NCC to review activities in Nigeria’s $200m VAS market

The Nigerian Communications Commission (NCC) has revealed plans, targeted at reviewing the activities of the Value Added Service (VAS) providers in the country.

The VAS market, a segment of the telecommunications sector, according to market watchers, is valued at $200 million yearly and expected to reach $500 million in another five years.

VAS is a popular telecommunications industry term for non-core services, or in short, all services beyond standard voice calls and fax transmissions. However, it can be used in any service industry, for services available at little or no cost to promote their primary business.

In the telecommunications industry, on a conceptual level, VAS add value to the standard service offering, spurring the subscriber to use their phone more and allowing the operator to drive up their Average Revenue Per Users (ARPU). For mobile phones, technologies like SMS, MMS, and data access were historically usually considered value-added services, but in recent years SMS, MMS and data access have more and more become core services, and VAS, therefore, has begun to exclude those services.

According to the NCC, in a paper titled: ‘Procedures and Guidelines for the Provision of Value Added Services in Nigeria’, VAS is any network-based service that offers more value than the ordinary voice conversation service, usually at a higher price than normal charges.

NCC, which segmented VAS markets into three, which are VAS developers; VAS Hosting Service Providers and Network Operators, stipulated that while multiple players will be allowed to operate in each segment of the market to ensure adequate competition, companies operating in one segment may be barred from operating in another segment of the market, should it holds effect of eroding competition.

However, those considered as VAS in Nigeria include Information services/Content such as news, updates, data, quiz, games, ringtones, video streaming, alerts, product information, call center and database access.

According to the 41-page document, NCC said it has received several complaints from the public in respect of service providers who use short codes assigned for VAS to perpetuate fraud, the menace of unsolicited text messages that flood customers phones, fake bank alerts, anti-competitive activities, among others.

According to NCC, “consequent upon the above development and the fact that VAS industry is beginning to approach maturity, the commission is of the opinion that it is time to regulate the industry in order to protect, balance and reconcile stakeholders interests.

NCC warned that all companies involved in VAS provisioning must ensure that information content and applications being offered to the public are free of default, bugs, and inaccuracies.

The commission noted that VAS developer and Hosting Service Provider will be jointly held responsible for any faulty or inaccurate VAS offered to the public and may be compelled to refund buyers if a clear case of negligence is established.

To be a VAS Developer, NCC said such a person must be the owner of a unique content or application and will among others have additional responsibilities for the registration of copyright for its VAS/content and its protection against copyright violations and all other related legal issues; obtaining third party authorization for his content/VAS where required, for example Central Bank of Nigeria license for financial services or lottery commission license; register with the Corporate Affairs Commission as a body corporate.