Mobile VAS providers welcome harmonization of short codes but…


Information reaching Adom Business indicates that beginning January 1 st 2015, all short codes used for mobile value added services (VAS) will be harmonized across all telecom networks, and the Wireless Application Services Providers Association of Ghana (WASPAG) say they are very glad about that because it will make life easier for them and their customers.

WASPAG is a group of about 20 registered and certified mobile VAS providers in Ghana. They are the main industry players who use short codes for various value added services such as bulk SMS services, ringtones, caller ring back tones, short videos, music and others.

Under the new regime, dubbed Special Numbering Resource (SNR) Regulations, the National Communication Authority (NCA) would issue all VAS short codes for all purposes and regulate their use.

The NCA recently harmonized customer service short codes and those are already in use. The VAS short codes are next in line. And the NCA would also be harmonizing emergency service short codes to easy access to the police, hospital, ambulance and other emergency services.

Director of Regulatory and Corporate Affairs for WASPAG, Conrad Nyur told Adom Business “we are absolutely in support of the harmonization of VAS short codes across networks because it will compel all telcos to activate common short codes for common services across all networks instead of the current situation where different short codes are used for same services on different networks.”

Currently there are lots of different short codes being used for similar services on the various networks. For instance, MTN may activate 1402 for motivational messages, while Airtel uses a different short code and Vodafone uses and different one also.

Even with police emergency numbers, MTN is doing 18555, Vodafone is doing some 0800 number and other networks are doing different numbers.

In time past, for instance, a VAS provider got MTN to issue 1422 as the short code for sending SMS to Joy FM. When the other telcos were requested to also activate the same short code, 1422 for the same purpose, they refused. So in the end, Vodafone activated 3003, Tigo activated a three digit short code and Airtel activated and different short code all for SMS to Joy FM.

This, according to mobile VAS providers, is because the telcos controlled the short codes and VAS providers have been at their mercy so they bullied the VAS providers into accepting whichever short code they (the telcos) unilaterally decide to activate for whatever service.  

The WASPAG Regulatory and Corporate Affairs Director said the situation makes it difficult for consumers to know which short codes are for which purposes.

“Consumers who use more than one phone line would have to memorize the various short codes for all the networks. That is too much for a consumer,” he said.

But under the new regime, once the NCA issues a short code to a VAS player for a particular purpose, each telco would be required by law to activate that short code for that purpose. The telcos would no longer have the luxury of refusing to activate particular short codes for VAS providers.

Nyur insisted that it would bring sanity into the mobile VAS space and, most importantly, make life easier for consumers.

 
Unfair revenue share
Another worry VAS providers have in their relationship with telcos is what the VAS players call “unfair revenue share arrangement”. VAS providers develop ideas and applications, and bring the content for the VAS, but the telcos take up to 70% of the revenue and the VAS provider is given only 30% to go share with the content owners.

Some telcos like Airtel, Glo and Vodafone take 70% up front, no matter how much the VAS generates, while Tigo takes 65% and MTN takes between 55% and 65%, depending on how much the VAS generates. So the VAS providers get between 30% and 45% of the money they generate for the telcos. And they have to go share that with content owners.

Some of the telcos recently unilaterally increased their share of the VAS revenue by 10% and their only reason was that their mother companies abroad instructed them to take more money from the local VAS players.  

This is contrary to the practice in the developed markets, where the multinational telcos and IT giants give VAS providers and App developers the lion’s share the revenue as a way of encouraging them to develop more Apps so everyone could benefit from economies of scale.

Nyur believes that harmonization and regulation of the short codes would also deal with the lingering issue of unfair revenue share between telcos and VAS providers.

“We believe anything between 50-50 and 60-40 should be fair and we trust that the regulations would put a range on revenue share so that VAS players would not be left at the mercy of mother companies of telcos who sit outside the shores of Ghana and issue instructions that disadvantage VAS players in Ghana,” he said.

He noted that currently, apart from telcos taking the lion’s share of VAS money, they also run commercial VAS locally by themselves, using only foreign VAS providers as partners and aggregators, to the detriment of the local VAS players who help them to generate moneys from VAS locally.

“Certain countries do not allow telcos to run commercial VAS without partnership local VAS players. In South Africa for instance, the regulator does not allow telcos to run commercial VAS. They have to necessarily contact a registered local VAS player to lead the promo,” he said.

 
Fees for short codes
Conrad Nyur however noted that the NCA has informed VAS players that from January 1, 2015 they would start paying about GHC2,400 per short code in addition to their licensing fee of GHC20,000.

He said WASPAG thinks the fee per short code is steep because it threatens to increase VAS cost for consumers and also increase abuse of the VAS platform, adding that it also threatens to kill young VAS startups at birth.

Nyur explained that telcos get their initial number blocks for free when they pay their licensing fees so VAS players should also get an initial number of short codes for free and start paying an annual renewal fee after operating the short codes for a year.

“This will enable the young VAS startups, after paying the licensing fee, to have some one-year period to stand on their feet and be able to generate some revenue before they start paying fees for the short codes,” he argued.

He also noted that, for the VAS players already in the business, the fee would force them to either increase their charges to the consumer or send more unsubscribed messages to consumers at a fee to the customer, just to shore up their revenue and be able to meet regulatory requirements.

“The whole issue about SPAM or sending unwanted messages to subscribers and charging them is for us to make revenue and pay the telcos their whopping 70% so that we can also make some money to meet our overheads. So if the NCA adds this additional fees for short codes it may make the SPAM problem worse or lead to increased cost for consumers,” he emphasized.

 
No Bluff
On his part, Chief Technical Officer of the leading VAS provider, TXTGhana, Eyome Ackah said the fee is a threat, particularly for startups, so he believes NCA needs to reconsider WASPAG’s proposal and give about 10 short codes for free as part of the initial license.

Eyome Ackah has worked with almost all telcos in this country and now works with a leading VAS providers. While with the telco, he worked at both the implementation and business levels, and there said “I have a good understanding of the both the technical business sides of the relationship between telcos and VAS providers.”

He also noted that there is need to regulate the revenue share between telcos and VAS players, in the same way the NCA regulates the interconnect rate between telcos.

Under the telcos interconnect regulations, if a call originates from telco ‘A’ and terminates on telco ‘B’, then telco ‘A’ is supposed to pay telco ‘B’ a specified amount of 5Gp per every minute of that call. But with VAS, the telcos unilaterally decide what to charge and the VAS providers have no say.

“Currently we deal with telcos purely on relationship and so they can decide to bluff or cut you off as a VAS player if they are not happy with you. But I believe that relationship needs to be properly regulated so that the telcos would not be able to bluff,” he said.

Eyome Ackah noted that the regulation of the VAS/Telco relationship would even be strong when the proposed Interconnect Clearinghouse comes onboard, because it would mean VAS players would just have to go to the Clearinghouse for connectivity to all telcos before going to each telco to talk business.

Meanwhile, Adom Business gathered that not all VAS providers need short codes for their services so those who need them are the ones required to pay that additional fee. So the can avoid the extra fee by steering away from Apps and services that run on short codes.

 
 

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