Technology

TRAI's second activation ruling to hit providers by 40 per cent

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MUMBAI: Like a callertune you heard recently? But wait now you will have to be doubly sure if you want it. Yes, you heard it correct. The Telecom Regulatory Authority of India (TRAI) has said that any value added service (VAS) will be activated only after receiving a second confirmation from the customer.

Techzone managing director Naveen Bhandari says VAS revenues will take a beating

Speaking on the order, Huawei Telecommunications (India) PR and brand - head Suresh Vaidyanathan matter-of-factly says, "One needs to understand why this ruling was done. Of course, nobody wants unwanted calls or smses. Therefore, I think, it is a welcome move."

TRAI made the ruling after it observed that there are various complaints regarding value added services offered by telecom service providers. According to it, the first offer of a service was on the service providers‘ platform and a second confirmation from the customer was through a dedicated consent gateway owned by a third party and not by the service provider.

Vaidyanathan feels that the Indian telecom industry is grown-up enough to understand it. He adds, "I‘m sure, it is only going to have a short term impact, if there would be any. On the contrary, it will only help structure the VAS economy."

SpiceDigital director & head of 

business development and 

alliances Shehzad Azad 
feels the

ruling may create problems 

for users in understanding the 

usage of VAS services

Similarly, OnMobile Global, chief commercial officer, Sanjay Bhambri feels that double consent with clear communication of price points us in the larger interest of consumers and industry and gives the industry a clearer picture on the way forward. "We feel that the revised directive (which mandates second confirmation from customers through a consent gateway managed by the operator) is a positive step from TRAI compared to the earlier one which mandated activation of services post confirmation from customers through SMS, fax or email."

But he is quick to point out that the ruling does have its downfall. "There could be transitional technology issues in connectivity of two consent systems resulting in poor consumer experience and drop outs, in the interim. Thus, the interconnecting multiple systems and changed user experience may result in consumers taking time to adapt to the new experience," adds Bhambri.

One of the biggest players of the Rs 26,000 crore industry feels that there will be an almost 50 per cent an erosion in revenues and that it it expected a ruling of this sort.

Shotformats Digital Productions, managing director and CEO, Niyati Shah points out, "It is likely to affect each and every company by as much as 30 to 40 per cent. And to control the damage, the telecom providers are very actively working towards new methods of consumer acquisition, engagement and also ensuring the best quality product to retain consumers."

Shotformats Digital Productions, managing director and CEO, Niyati Shah

says the ruling will hit the market 

by close to 30-40 per cent

Suburban and rural India contributes to more than 65 per cent of Mobile VAS revenues. Industry professionals say that it is not surprising that more than 30 per cent of people are unable to correctly follow even the simple one step keyword instructions for Person to Application (P2A) based media services like polls and contests. Now that there‘s an additional gateway being introduced, it would take at least one to two quarters for the platforms to stabilise which would result in further dip in revenue.

SpiceDigital director & head of business development and alliances Shehzad Azad adds, "Not many have the knowledge or the skill about VAS services. Therefore, there are chances of people not sending second conformations within the given timeline."

He states an example of the service SpiceDigital offers for railway enquiries and believes that there are many who don‘t know how to send SMSes. "Customers will face problems even if they need any information with this ruling coming into place," he opines.

Talking about the future of the industry after the ruling Techzone managing director Naveen Bhandari says, "A large portion of the core VAS revenues are generated from subscription based services which already has an existing subscriber base."

For example caller ring back tones (CRBT) which is a subscription based product contributes to approximately a fourth (varies from 20 per cent to 25 per cent depending on the operator) of the total core VAS revenue and is the largest contributor to the revenue.

"A product like that is typically composed of almost 70 per cent renewal revenue and 30 per cent new acquisition. Hence, in a window of two to three months, it‘s the new acquisition revenue that would get hit. But without proper steps the effect would be stable over the total kitty in four to six months period, considering average customer lifetime for VAS products is not more than three months."

So what is it that will lower the impact of TRAI‘s new ruling and provide some succor to the industry? Most telecom providers say that there is a need to have mobile handsets which can support local languages so that it becomes easy to educate the consumer. And from the telecom operator‘s side, there is a need for a more focused marketing approach which will result in a better understanding of the customer‘s need and help create and supply the right content to the right target audience in a form that is easier to use and consume.

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