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Government restructures VAS market for improved service delivery


The Value Added Service (VAS) segment of Nigeria’s $70billion telecommunications sector has been re-structured for improved service delivery.

Estimated to currently worth about $200million and projected to hit $500 million by 2020, the VAS market, according to a document titled: ‘Value Added Services Aggregator Framework’ by the Nigerian Communications Commission (NCC), has been segmented into four distinct areas.

These are Network operators; Aggregators; Content and application service providers and Developers of content, applications and platforms.

The Guardian gathered that the need to guard against rising anti-competitive practices and other unfair sharing formula between VAS licensees and the Mobile Network Operators (MNOs), had necessitated the move by the NCC to restructure the market with a view to engendering an effective competition that will ensure sanity and foster needed economic growth.

The NCC, in the 30-page document explained that VAS sub-sector will now employ horizontal segmentation in line with the value chain of the industry, which is consumer-centric.

Under the new structure, “Network operators will provide final link to the subscriber for the purpose of delivering value added service to the end user. The operators will not be allowed to host or distribute VAS to its 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.

“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 own in-house software and hardware platforms.

“Developers are unlicensed, freelance creators of content and applications or those who have franchise on such value added services. They are however not licensed to distribute such services.”

The NCC also explained there will 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.

They will also be required to upgrade their facilities to meet the technical specifications stipulated in the technical framework within 12 months of the coming into effect of this framework, and will no longer have direct physical connection to the network operators.

Furthermore, VAS will be activated if the developer provides a legally enforceable guarantee against infringement of third party copyright, patents and intellectual property rights if required by the content service and app provider.

Secondly, if the VAS belonged to the class that the Commission defines as being qualified for short code allocation, it will be activated.

On the other hand, a content and app service provider is allowed to de-activate a VAS being hosted if any of these conditions is satisfied: the developer so requests or there is mutual agreement between the two parties; and if the VAS does not generate any revenue for three months continuously. Also, if the revenue generated does not cover the cost of hosting for a period of six months; if it is discovered that the developer has obtained access through false information or via a fraudulent process; and if there is a proven case of third-party intellectual property rights, copyrights or patent violation that is not resolved within 90 days. Additionally, if the VAS is found to contain errors or bugs and the VAS developer fails to make necessary correction within 14 days of a written notice being given.

The document explained that denial of VAS activation or illegal de-activation would occur when a request for access is denied or there is illegal de-activation of an already hosted VAS.

In this case, the aggrieved party has the right to appeal to the Commission and secondly, where adverts for VAS must indicate that transport cost will be charged as extra in addition to the VAS product cost.

With regard to provision of access, the structure requires that each segment of the VAS value chain needs to interface with adjacent segments for a bidirectional exchange of information, while the provision of access is necessary in order to provide an end-to-end service to subscribers.

The structure revealed that all aggregators and network operators licensed by NCC have the right of access to the VAS provisioning facility of other licensees in adjacent segments of the VAS value chain or licensees whose services are required in order to complete a service already initiated by another licensee.

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