This article will be dealing with the regulations governing Value Added Services (VAS) businesses and Aggregators as an important component of the Telecomms service value chain. This article will in focus be looking at :-
– The definition of Value Added Services VAS as a Telecomms service offering.
– The relevant regulator for VAS services in Nigeria.
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– The structural framework for VAS in Nigeria regarding market segmentation.
Which organization is in charge of regulating Value Added Services in Nigeria?
Value Added Service licensing and business operations are regulated by the Nigerian Communications Commission (NCC) by virtue of the Nigerian Communications Act.
What is the definition & classification of Value Added Services?
Value added Services or VAS are terms describing any network-based service other than voice conversation that is provided in the form of text, video, graphics, picture, multimedia or data for the purpose of conveying information or executable content either downloaded or accessed on line and normally at extra cost.
The following service classifications are recognised as value added services:-
Information services/Content: News, updates, data, quiz, games, ringtones, video streaming, alerts, product information, call center, database access .
Interactive services/ applications: charting, contest participation, e-voting, egovernment, text –to-win, polls and surveys, coupons, on-line games, promotions, prepaid calling card service, call directory, location-based services.
Commerce: E-banking, mobile money, e-health, telemarketing, e-ticketing.
The list is not exhaustive as new value added services are being developed virtually every day.
Nevertheless, VAS are usually external third-party hosted
functionalities which are physically and logically not part of the switching or signalling fabric of the telecommunications network.
What is the structural framework for Value Added Services (VAS) in Nigeria regarding market segmentation?
The VAS subsector of the telecommunications industry is based on horizontal segmentation in line with the value chain. This consists of four broad segments with the following corresponding market players:-
Segment 1: Network operators.
Segment 2: Aggregators.
Segment 3: Content and application service providers .
Segment 4: Developers of content, applications and platforms.
What are the functions and responsibilities of these market players within VAS arrangements?
Network Operators
-Providing termination service to Aggregators and transmit requests for service from subscribers to content and application providers through aggregators. They must possess a Digital Mobile License, Unified Service Access Service License (UASL) or any other license issued by the Commission which enables the licensee to transmit VAS to end users.
-Protection of subscribers from unwanted and unauthorised value added services in accordance with NCC directives and the provisions of the Nigerian VAS.
– Providing billing, revenue collection, publicity and e-marketing services to content and application providers who wish to outsource these administrative services to network operators.
Aggregators
-Providing simplified, direct and secure connection to content and application providers for access to all network operators that have the capability to transmit value added services to end users.
This service will be limited to multiplexing of signals from various VAS providers and distributing same to all network operators as requested by each content and application provider.
-Providing a direct link to the internet or International Data Access service providers for content and application providers who wish to market their services globally.
-Securely transporting content to and from operators and VAS content service provider systems.
-Provision of collocation services to those requiring it.
-Provision of billing and revenue collection services to content and application providers as may be required.
-Provide intermediation for billing verification between parties in the VAS value chain.
Content & Application Providers
-Installation of hardware and software platforms for hosting applications and content.
– Hosting and distribution of third party applications and contents.
-Installing software for processing, counting and logging request for Value Added Services.
-Takes responsibility for billing the customer and revenue collection, either by installing an in-house billing platform or outsourcing it to third parties. The content and application provider may collect payment directly from the subscriber via VAS prepaid voucher or other electronic payment platforms.
Revenue collection, branding and advertising can however be outsourced to third parties.
– Remission of revenue due to developers based on agreed sharing formula.
– Collaborating with developers in determining a reasonable price for VAS products.
– Taking responsibility for user authentication, traffic management, security and service delivery.
– Monitoring and managing end-to-end quality of service in conjunction with other market players and taking charge of customer complaints, service level agreements(SLAs) and customer code of practice.
There is no restriction to the types of value added services they can offer except that they cannot offer those that are banned by the NCC and/or those that are not permissible under the relevant Nigerian Laws that may then be in force. For tele-marketing and e-adverts, they must adhere to the modes of delivery specified by the Commission as stated in the NCC framework and other conditions.
-Must meet minimum technical specifications outlined in the technical framework.
