Are the recommendations in the draft regulations on Value Added Services, prepared by Nigerian Communications Commission for stakeholders, surplus to requirement? What are the contents of this draft regulation that pitted operators against the regulator? In this report, Olubayo Abiodun provides insight into the contentious issues in the new framework for VAS
DATELINE: Wednesday, 27 April 2016. With the hushed tones in which they were talking as they clustered in 3s and 4s in the hall before the stakeholder forum officially got underway, it was apparent that the battle line was drawn between the operators and the Nigerian Communications Commission (NCC). Even the presence of D’Banj; the pop music crooner, will not significantly distract the operators from the headline battle for the day. Some of the gladiators; representing the operators were strategically seated discretely in the hall where they could effectively ‘snooker’ the regulator from their vintage positions. When the meeting eventually kicked off, the operators lived up to expectations as they drew their ‘swords’ from their well prepared position papers.
With 200 licensed operators in a sub-sector valued at about (N300 billion (US$200 million), it was not a surprise that the meeting ignited high-wired interests from the participants in theVAS ecosystem. The timely and comprehensive presence of stakeholders gave out the first signal that there was a serious business to be trashed out. The multi-purpose hall at Ikeja Sheraton Hotel, Lagos, Nigeria was filled to the brim. Those in attendant were members of the fraternal bodies including Wireless Application Service Providers’ Association of Nigeria (WASPAN), Association of Licensed Telecommunications Operators of Nigeria (ALTON), Association of Telecommunication Companies of Nigeria (ATCON), Nigeria Internet Registration Association (NIRA) and officials of NCC among others.
High on the issues to be sorted out was VAS licensing template and licensing fee, the menace of unsolicited text messages, spam calls and mobile adverts which has continued to give mobile consumers severe concerns. Published data showed that Nigeria’s VAS market, which includes text messages, ringtones, mobile adverts, mobile Internet sites, short codes, call centre services and special numbering services, is said to be worth US$200 million yearly and is expected to reach $500 million in the next five years.
But this bourgeoning segment of Nigeria’s telecom ecosystem is bedevilled with many hue and cries from consumers who most often cry wolves over ‘unethical practices’ by the service providers whose main attraction is how to drive up their average revenue per users. Experts acknowledged that this might have been due to its relative loose regulation which the EVC of NCC did not deny. Danbatta said that the VAS sector was long overdue for regulation as envisaged in the Commission’s 8-point agenda, specifically on the promotion of ICT innovation and investment opportunities.
Complaints from the consumers include torrents of unsolicited messages, forceful activation and auto-renewed VAS and a lack of harmonized short-codes and USSD by network operators. And this is the main reason NCC convened the meeting. But the essence of the gathering was not lost on the leadership of NCC. “Our gathering at this time is in line with the commission’s rule-making processes and in substantial compliance with the guiding principle of carrying out representatives and wide consultations in the development of regulatory instrument as stipulated by the Nigerian communication Act 2003,” said Danbatta.
“The draft regulatory framework before you today is a product of multiple efforts and reflections, including your own ideas which were submitted to the commission following our advertisement on this subject matter in several dailies in March 2016. The document’s principal focus is to encourage critical players to participate in the Value Added Services subsector by defining the roles and responsibilities of each player in a manner that is transparent, healthy and jointly beneficial,” he stressed.
He was clear headed that the gathering was a consultative meeting for which the Commission had prepared a draft report which was comprehensively articulated to the gathering by Steven Bello, an erstwhile Director of the commission who is now consulting for the NCC. Hardly was the draft regulatory framework presentation concluded by Bello when the practitioners started firing from all angles. This was no surprise because the NCC had earlier published the draft on its websites after compiling the initial inputs from previous stakeholders’ engagements. But on this occasion, it would seem that the inputs of the stakeholders have not been fairly represented as the practitioners openly disagreed over some sections of the draft regulatory framework.
Where did Bello stir the honey’s nest? In his presentation, he said the segment has been restructured into VAS and content developers; VAS hosting and service providers; and Mobile Network Operators (MNOs), saying that the aggregators would now be paying new licence fee of N10 million renewable after five years.
He also told the practitioners that the regulator has come up with improved interventions which include the unbundling of VAS for cost sharing, the decision for NCC to become the sole generator of short codes to operators to be renewed yearly, blockage of any text messages without properly registered caller ID to nip in the board the rising wave of unsolicited SMS, unwanted mobile adverts, among others.
