NCC, mobile operators in deadlock over VAS Aggregator plan

NCC, mobile operators in deadlock over VAS Aggregator plan

NCC, mobile operators in deadlock over VAS Aggregator plan

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A meeting summoned yesterday by the telecoms regulator on planned licensing of value added service (VAS) Aggregators in Nigeria has hit a deadlock following stiff opposition by mobile network operators (MNOs).

Technology Times learnt that MNOs stiffly resisted the VAS Aggregator plan by NCC citing several reasons including revenue erosion; substantial investments they have made into their VAS business, an emerging revenue stream in the face of depleting voice and SMS services earnings.

It has also emerged from the meeting that NCC may license five VAS Aggregators for the Nigerian market to feed the VAS needs of the market’s over 140 active phone connections.

The Nigerian Communications Commission (NCC) last year announced plans to license VAS Aggregators that become one-stop-shop providers of direct links between VAS providers and MNOs in the VAS ecosystem.

The entry of VAS Aggregators will disallow MNOs from playing directly in the lucrative VAS market space as the new entrants will now provide direct connection between VAS providers and MNOs, according to the regulatory framework under consideration for the sector.

Technology Times learnt that MNOs stiffly resisted the VAS Aggregator plan by NCC citing several reasons including revenue erosion; substantial investments they have made into their VAS business, an emerging revenue stream in the face of depleting voice and SMS services earnings.

Sunday Dare, Executive Commissioner Stakeholder Management at NCC (standing) delivering a presentation at the meeting held yesterday by the telecoms regulator on planned licensing of value added service (VAS) Aggregators in Nigeria.
Sunday Dare, Executive Commissioner Stakeholder Management at NCC (standing) delivering a presentation at the meeting held yesterday by the telecoms regulator on planned licensing of value added service (VAS) Aggregators in Nigeria.

The regulator called a crucial meeting yesterday at its Abuja headquarters that had in attendance representative of MNOs and other stakeholders to review the planned licensing of VAS Aggregators for the Nigerian market.

Amid the opposition from the MNOs, the telecoms regulator hinted that it will proceed with its plans to issue licences for the VAS Aggregators being introduced to connect to the MNOs in the telecoms market.

NCC officials told the forum that they will get back to the industry over the next three weeks on the final position on the VAS Aggregator licensing plan based on feedback from attendees at yesterday’s meeting.

MNOs are adamant that the entry of VAS Aggregators will erode their revenue. Under the current regime, MNOs often earn 80% ratio of VAS partnership businesses and they fear the proposed regime will leave them with 30% or less.

A Technology Times source, who works with one of the Big Four MNOs, says that MNOs are united in the opposition to the regulator’s plan because they will not want to be a “dumping pipe” for what was cited as “unvetted contents.”

The bane of the VAS market has always been the revenue sharing between MNOs and VAS providers, the source told Technology Times and reckons that such commercial relationship issues can be addressed through the regular course of regulatory arbitration by NCC rather than the introduction of new “middlemen” into the ecosystem.

Segun Ogunsanya, CEO of Airtel Nigeria
Segun Ogunsanya, CEO of Airtel Nigeria

“NCC’s plan to license VAS Aggregators appears to be killing a fly with a sledge hammer”, the industry source told Technology Times after the crucial meeting held in Abuja.

The telecoms regulator has not conducted any market study to understand if the planned VAS Aggregators can be viable in the market, a development that appears to indicate that NCC was only interested in the revenue to be generated from issuance of licences, rather than the sustainable growth of the market, MNOs claim.

They also claim that the absence of any form of vetting for content to be piped through the VAS Aggregators when they go live is a development considered unhealthy for the industry.

At the meeting, the MNOs were told that the telecoms regulator was proceeding with the plan to issue VAS Aggregator licences, which will create a new market segment for fresh entrants in the space.

Meanwhile, the regulator said in a statement after the stakeholders meeting that the addition of the VAS Aggregator player to the original value chain linking Content Developer- VAS Provider- Network Service Provider, will lead to the recreation of the value chain into a framework of Content Developer- VAS Service Provider- VAS Aggregator- Network Service Provider.

“The VAS Aggregator will provide direct and secured connection to content and application providers, otherwise called VAS providers for access to all network operators that have the capacity to transmit value added services to end users”, NCC says.

According to the regulator, the framework “will also ease revenue collection and its sharing, a contentious area between VAS providers and Network Service Providers and, will also help address the menace of unsolicited text messages to end users without their consent by making it mandatory for network providers to establish a central database into which subscribers can register their phone numbers for the purpose of preventing the receipt of any form of advertisement.”

The telecoms watchdog says that obligations will be imposed on “operators and aggregators are to ensure that no adverts are sent to any telephone number on the database.”

The VAS segment of the industry despite its challenges appears to be a hub for employment opportunities huge revenue generation and national economic development, NCC says citing that it will continue consulting with industry stakeholders and, “this will eventually lead to the licensing of few VAS Aggregators to provide the link.”

Technology Times Reports News and reports from Technology Times Newsroom

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