TRAI Seeks Comments On Licensing & Regulation Of Mobile Service Tariffs

25 Jul, 2011

Indian telecom regulator TRAI has mooted a new licensing scheme, revenue sharing models, and government regulation of tariffs of utility services in its consultation paper on mobile value added services (VAS) and has sought stakeholders views on proposed changes to rules of the game in the buzzing telecom industry.

Telecom Regulatory Authority of India(TRAI) has floated the proposal of not just bringing the VAS providers under the licensing regime but also on regulation of revenue sharing models, differences between MIS figures of operators and VAS providers, need for open access to subscribers, central allocation of short codes and whether the government should regulate tariffs of utility services. For more detail, download the consultation paper (PDF).

Mobile VAS are services that sit above the basic voice service on networks and allow users to send short messages (SMS), pictures, play games, listen to music, read news headlines, astrology, get flight information, surf Internet, and conduct mobile payments.

The framework, according to TRAI, will enable benefits to consumers, promote entrepreneurship and create additional revenue streams for the service providers. It will also ensure a level playing field and transparency between content providers/aggregators and telecom service providers.

Comments on issues raised in the consultation paper are being invited from stakeholders by August 12, 2011 and counter-comments on the comments by August 19, 2011.


There are some interesting data points in the mobile VAS consultation paper prepared by TRAI which we have summarised below.

Mobile Data Users Doubled In The Past Year: The total number of wireless subscribers who have subscribed for data services is up 2.14 times from 177.82 million in March 2010 to 381.4 million as of March 2011.

Utility Services: TRAI says that applications meeting the needs of the customers will be adopted to create a substantial revenue stream and quotes the examples of China's IM service Fetion, which has recorded 100 million registered users; M-PESA from Safaricom in Kenya; China Mobile's Rural Information Service; 'Please Call Me' service by MTN in South Africa and 'CellBazaar' by Bangladesh's Grameen Phone.

Social Networking: TRAI points out that the use of social networks such as Facebook, Twitter, Linkedin and YouTube is growing rapidly across the globe. Stats shared by the regulator include: As on July 2011, Facebook had more than 750 million active users out of which more than 250 million are currently accessing Facebook through their mobile devices. Twitter has 175 million registered users as on September 2010, of which 37 percent use their mobile phone to tweet. YouTube has more than 2 billion views a day including 100 million views on mobile a day.

Rural: Will be a focus for growth of mobile services. The share of rural wireless subscribers has risen from 20 per cent in March 2007 to 33.98 per cent as of May 2011. Customised VAS such as crop price alerts, microfinance scheme information, instalment dues alerts, weather alerts, banking and mobile payments will be offered.

Shift To Rich Apps: From simple applications such as e-mail, instant messaging, educational information and text chats, the focus is now shifting to video downloads, ads, gaming and video chat. Convergence of voice with mobile TV and IPTV as well as convergence of devices both at the end-user and core-network level will facilitate the adoption of VAS.

Revenue Of Telcos Falling Behind: A revenue gap exists between the number of subscribers and the total revenue of telecom providers. From Rs 1,579,850 million in 2009-10, it has now reached Rs 1,717,190 million in 2010-11. The contribution of non-voice revenue is currently 11 per cent, compared to 14 per cent in Brazil, 21 per cent in UK and Germany, 27 per cent in China and 30 per cent in USA.

ARPUs Down To Rs 100: From a high of Rs 366 for GSM operators in March 2006, the average revenue per user (ARPU) has fallen to Rs 100 in March 2011. For CDMA operators, it has declined from Rs 256 in March 2006 to Rs 66 in March 2011.