WASPAN, standing as the most vocal in its opposition to specifics in the draft regulatory framework, disagreed with the regulator on some sections of the policy draft which they argued could stifle competition, disrupt the current market structure and work against national interest of local content policy. Chijioke Ezeh who spoke for WASPAN members raised concerns on how the draft regulatory framework could hinder competition, lead to loss of jobs, frustrate local content policy, make Nigeria VAS companies bleed to death, force unnecessary decimation of the digital industry, lead to dearth of innovation, work against market evolution, and constitute potential risk to national security.
Noting that VAS was introduced into Nigeria in 2000 and was developed side-by-side with the GSM market, Ezeh said that the implementation of the NCC proposition will exit 85 per cent of the market thereby reversing multi-billion Dollars VAS market developed over the years. He said that the dearth of Nigeria VAS companies will give rise to foreign companies that will engage in capital flight to the detriment of the local economy. According to him, this would further mount pressure on the troubled Nigerian economy.
“The NCC’s consultation paper seeks to place all the discretionary powers with the Hosting Licensees, while other licensees are mandated by the NCC to do as the Hosting company pleases. This portends serious potential anti-trust issues in a multi-billion Dollars industry where one or few companies hold all the aces”, he said. Ezeh said as well that NCC’s proposition would kill the promotion and implementation of the local content policy in ICT where Nigerian VAS companies are allowed and encouraged to develop services that meets the needs of the average Nigerian consumers.
Ezeh said that WASPAN is not oblivious of sharp practices by some of its members. And to curb such unwholesome activities, it was updating its industry-wide code of conduct as directed by the Industry Working Group on Short code. WASPAN members, according to him, have also collaborated with the MNOs to assist the NCC in the protection of the consumers from bad practices by some unscrupulous VAS providers. The steps activated include “no marketing SMS or calls before 8am and after 8pm”, deployment of the “Do-Not-Disturb” portal that are accessible to all subscribers, and all marketing and promotional SMS originating from VAS Licensees shall not exceed six per day in line with the 12-hour daily marketing window directed by the NCC.
The Managing Director of CreditSwitch, Tayo Adigun and the Chief Executive Officer, L5 Lab, Chika Nwobi, also picked hole in the draft document and opposed the N10 million licensing fee introduced in the proposed regulatory framework because most practitioners are smaller players that will not be able to pay such fee.
President, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo said some provisions in the draft policy could threaten new investments, lead to market upheaval, impact job creation and economic growth, raise national security concerns and legal liability issues. But he agreed with the NCC on the need to sanitize the sector.
Adebayo called for increased collaborations in order to strengthen the content of the draft document. Accordingly, he said that NCC must come up with a draft regulation on VAS that seeks to protect, balance and reconcile stakeholders’ interests. He expressed worries about the development which has forced NCC to prevent “service users” from using short codes to perpetuate fraud and the growing trends of unsolicited text messages that flood customers’ phones. He expressed confidence that the final document would be able to address the menace of unsolicited text messages that flood customers’ phones and those activities that prevent anti-competitive activities.
He said: “For us, anything that affects our customers’ satisfaction affects the sustainability of our investments. It affects our ability to attract new investments required to meet growth objectives. It affects the reputation of operators and further affects our goodwill and it affects the future of our industry,” he said.
“We are of full accord with the commission that these problems must be solved as quickly and efficiently as possible. Therefore, the NCC can count on our 100 per cent support on this.
Danbatta responded that the forum was organised to deepen the growth in the telecommunications sector in a remarkable and measurable manner. According to him, the centrality of VAS segment on the growth of the industry was one of the reasons the joint examination of the draft regulatory framework was very significant. He stressed that the objective of NCC’s 8 point agenda is to promote ICT innovation locally, increase investment in youths, promote Small and Medium Enterprise (SME) as well as provide and optimise access to the use of affordable fixed and mobile broad-band everywhere in the country.
By and large, the meeting achieved a significant milestone for the NCC and other stakeholders. It is the opportunity to exchange notes and come to a common ground on the draft regulatory framework in the overall interests of the growing tribes of telecoms consumers in Nigeria.
But it would remain to be seen if the objective of NCC will be realisable after the next tinkering with the draft regulation based on the objections raised by the operators on specifics clauses which are the fulcrum of the draft regulatory framework.