By Prince Osuagwu

Plans by the Nigerian Communications Commission, NCC to regulate the Value Added Service, VAS industry is generating anxiety, suspicion and fears of foreign invasion of the sector.

This is coming particularly from people whose professions are in that genre of telecommunications business, if the NCC did not tilt its regulation towards the protection of local businesses in the sector, foreigners would swoop in and hijack the industry.

But the commission says that the traditional network-centric and facilities-based business model is fast being overtaken by over-the-top, OTT services in terms of volume and turnover and therefore, it was time to coordinate its activities with regulation.

The NCC said it deliberately allowed the value added services industry to develop without any encumbrance or significant regulatory interference.

However, it believes that though the VAS industry in Nigeria has grown to a multi-billion Naira industry, as well as also becoming enabling tool for facilitating efficient operations in other sectors of the economy, there is also a dark side to the success story.

 Menace of unsolicited text messages

The dark side of the story, according to the commission included several complaints from the public against perpetuating  frauds through short codes assigned for Value Added Services, the menace of unsolicited text messages that flood customers’ phones, fake bank credit alerts, anti-competitive activities etc.

Consequent upon this and the fact that the Value Added Services industry is beginning to approach maturity, the Commission says the sector is ripe for regulation, in order to protect, balance and reconcile stakeholders’ interests.

In doing this, the commission has developed a market structure with three pronged value chain which it believes will help it easily perform regulatory oversight functions. They include VAS and content developers, VAS hosting service providers and Network operators

VAS Developers are owners of a unique content or application who would also have additional responsibilities for registration of copyright for their VAS /content and its protection against copyright violations and all other related legal issues; obtaining third party authorization for their content/VAS where required and register with Corporate Affairs Commission as a corporate body because the commission would place them under a class license.  The VAS service hosting providers are to be providers of software and hardware platforms for hosting VAS and providing transmission links to network operators.

They will also need to acquire software platform for receiving and processing requests for service via SMS messages and other methods, traffic metering, message logs, transaction accounting, traffic and security management; obtain operating license from NCC; acquire and pay for block allocation of short codes from NCC; manage the assignment of short codes to content/ VAS products being hosted on behalf of developers, among other responsibilities.

Meanwhile, mobile network operators will provide two-way termination services to VAS Hosting Service Providers (VHSP’s).

However, some stakeholders, particularly those the new order will affect, have said that the NCC action would impoverish their economy if modalities to the licensing did not take some progressive steps. Of particular concern to them is the licensing of a VAS service hosting provider, who would now act like a middleman between the VAS operators and the network operators. In their views, that license has no value to the entire ecosystem and by structure, would impoverish the local service providers the more.

Recall that the VAS operators have been battling with the network operators to have the current revenue sharing formula reviewed upwards to better their lot, therefore, in their own estimation, unless the project is being sponsored by enemies of local content, the license currently in use by VAS operators is in order, to stimulate more growth in the industry.

For instance, in the new, provisions and guidelines for the provision of valued added services in Nigeria, published by the NCC, the regulators proposed that Developers would be placed under a class license to be issued by NCC.

Businesses and individuals

But Wireless Application Service Providers’ Association of Nigeria, WASPAN, contend that a VAS Developer does not need licence. “WASPAN does not subscribe to VAS Developers, businesses and individuals, who strictly create, develop and provide content and applications to be licensed by the NCC. A good number of them have procured licences for their respective areas of primary business. Licensing those who are core technical service providers will ultimately stifle innovation from that part of the value chain and consequently, their growth”.

The association rather tasked the NCC to ensure that the strict adherence to contractual terms between and among parties is maintained as much as strict adherence to anti-competition and anti-trust rules and regulations. For them, “NCC must ensure the protection of the Nigerian VAS ecosystem from foreign invasion.”