution of the mobile phone from a device just to support communications requirement to a smart phone with the capacity to provide a plethora of services. According to experts in the telecom industry, competition comes not only from other operators, but “new frenemies” like OTT (over-the-top) services like Netflix and Hulu, VoIP providers like Skype, and walled digital content gardens like application stores and streaming music services. To counteract competition and business challenges, telecom companies in all markets must look to VAS (value-added services) to differentiate themselves, attract new customers and boost margins and average revenue per user (ARPU). 

Given the decreasing average revenue per user in the voice services owing to increased competition, telecoms service providers in Nigeria now see value-added services as a new vista of opportunity to add a new revenue stream for the mobile network operators. Industry experts estimate mobile VAS to be worth over $200 million annually with huge potential to accelerate to $500 million in the next few years. According to the executive vice chairman of the NCC, during a recent interactive session with the VAS operators and mobile network operators (MNO), on the regulatory framework for the VAS segment of the industry in Lagos, this potential is achievable if proper regulatory framework is put in place.

However, the executive vice chairman noted that recently, the industry has witnessed some practices and behaviours in the VAS segment, which as individual subscribers and as industry regulator have given cause for concern. He further stated that the Commission has received avalanche of complaints from Nigerian subscribers regarding forceful activation of various value added services by service providers without explicit consent. Worse still, these services are auto-renewed, resulting to perpetual look-in of subscribers by the VAS providers.

On the other hand, the National Coordinating Consultant, Wireless Application Service Providers of Nigeria (WASPAN), harped on the need for the telecoms regulator to look into the area of revenue sharing among MNOs and VAS providers in its proposed regulation; he also noted that there is a need for increased collaboration among NCC and operators to set up a central database centre where unsolicited VAS messages can be screened and monitored,  adding that the regulator should protect the indigenous VAS players. 

We believe that there is a need to ensure the provision of fair and transparent value-added services to consumers and protect operators’ investment for healthy competition in the Nigerian telecoms space. 

The NCC should go ahead with the plan to develop the regulatory framework which aims to ensure the right market practices by the operators in the VAS segment of the telecoms industry to enrich the consumers’ total quality service experience. The NCC has been one regulator that has always taken serious interest in consumers’ welfare and worthy of emulation by other regulators.