It comes in form of a beast that seems to respect no one. Both the rich and the poor in the country suffer from its pangs, yet the menace of unsolicited text messages has refused to be tamed, as series of regulatory efforts fail to end the suffering. And as those behind the messages rejected the regulator’s attempt to bring them under control, there seems to be no hope that this suffering by the mass of telecom customers will go away anytime soon. SAMSON AKINTARO reports.
When it comes to stories of achievements, Nigeria has a shining one in the story of its telecommunications, which jumped from zero to become the hero of telecoms revolution in Africa. The tremendous growth that saw the country moving from less than half a million connected lines in year 2000 to now over 150 million, had made the country become a reference point for telecommunications development in sub-Saharan Africa.
Of course, the story of the successful telecom revolution is ever sweet to savour, more so, when it has indeed affected lives of the people and the nation’s economy positively. Aside making communications easier and cheaper than ever before, millions of jobs have been created through the telecom sector. And this is capped by robust and increasing contributions to the country’s Gross Domestic Products (GDP) every year.
These achievements become more profound, when placed side by side with the realities of the pre liberalisation Nigeria. This was a country where international mobile operators were afraid to do business mainly based on the reports commissioned to telecom research agencies and the global financial institutions like the World Bank and the International Monetary Fund (IMF) which had forecasted that in the Nigerian telecom sector, the average Nigerian cannot afford to own a mobile phone as the per capita income of the citizens was below the internationally recognized average and the daily income was below $100 mark.
Based on this reports, the telecom researches agencies had forecasted that it would take a 12 months for any operator to reach 100,000 subscribers, 3 years to connect 300,000 lines and 5 years to hit the half a million mark subscription. This conservative report peddled to mobile operators about the market in Nigeria and other emerging markets put off many operators that would entered the GSM auction.
But against the odds, the course of Nigeria’s telecom sector changed in January 2001 with the auction for Global System for Mobile communications (GSM). This move liberalised the sector bringing in mobile operators like MTN Nigeria, Econet Wireless Nigeria (Now Airtel), the comatose MTEL), and Globacom to operate digital mobile service. The GSM licensees companies paid $285 million each to obtain the Digital Mobile License (DML). They were later in 2008 joined by Etisalat, which though came last, could not be described as the least as it garnered huge subscribers within a very short period of its entry into the market, which of course, proved the IMF forecast totally wrong. The telecom auction which led to a revolution brought in a liberalised sector, striping NITEL of its monopoly and making the private telephone operators to sit up. The success of the licensing process attracted international praise from as far as the International Telecommunications Union (ITU) and Commonwealth Telecommunications Union (CTO).
And thereafter, Nigeria has not remained the same in terms of telecommunication; the figures of connected lines continue to grow, even as every other sector of the nation’s economy key into the mobile telephony success to improve their respective sectors. The telecoms have helped to promote mobile banking, e-commerce and virtually all businesses in the country.
Interestingly, along the telecoms growth line sprang a sub-sector known as the Value Added Services. It all began with mobile number operators’ efforts to generate more revenue from their none core services and it began to evolve from simple text messaging (SMS), to advanced functions such as mobile entertainment caller ring back tone, push-to-talk, payments, email, instant messaging and m-Commerce, among others.Value added services are supplied either in-house by the mobile network operators themselves or by a third-party service provider also known as content providers.
Thousands of short codes had been activated by the telecoms networks to provide all sorts of services on their own and while also working with licensed VAS providers to provide contents for the use of the short codes. More worrisome is the new trend of telcos and VAS providers forcing their products and services on consumers for a fee deducted from their airtime. These unwanted services and products were enumerated as unsubscribed caller tune, SMS, fashion, love, health tips and airtime borrowing among others.
On realising that the use of the short codes are being abused, the industry regulator, Nigerian Communications Commission (NCC) had assumed the responsibility of licensing the codes. Unfortunately, that has not stopped the abuse, rather, its getting worse and the consumers have been at the receiving end of unsolicited messages, fraudulent deduction of consumers’ credit for VAS not subscribed for, among others. And subscribers are asking if what the telcos and their third parties are adding is ‘value’ or ‘pain’ services?
Indeed, the NCC just recently announced that it has received avalanche of complaints from the public in respect of service providers who use short codes assigned for Value Added Services to perpetuate fraud, the menace of unsolicited text messages that flood customers’ phones, fake bank credit alerts, anti-competitive activities etc. This was why the Commission early this year announced plans to commence regulation of the VAS segment, “consequent upon the complaints and the fact that the Value Added Services industry is beginning to approach maturity, the Commission is of the opinion that it is time to regulate the industry in order to protect, balance and reconcile stakeholders’ interests” the Commission said. Unfortunately, that has not gone down well with the telecom operators as well as their VAS content providers counterparts, who rubbished the entire regulatory framework designed by the regulator and would rather embrace ‘self-regulation’ which is unable to stop the insanity.
