Bharti airtel, Vodafone Essar, Reliance Communications (RCOM) and Bharat Sanchar Nigam Limited (BSNL) have asked the Telecom Regulatory Authority of India (TRAI) not to intervene in revenue sharing negotiations between operators and value added services (VAS) companies.
The regulator had started examining the issue following complaints from VAS companies that operators often retained a significant share of the revenues earned through mobile VAS.
The VAS companies also said that this practice had resulted in their returns of investment not being substantial enough to encourage faster capital investments.
Meanwhile, the operators further stated that determining a revenue percentage share on content would not only be counter-productive but also unscientific. This was because the value of such applications were intellectual property rights (IPR) driven and not on a dry cost basis.
Bharti airtel said that any attempts to regulate revenue share arrangements would lead to micro regulation as each new service would have to be examined separately. The company said such a move would interfere with the free play of market forces and may result in delays.
RCOM has pointed out that globally, the mobile VAS industry has operated under free market practices and that the government only intervened and regulated prices for industries providing utility services.
RCOM also said that a uniform revenue share could not be fixed for VAS products as such content did not fall under the criteria of standard commodities. The operator added that revenue share depended on the demand and acceptability of a particular service and warned that regulations may lead to innumerable litigations.
All operators have also asked TRAI not to introduce a separate licence for VAS services. Vodafone Essar has said that since data usage in India is driven by innovation and applications, attempts to bring the programmers who create VAS under a licensing framework would be a disincentive to the sector.
