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Recommendations on Application Services

Presented By: Syndicate I


Name Chaitanya Pande PRN 12020541095

Manish Chandra Renu Shaliesh Jain


Sonal Meshram Paramveer Singh Khosa Sakshi Bateja

12020541107 12020541129
12020541132 12020541151 12020541153

Agenda
Overview of Application Services Application Services - Present Status
Definition Value Chain Categories Platforms Business Models

Regulatory Framework/Recommendations by TRAI


Licensing through Authorization Short Code Allotment Utility Application Services

Summary

Application Services Overview (1/2)


Value Added Services (VAS) traditionally defined as enhanced services, which add value to standard/core tele services offering VAS needs to include all kind of content and applications provided on telecommunications network apart from traditional value added services VAS has evolved into Application Services 3G & BWA pushing demand for application services as well as innovations in application services products offering Revenue from mobile application services 11%, expected to reach 31% (inclusive of SMS and data access) by 2015 Content and application services are not going to be limited to only mobile devices but will be delivered to customers through different access platforms

Application Services Overview (2/2)


Number of players involved in providing the application services to the end consumer TSPs, ASPs, Content Owners etc. Commercial arrangements exists, including revenue sharing model TSPs dominate terms and conditions Factors hampering growth of application service industry : MIS reconciliation revenue sharing allocation of short codes There is a need to develop a forward looking framework for ushering growth in all the segments of the application services Framework should : achieve the potential of application services should not create additional significant burden on ASPs

Application Services : Value Chain

1) Content/Application Providers : Provide the core content which drives the application services which may be owned or sourced by them (10% revenue) 2) Content/Application Aggregators : Aggregate content/applications obtained from various content owners/application providers 3) Technology Enablers : Provide the technology layer for the telecom networks (20% revenue) 4) Telecom Service Providers : Own the access network & end users and also provide end-user billing & collection for the provision of application services(70% revenue) 5) Handset Manufacturers : Sometimes have direct agreement with content owners or ASPs for content which are embedded in the handset

Application Services : Categories and Platforms


Categories 1) Entertainment application services : Services like music, ringtones, videos & games 2) Information application services : Services like e-education, e-health, news and information on bank account, real estate, education, travel 3) Transactional application services : Enable customers to conduct transactions like banking and payment through phone

Platforms
1) Short Message Services (SMS) 2) Interactive Voice Response (IVR) 3) Wireless Application Protocol (WAP) and General Packet Radio Service (GPRS) 4) Unstructured Supplementary Services Data (USSD) 5) Call Management Services (CMS) 6) SIM Application Tool Kit (STK)

Application Services : Business Models


On Deck Model
TSP undertakes the branding, marketing and selling of content/application, billing, collection of revenues from subscribers . Retains largest portion of revenue (typically 70%) Service platform including gateway/middleware is provided either directly by the TSPs or by the ASPs In the first case ASP only aggregates the content and makes it suitable for telecom network In the second scenario ASPs provide technology platform along with content/application

Off Deck Model


ASP sells content directly to subscribers The content can be provided either through the TSP's portal or through short code allotted to ASP Content developers and aggregators typically retain 60-65% of revenue whereas 30-35% is being passed on to the telecom service providers Off-deck ASP needs to integrate and sign agreements with multiple operators ASPs approach each telecom service provider for allotment of short code

Regulatory Framework for Application Services

Licensing for Application Services Providers Provisions in existing Licences


Short Codes

Licensing for Application Services Providers


Need for Licensing : Consumer Interest protection issues Realise the growth potential of ASP Compliance on security & content regulation Opinions of the stakeholders : Indian Telegraph Act 1885 (establish/maintain/work) Cost of Providing VAS VAS need to be registered under appropriate GOVT body

Licensing for Application Services Providers


Opinions of Stakeholders : More responsible towards QoS, Content Provisioning & Customers Licences can be provisioned under Other Service Provider Category

Issues under OSP category : It may not entitle the benefits available under licensing through Section 4 of Indian Telegraph ACT, 1885 Large number of ASPs entries due to emerging 3G/BWA market

Licensing for Application Services Providers Benefits ASPs


Benefits to ASPs MIS reconciliation Revenue Share Tariff related issues Dispute resolution
Benefits to the Industry : Encourages Serious players Facilitate growth of application services Industry Promote Entrepreneurship Flow of Investment in the sector

Provisions in existing Licences

Are Provisions under various licences adequate to grow the MVAS market to desired level?

What are the additional measures need to be addressed under the current licensing framework?

Provisions in existing Licences - Opinions


Adequate provisions under UAS and CMTS licences Different licences have different provisions MVAS services offered under mutual commercial agreements outside the purview of current licensing regime Service providers should be allowed to provide VAS services under existing licence without any permission from the Licensor Transparency in the licensing scheme

Short Codes
Short codes allocated by TSPs to ASPs according to NNP

No standard procedure for allocation


Questions asked about the existing framework, independent allocation of SCs to TSPs and VASP, central allocation and fees.

According to stakeholders -Existing way of allocation is correct as it facilitates best use of available short codes -Commercials related to allocation should be left to market forces that are mutually agreed upon by Operators & VASP -Formation of central Short code agency as a licensed agency

Short codes
-Short code services should be made independent of TSPs. Allocation by an independent body on FCFS at affordable price. Creation of online common short code registry -CSC could issue SCs to VASP at predetermined price, Rate Card -No fees for allotment of SCs. Initial agreement of monetary terms for elimination of non serious players Present ScenarioSCs allocated by TSPs according to DOT which mandate provisioning of SCs of Level 5 and min 5 digits ASPs approaches each TSP for individual service offering on their networks In US, Canada and Australia, SCs are allocated centrally by CSCA. CSCs of 5 or 6 digits. Cost of registration and lease is $500-1000/month. For activation, allottee approaches individual Wireless Carrier

Authority Recommendations
Short code council (SCC) will be set up by TRAI Central allocation through web in accordance with NNP. Independently to ASPs and TSPs SCC will centrally manage- Details of short codes allocated, Type of service, Tariff, Hosting details ASP can launch service only after SCCs approval Appropriate fee, one time & recurring charges for common SCs by SCC Service should be operational within 3 months else cancellation and reallocation to other applicants TSP should open common SC within fortnight after code approved by SCC & update the same online

Utility Application Services


Comments of stakeholders

Role of government in utility VAS Segment


Key drivers for the growth of utility Low cost of access devices Availability of content in vernacular languages Mobile equipment interoperability local languages Ease of use of services Need to set up a government Advisory Committee

Utility Application Services


Adequate network coverage and wider distribution of handsets in non-urban areas Need for regulatory framework for Privacy Dispute resolution Assurance of relevant services

Tariff regulation should be left to operators

Applications Supporting Indian Regional Languages


Key drivers for the growth of utility application services are: low cost of access devices availability of content in regional languages As rural tele-density is just 38.53% as compared to urban tele-density of 169.37% so majority of new subscribers are expected to come from rural areas Growth of application services market in India may be hampered by : lack of content in Indian vernacular languages lack of regional languages embedded handsets

TRAIs recommendation The Authority recommends that development of application services in Indian regional languages should be encouraged through suitable incentives.

Challenges
Double Confirmation Confirmation for Renewal