Since April when the service providers kicked against the draft regulation, the issue of VAS regulation has become stalemated and it does seem the regulator is not bold enough to go ahead with its planned regulation. Rather, it announced the enforcement of a ‘Do Not Disturb’ code on the networks as a way of curbing the menace of unsolicited text messages. Unfortunately, that has not really assuage the pains of the consumers, who, though opted out of unsolicited messages through the ‘2442’ code, are still getting message unsolicited messages from their network providers and still experiencing illegal deductions.
Who is Afraid of Regulation?
Before the Nigerian Communications Commission (NCC), the telecom regulator could come up with a regulatory framework for the VAS sector, it was convinced that bringing the service providers under regulation would bring sanity; end fraudulent activities and bring reprieve to the consumer who have been at the receiving end of all atrocities being committed through VAS platforms. But the service providers did not see it that way, and would rather prefer the status quo while believing that a self-cleansing, which had failed to lessen the burden of the consumers would suffice for them.
Late April, the regulator had held a consultative forum in Lagos to intimate the value added service providers, which included the MNOs and the core VAS providers, with the draft regulation and also get their inputs. But rather than make inputs or seek adjustments in the regulatory framework, the service providers requested for a stand down of the regulation, they claimed it would stifle innovation and lead to loss of jobs.
While a few of the operators had registered their displeasure with some provisions of the regulation through comments made on the regulator’s portal before the interactive forum, the meeting afforded them the opportunity to say it to the regulator’s face and they minced no words in doing that. According to them, the regulation does not recognise the current category of players in the sector that should benefit from the policy.
Specifically, Mr. Chika Nwobi, the Managing Director of M-Tech Nigeria Plc, noted that the objective of the regulator in coming up with the regulation in the first place, which is to address the problem of unsolicited text messages, was wrong. “Why should that leading to the creation of a new structure for the sector? Besides, the issue of unsolicited message is a technical problem that requires technical solution, not regulation” he said.
But for the National Coordinator of Wireless Application Service Providers of Nigeria (WASPAN), Mr Chijioke Ezeh, it was not about the local VAS operators but about the thousands of Nigerians that would lose their jobs if the regulation, which he described as favouring foreign players, comes into effect. “We (VAS operators) employ about 9000 people directly and about 85,000 indirectly, what we need is protection, not a regulation that will push us out of operation”. According to him, the regulation would also stifle innovation in the country. But Eze did not end his comment without making one critical request: “The draft framework should be set aside and let the stakeholders sit and brainstorm for better solutions”. Other players were also of the opinion that the regulator should put the regulation on hold and allow the players continue with their efforts at addressing the industry challenges.
Mobile Operators also Kick
Meanwhile in a joint statement presented by its Chairman, Engr. Gbenga Adebayo, the Association of Licensed Telecom Operators of Nigeria, ALTON, which is the umbrella body of all the MNOs, also expressed concerns over the new policy framework for VAS. According to the Association, the NCC had come up with the new regulation to address the complaints from the public; prevent “service users” from using short codes to perpetuate fraud; and addressing the menace of unsolicited text messages that flood customers’ phones.
“Alton members are more severely impacted by the problems listed above than any other group of stakeholders in the industry. Why? For us, anything that affects our customers’ satisfaction affects the sustainability of our investments. It affects our ability to attract new investments required to meet growth objectives. It affects the reputation of operators and further affects our goodwill and it affects the future of our industry. We are of full accord with the Commission that these problems must be solved as quickly and efficiently as possible. Therefore, the NCC can account on our 100% support on this.”
While listing some of the efforts already put in place to address the problem, ALTON frowned at the NCC regulation, saying, it has “made very sweeping provisions, with very severe implications for overall industry sustainability. This makes us wonder what the true objectives of the Guidelines are.” For instance, on the new structure being proposed, ALTON said: “A new industry stricture is being proposed – the Commission has however not done any comprehensive market study that we are aware of. This is necessary as mandatory first step to determine what faults there are in the market and how to intervene. In any case we find no correlation between the proposed market structure and the principal objectives of the Guidelines, which is to address issues of abuse of customer rights.”
On restriction of MNOs from providing VAS, the Association said: “Contrary to the terms of our operating licenses and the Unified Access Licensing Framework, the Guidelines proposes to bar operators from providing Value Added Services and to limit them to caller ring back tones and two other VAS! We wish to state that this is most unacceptable to our members.”
These submissions by the service providers, seemingly deadlocked the regulatory process started by the NCC. Perhaps the regulator had gone back to the drawing board to fashion out another regulatory framework; adjust the existing framework to protect the interest of the VAS providers or stand down regulation completely, has yet to be ascertained.