Developers of Content, Applications and Platforms
– A VAS developer must be able to provide valid proof of ownership of an application to be hosted and distributed if required by the content and application service provider.
-Taking responsibility for obtaining necessary rights, licenses, consent and permissions for content or third –party applications to be hosted on his behalf when required.
– Be responsible for payment of all royalties and fees required by third-party owners of content and applications subject to the terms of any agreement.
What are the notable provisions of NCC competition and market rules for VAS businesses in Nigeria?
Prohibition of Network operators from Offering Value Added Services:
The Unified Access Service license clearly specifies the list of services the licensee is allowed to offer which does not include Value Added Services.
– Operators will not be entitled to common short codes assignment except for critical operator specific services for example access numbers to call centres, short codes for recharges as approved by the NCC.
– Operators are allowed to partner with third party content providers for the provision of charged Caller Ring Back Tone (CRBT).
– Content providers are free to develop in-house applications and content in addition to acquisition of franchise rights from third-party apps and content developers .
-Content and apps providers must not discriminate or show preference in accepting application for hosting on the basis of the source of the product to be distributed.
-Both in-house products and third party products must be treated equally. VAS developers whose request for hosting has been rejected despite meeting the conditions stipulated in section above will have the right to appeal to the NCC for redress.
-Rejection of hosting requests for flimsy excuses or deliberate restriction of access to third-party applications/content in order to give advantage to in-house content/ apps will attract sanctions.
Network operators and content/application providers are barred from full or partial ownership of aggregator companies.
-The provision of the Nigerian Communications Act, 2003 (section 31.1) barring any company in Nigeria from offering any telecommunications service without appropriate license applies equally to value added services.
These include location-based services, commercial ring tones and ring back tones, music downloads, mobile money
Switch-generated ring tones or caller ring back tones and other features such as call forwarding, multi – party conference call etc. which are offered to subscribers without extra charges will not be classified as value added services.
Barring of Fixed Charges
-No monthly or annual fixed charges for bearer, channel or access cost shall be imposed on any access partner in addition to usage-based charges.
-The charging model shall be usage-based or subscription type, but not a combination of the two.
-If the aggregator collects VAS product charges from the user directly via any other method other than Subscriber’s airtime credit, it must settle the network operator or other access partners for additional services within the agreed time frame failing which the partner owed will be entitled to interest charges.
Undelivered VAS
-Where the VAS payload is successfully handed over to the network provider, and it is unable to deliver it to the subscriber, the operator must not charge the subscriber any transport cost.
-The content and application provider must not charge the subscriber for VAS until there is a confirmation that the VAS payload has been successfully delivered to the subscriber.
-In all circumstances the subscriber must not be charged for a service that was not rendered.
Conditions for VAS Activation
-A request for hosting must be granted if the developer satisfies the following conditions:
(1) If the developer provides a legally enforceable guarantee against infringement of third-party copyright, patents and intellectual property rights if required by the content service and app provider.
(2)The VAS belongs to the class of VAS that the Commission defines as being qualified for short code allocation.
(3) If the VAS content is permissible under the relevant Nigerian Laws that may then be in force and is not one that is deemed to “encourage or incite crime, lead to public disorder, be repugnant to public feeling or contain an offensive reference to any person, alive or dead, or generally, be disrespectful to human dignity”
Conditions for VAS De-activation
-A content and app service provider is allowed to de-activate a VAS being hosted if any of the conditions below is satisfied:
(1) If the developer so requests or if there is mutual agreement between the two parties.
(2)If the VAS does not generate any revenue for three months continuously.
(3) If the revenue generated does not cover the cost of hosting for a period of 6 months.
(4)If it is discovered that the developer has obtained access through false information or via a fraudulent process.
(5) If there is a proven case of third –party intellectual property rights, copyrights or patent violation that is not resolved within 90 days.
(6) If the VAS is found to contain errors or bugs and the VAS developer fails to make necessary correction within 14 days of a written notice being given.
Denial of VAS Activation or Illegal De-activation
-Where a request for access is denied or there is illegal de-activation of an already hosted VAS, the aggrieved party has the right to appeal to the NCC.