Mobile phone operators oppose VAS licensing

The government's plan to introduce licence for mobile phone applications for the best interests of application (app) developers has been met with opposition from mobile phone operators.
According to the draft of the value-added service (VAS) guideline posted on the Bangladesh Telecommunication Regulatory Commission (BTRC) website in January, the content providers will set the price of VAS to be provided through mobile operators' network.
VAS is a term for all services beyond standard voice calls, SMS, MMS and data access provided by the mobile operators. In Bangladesh, examples of VAS include missed call alerts, call block, voice mail, music and ring tone downloads and so on.
Currently, local developers receive a modest percentage from the operators who set the price for the app. They stand to receive up to 90 percent if they sell the app to international operators.
“I am developing the content with my idea and investment but the operators are fixing the price. They can't do,” said Russell T Ahmed, chief executive of Champs21.com, an app developer.
Fahim Mashroor, senior vice president of Bangladesh Association of Software and Information Services (BASIS), alleged that operators lift local content developers' ideas and go on to provide the services after having developed the software in-house.
Faisal Alim, secretary general of Content Providers and Aggregators Association of Bangladesh (CPAAB) proposed to the government to open foreign investment for VAS industry, while the draft excludes foreign firms. VAS should be provided collaboratively by the operators and locals, he added.
As VAS providers will be connected through interconnection exchanges (ICX), the infrastructure cost will go down, which means subscribers would receive the service at a lower price, said Dr Shahadat Khan, CEO of Progoti System.
Ahmedul Haque Bobby, president of the Call Centres Association of Bangladesh, believes the VAS licensing regime will create a level playing field.
More apps would be developed, which would increase the traffic level of the operators.
BTRC Chairman Zia Ahmed believes the licensing regime will ensure that the local content providers finally get a just amount for their intellectual property. Foreign developers will be allowed when locals fail, said the BTRC boss.
However, mobile operators are less welcoming of the regime as it will eat into their revenue sources.
Md Munir Hasan, director of Grameenphone, feels the licensing regime would be unfair on them as they have spent a colossal amount to develop their networks, while VAS providers get to avail and exploit the improved network without having made any investment.
The new system will not be successful if operators are excluded from the service, he added.
Abu Saeed Khan, secretary general of Association of Mobile Telecom Operators' of Bangladesh (AMTOB), said, according to the telecommunication policy of 1998, mobile operators are VAS operators, so the guideline contradicts the policy.
Earlier in an interview, Grameenphone CEO Tore Johnsen said, “We didn't see such a guideline in the world.”
In a letter to the telecom ministry, Rohan Samarajiva, chairman of Colombo-based regional think tank LirneAsia, said, “This proposal is harmful to the achievement of Digital Bangladesh objectives and should be withdrawn.”
He said licensing is especially inappropriate at a time when mobile apps (primarily for smartphones but also for feature phones) are attracting significant venture capital.
When the trend is for vast numbers of micro enterprises to develop applications that would be bought and sold on virtual “app stores,” the last thing the government should do is impose onerous licensing requirements, he said.
The exclusion of operators from the provision of VAS would be unfavorable to the development of VAS for feature phones, used predominantly by the poor. The proposed licensing rules may thus be justifiably described as being anti-poor, said Samarajiva.
Existing arrangement with win-win revenue sharing model will make the business case viable for content owners, providers and operators, while encouraging innovation and improved customer satisfaction, according to AMTOB.