Mobile VAS providers should have licences

A good number of foreign mobile value-added services companies that repatriate a significant amount of funds from Bangladesh will face regulatory bar as the telecom regulator is set to introduce licensing for the business.

Bangladesh Telecommunication Regulatory Commission (BTRC) has finalised a guideline to bring the valued-added service providers under its regulatory framework. The telecom ministry has also given its approval.

Once licensing is put in place, no foreign entities will be allowed to run business without establishing joint ventures in Bangladesh. In the joint venture, foreign companies will be allowed to hold a maximum 70 percent stake.

The BTRC has taken the initiative to provide licences to VAS-providers as there are irregularities in the market, said Md Jahurul Haque, acting chairman of the regulator.

"We have noticed that customers have complaints about the services. But since the service providers are not registered, we can't take any action against them," said Haque, also the commissioner of the legal and licences wing of the BTRC. 

The size of the country's telecom-related VAS market is more than Tk100 crore and it is growing significantly, said industry people.

At the moment, about 100 entities, including 15 foreign ones, offer VAS such as welcome tunes, music and health tips through mobile operators.

Although the foreign companies are running their business in Bangladesh, they have so far stayed beyond the regulator's reach in absence of a licensing system, said officials of the BTRC.

Haque said some foreign companies repatriate a huge amount of money from the sector. "We are working on it to ensure regulation.

The telecom regulator found that Indian company Hungama repatriated about Tk 13 crore last year although it had no legal entity in the country, said another official of the BTRC requesting anonymity.

In a bid to contain such fund transfer, the telecom regulator had proposed in the draft guideline to limit foreign companies' ownership in VAS providing entities to 51 percent, said BTRC officials.

However, the telecom ministry has allowed foreign companies to hold more stakes when it approved the guideline."

In the guideline, the BTRC has fixed the range of revenue sharing ratio between mobile phone operators and VAS providers from 40 percent to 60 percent.

Local VAS providers said they are happy that the regulator has at last taken an initiative to bring the sector under regulation.

"We think local players will receive some benefits under the regulation compared to the current situation," said Rafiur Rahman Khan Yusufzai, general secretary of the Content Provider and Aggregator Association of Bangladesh.

He said the BTRC's directive on the revenue sharing ratio would help resolve VAS providers' longstanding tussle with mobile phone operators.

Currently, Grameenphone shares 50 percent of revenue with VAS providers while Robi and Banglalink share 20 percent to 40 percent, said Yusufzai.

Mobile phone operators also welcomed the move as the guideline is expected to help establish a transparent ecosystem.

"However, it could have been more beneficial for customers had mobile phone operators been allowed to provide agnostic service," said Mahmud Hossain, chief corporate affairs officer at Grameenphone.

The guideline said VAS providers would have to obtain registration certificate from the BTRC.

The application fee for the registration is Tk 5,000 and the registration fee for a period of five years is Tk 50,000.

The ratio of revenue sharing depends on service modality, contribution of stakeholders to the VAS value chain, scale of operation, and geographic and demographic characteristics of the target market, according to the guideline.

The revenue sharing model may vary depending on services and networks, it said.