Only ‘supporting role’ for value add services

The country's telecom regulator is not keen on getting into value-added services such as messaging and ring tones that operators offer to mobile phone users, even though there have been demands to regulate these services.

“The role of TRAI would not go beyond a supporting role,” said Nripendra Misra, chairman of Telecom Regulatory Authority of India.

TRAI had recently issued a consultation paper seeking inputs from content generators, telecom and Internet service providers and even consumer forums on whether the VAS industry should be regulated.

The biggest area of contention between content providers and telecom operators has been that operators in India corner a major share of revenue, anything between 50 to 85 per cent -- coming from these services, whereas in countries like Europe and Japan, it’s the other way round.

In India, value-added services contribute about 10-15 per cent of a telecom operator's revenue and the share is expected to go up once third generation technology is introduced in the country..

Analysts feel regulation will curb growth of VAS.

“An open market is good for the industry as it creates competition and gets a user value for his money,” said Madhusudan Gupta at consulting firm Gartner.

Gartner estimates the Indian VAS market to grow to $5.5 billion (Rs 23, 650 crore) by 2011 from an estimated $ 1.2 billion (Rs 5,160 crore) at the end of 2007.

“No regulation whatsoever is required for VAS and these services will lead to better utilisation of the existing network infrastructure,” said telecom consultant Mahesh Uppal.

Uppal, however, sees a role for TRAI in bringing fairness to revenue sharing.

“In most cases, VAS producers struggle to have an equitable deal with the operators and TRAI must ensure transparency in the deals,” he said.