Samson Akintaro 
Moves to reform the Value Added Services (VAS) segment of the Nigerian telecommunications market hit top gear this month as the Nigerian Communications Commission (NCC) licensed nine new VAS aggregator companies.
This brings the total number of firms operating in this new segment to 19, as the telecoms regulator had initially licensed 10 last year. 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.
With the aggregators in place, the two-way transactions between the telcos and the VAS providers will now have a third party with the aggregators playing the middlemen between the two sides.
The new licensees, who are to commence operation from October 1, 2020, include Aerandir Technologies Nigeria Limited, Briccs International Ideal Limited, Exchange Tele- communications Limited, Paribas Communications Limited, and Thermolinks Concepts Ltd. Others are Broad based Communications Ltd, MVP Innovations & Technologies Ltd, V & Q Concepts Limited, Interconnect ClearingHouse Nigeria Limited, and SPEC3 Technologies Limited. According to NCC’s licensing fee schedule, while VAS operators pay N500,000 for their licence, the aggregators pay a sum of N10 million for the licence which is renewable after five years. This indicated that the aggregators would be playing bigger roles in the segment than the VAS service providers. The framework for the creation of the VAS Aggregators states that under the new structure, “the network operators will provide the 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 a franchise on such value-added services. They are however not licensed to distribute such services.” NCC also explained that 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. The VAS market was valued at $200 million two years ago and had been projected to reach $500 million this year.
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 for. Licensing of the aggregators is one of the measures being introduced by the regulator to sanitise the market. Speaking on the efforts to reform the market, the Executive Vice Chairman of NCC, Prof Umar Danbatta, had recently described VAS as an important element of the telecom ecosystem necessary for optimizing the benefits of telecom service to the consumers.
He, however, noted that it also comes with challenges of consumers’ mobile phones being flooded with contents not requested and being charged for 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 potential,” he said.
