The Value Added Services, VAS, segment of Nigeria’s telecoms market is being transformed as the Nigerian Communications Commission rolls out measures to sanitise the system.
Despite the concerns over the mode of operations of the players, the Value Added Services segment continues to play a critical role in the Nigerian telecoms ecosystem. It is, therefore, not surprising that the telecoms regulator, Nigerian Communications Commission, NCC, has been making strategic efforts to reposition and transform the market amidst complaints from subscribers over misuse of some of the VAS platforms.
One of the critical measures introduced by the Prof. Umar Danbatta-led NCC to transform the market is the licensing of VAS aggregators. This is aside the implementation of the Do-Not-Disturb, which takes care of the interest of the subscribers.
One of the critical measures introduced by the Prof. Umar Danbatta-led NCC to transform the market is the licensing of VAS aggregators.
These initiatives by the regulator, ensure that while building a vibrant industry where the operators carry on their businesses with all decency, the consumer is also adequately being protected from any form of abuse by the operators. The efforts of the NCC in this regard speak of its consumer-centric regulatory approach.
Licensing aggregators
As of the last count, a total of 28 new firms have been licensed by the NCC to operate as VAS aggregators in a move aimed at promoting transparency in the VAS business. Poised to guard against the rising anti-competitive practices and other unfair sharing formulas between VAS licensees and the Mobile Network Operators, MNOs, the Commission had in 2019 issued the first set of licenses in this category. More were licensed last year and two additional ones this year.
Stakeholders said that the restructuring of the market by bringing in the aggregators as a third party was to engender an effective competition that will ensure sanity and foster needed economic growth. With the aggregators in place, the two-way transactions between the telcos and the VAS providers now have the aggregators playing the middlemen between the two sides.
Aggregator framework
According to the regulatory framework for the VAS aggregators, under the new structure, the network operators are to provide a final link to the subscriber to deliver value-added service to the end-user. “The operators will not be allowed to host or distribute VAS to their subscribers directly. An aggregator will primarily provide a concentration point to limit the number of devices that will be directly connected to the operators. It will eliminate the need for a Content Service Provider to maintain multiple physical connections to each network operator,” it stated.
The framework also stipulates that content and applications service providers (present VAS licensees) are the only players that will be allowed to pool, host, and distribute content and applications using their in-house software and hardware platforms. “Developers are unlicensed, freelance creators of content and applications or those who have the franchise on such value-added services. They are however not licensed to distribute such services.”
The NCC in the framework also explained that there would be no limit to the number of content and application service providers to be licensed by it, stressing that the number of active participants in this segment will be left to market forces. The Commission said companies, which presently hold a VAS licence will not need to apply for any new one but will operate in segment 3, as content and application service providers.
Need for reform
The VAS market was valued at $200 million three years ago and was projected to reach $500 million in 2020. That segment of the telecoms business had however come under the scrutiny of the regulator following increasing complaints from telecom subscribers who are being forced to pay for services they did not request. This led to the introduction of the VAS aggregators and other initiatives aimed at transforming the market.
Speaking on the efforts to reform the market, the Executive Vice Chairman of NCC, Prof Umar Danbatta, had recently described Value Added Service as an important element of the telecom ecosystem necessary for optimising the benefits of telecom service to the consumers. He, however, noted that it also came with challenges of consumers’ mobile phones being flooded with content not requested and being charged for the same.
Danbatta noted that the aggregator framework designed by the Commission in consultation with industry players would be adopted to enhance regulatory excellence and ease the operations of VAS provision in Nigeria’s telecoms industry. “The overall aim of our reform is to ensure fairness in the entire VAS value chains. I must say that the VAS segment of the industry despite its challenges is no doubt a hub for employment opportunities, huge revenue generation, and national economic development. It must therefore accord necessary regulatory intervention to realise its full potentials” he said.
DND for consumers
While implementing the restructuring of the VAS market, the regulator has also given the consumers the power to control what they receive from the VAS operators by introducing the Do-Not-Disturb (DND) code. The DND initiative first introduced by the NCC in 2016 was aimed at addressing the challenge of unsolicited messages, which had become a major concern for telecoms subscribers in the country.
The DND, therefore, gives the subscribers the freedom to choose to receive or not to receive promotional messages from the various networks and other telemarketers through their phones. With this, the Operators were mandated to dedicate a common short code, 2442, which provides subscribers the control to reject all promotional SMS and calls (full DND), or from only select categories of telemarketers (partial DND).
Five years after, about 30 million subscribers are said to have activated the code. Interestingly, a study commissioned by the telecoms regulator has revealed the far-reaching impacts of this initiative on the consumers, the operators, and the industry as a whole.
The regulator’s efforts will, no doubt, prevent unwholesome practices of shortchanging innocent consumers while ensuring that the VAS business continues without being a disturbance or nuisance to the peace of the consumers.
According to the report, since the inception of the DND service, there has been a drastic decline in the number of complaints received with respect to unsolicited text messages. Giving a breakdown of complaints, the report revealed that in the year 2017, a total number of 2,157 complaints were lodged. By the following year 2018, only 971 complaints were lodged, which was a 55 per cent decrease from the total complaints of 2017, and represented only 45 per cent of the total complaints lodged in 2017. In 2019, there was a major decline in the number of complaints from 2,157 in the year 2017 to only 74 in 2019. This figure represents just 3.4 per cent of the total of 2017 and shows there was a reduction of 96.6 per cent from 2017.
“Since the inception of DND service ‘2442’, it has been observed that there was an increase from year to year of the total number of subscribers to the service. In the year 2017, there were 132,100 and 8.2 million subscribers for partial and full activations respectively. In the year 2018, there were 403,685 and 21.3 million subscribers for partial and full activations respectively.
“There was a significant increase in the total number of activations in the year 2018, with an increase of 305 per cent and 250 per cent respectively from the previous year 2017. In the year 2019, there were 448,985 and 22 million subscribers of partial and full activations respectively. It was also an additional increase from the year 2018,” the report stated.
Conclusion
With the ongoing reforms in the VAS market, the telecoms regulator has reiterated its desire to see the business grow. The regulator’s efforts will, no doubt, prevent unwholesome practices of shortchanging innocent consumers while ensuring that the VAS business continues without being a disturbance or nuisance to the peace of the consumers.
