New Telegraph

NCC licenses more firms as VAS aggregators

In its bid to reform the Value Added Services (VAS) segment of the country’s telecommunications market, the Nigerian Communications Commission (NCC) has licensed two more firms as aggregators. This brings the total number of firms operating in this new segment to 28. The Commission had, in 2019, licensed 10 firms as the first set of aggregators.

It continued the licensing last year as 16 more companies were issued licenses, while the two new operators were licensed in March this year. The need to guard against rising anti-competitive practices and other unfair sharing formula between VAS licensees and the mobile network operators necessitated the move by NCC to restructure the market to engender 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 two newly licensed firms, according to the Commission’s database, are Project Support Services Limited and Groove Platforms Limited. The framework for the creation of the VAS Aggregators states that under the new structure, “the network operators will provide a final link to the subscriber to deliver value-added service to the end-user. The operators will not be allowed to host or distribute VAS to their 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 in-house software and hardware platforms.

Developers are unlicensed, freelance creators of content and applications or those who have the franchise on such value-added services. They are, however, not licensed to distribute such services. 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 coming into effect of this framework and will no longer have a 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 three years ago and was projected to reach $500 million in 2020. 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. 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 value added service as an important element of the telecom ecosystem necessary for optimising 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 the 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 potentials,” he said.

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