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VAS players seek regulator's intervention for fair share
By siliconindia
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Monday, 14 July 2008, 17:52 IST
New Delhi: Claiming that existing commercial terms are heavily in favor of the mobile operator, mobile value-added service (VAS) providers have sought the telecom regulator's intervention in determining the revenue sharing formula with cellular operators. VAS accounts for nearly 25 percent of mobile operator's revenues.
This revenue is expected to go higher as third generation mobile services are launched and as consumers move beyond the voice service.
The major VAS providers including Google, Times Internet and Netcore provide services such as ring-tones and wall paper downloads, information services and music downloads.
According to one industry estimate mobile operators keep as much as 60-70 percent of the revenue generated from such services. VAS providers have now told the TRAI that there should be a benchmark to determine the revenue share.
In response to a consultation paper on the issue, Google said, "Google believes that it is of the utmost importance for the government to state in unequivocal terms - in the form of a directive or guidelines- its preference for more equitable revenue-sharing agreements that align properly with true value added to the consumer. More specifically, TRAI might consider articulating a revenue-share band or a minimum floor price based on service type. Such thresholds, benchmarks, and point of reference - perhaps not mandatory - can add enormous value as revenue-share agreements are finalized."
Times Internet responded, "There is a need to regulate the revenue sharing model, because telecom operators have monopolized control over access to networks. As they have control over VAS distribution, pricing and billing processes, the revenue-share arrangements are in their favor. In some cases the Mobile Network Operators pay VAS players as little as 8-10 percent as revenue share."
But taking an objection to any regulation, the Cellular Operators Association of India said, "We believe that it would be extremely undesirable for the Authority to regulate revenue sharing between the various stakeholders involved in the Value-Added Service chain. This should be left to the commercial negotiations and mutual agreement between the various stakeholders involved as is the current practice."