VAS Regulation: The Choice Before NCC
The Nigerian Communications Commission pride itself as a consumer centric regulator and even in that consumer centrism, it has succeeded in growing the telecom sector for the benefit of both the consumers and the operators/investors, who continue to enjoy huge returns on investment. With that knowledge, it is not expected that it would ‘regulate to kill’ as being claimed by VAS providers. Of course, failure to regulate the VAS sector would mean that Commission is shying away from its responsibility of protecting the consumers, more so, when the Nigerian Communications Act (NCA) confers on it, the responsibility to control and regulate other related services offered in addition to the basic voice communications, which include data services, internet and other value added services.
Interestingly, the NCC commenced the process of regulating the VAS sector since 2014, when it held an interactive session with the operators and VAS providers in Lagos over the lingering problem of unsolicited messages and calls. The Commission also pointed out it discovered a number of irregularities in the VAS segment, where a number of unlicensed are colluding with the MNOs to offer services. “Following the compliance monitoring activities carried out on Value Added Service licensees from January and December, 2013, the Commission directed all the network operators to disconnect all unlicensed VAS providers. However, subsequent monitoring exercise carried out in March 2014 showed that mobile service providers still have some unauthorized VAS Providers on their networks including MTN, Globacom, Airtel and Etisalat,” the Commission had noted.
According to NCC, the session was held with all stakeholders to present the Commission’s findings of some unethical conducts in VAS provision and chart a w ay forward in the VAS segment of the Nigerian telecoms industry. Part of agreements at the session was to have a proper regulation of VAS business to bring sanity to the segment.
And that gave birth to the regulatory framework, which was bluntly rejected by the service providers in April this year. Obviously in search of temporary reprieve, the regulator had to begin the enforcement of ‘Do Not Disturb’ code in July. Although the code has been in existence before then, NCC had not deemed it necessary to enforce its implementation, until subscribers threatened to seek redress in court. Again, the old existing DND code was not uniform and each operator had to introduce different codes on their networks for DND the facility, a situation that made it difficult for NCC to supervise, hence the introduction of unified code: 2442.
DND has failed
Unfortunately, the introduction of DND code has not stopped the shenanigans of the telcos and their VAS provider collaborators in unsolicited text messages. Two months after what was supposed to be an enforcement of a code that would give the consumers freedom to opt out of all unsolicited messages, the regulator had to issue warning to the service providers as there was no compliance. In a warning statement issued in September, NCC’s Director of Public Affairs, Tony Ojobo, had reiterated the regulatory agency’s resolve to protect subscribers from the nuisance and irritations of unsolicited text messages and calls from mobile network operators.
Ojobo noted that in spite of earlier warnings to telecommunication service providers to activate their Do-Not-Disturb facility which gives subscribers the freedom to choose the messages they receive, the commission was still inundated with complaints by subscribers of continuing text harassment by operators. The NCC spokesman explained that the direction mandated the operators to take immediate action which would allow subscribers to take informed and independent decisions on what messages to receive from the networks.
He observed that industry compliance didn’t seem to have matched the seriousness of the direction thus, compelling the commission to issue a final warning to the operators. According to Ojobo, the direction takes into cognisance the broad range of services, which include banking/insurance/financial products, real estate, education, health, consumer goods and automobiles, communication/ broadcasting/ entertainment/ IT, tourism and /leisure, sports, religion, and directed the operators to give the necessary instructions and clarifications that will enable subscribers subscribe to a particular service/services/none at all. Ojobo called on the service providers to comply with the direction as further complaints from the subscribers would be taken as serious infractions to a major regulatory intervention by the commission.
New Ultimatum
Even when July 1, 2016 was the deadline given to the mobile network operators to compulsorily implement the DND code, as worrying as it was that the regulator had to issue warning two months after, that was not enough to deter the service providers who seems to have been blinded by the need to generate more revenue to see the need for compliance. Surprisingly, when it was expected to wield the big stick against the disobedient operators, the regulator again in November came up with another one week ultimatum for the telecom operators to comply with the directive of DND or face sanction. A statement issued by Mr Tony Ojobo to to that effect indicated that MTN, Airtel and others might face sanctions over Unsolicited Telemarketing for failing to comply with the NCC directive on the “Do Not Disturb (DND) directives, issued to them. “13 network operators risk severe sanctions by the commission. “The network operators are Airtel Network Ltd., MTN Nigeria, Globacom Nigeria, Smile Communication, Visafone Communications, Ntel, Etisalat, Multi links, Starcomms, Danjay Telecoms, Gamjitel Ltd. and Gicell wireless” He added: “they are however given another one-week ultimatum from Monday, Nov. 14, to remedy the situation or face the sanctions enshrined in the directive.”
According to Ojobo, worried by the non-compliance by the operators occasioned by deluge of complaints by subscribers across Nigeria, the NCC inaugurated an eight-member committee to look into the matter. “After several meetings, including those it held with the network providers, it became necessary to issue the latest ultimatum to redress the menace of incessant unsolicited text messages and phone calls for telemarketing via the various networks.” Ojobo added that NCC had written to all 13 networks providers on whose networks it had received a series of complaints from subscribers regarding the efficacy of the Do Not Disturb (DND) service. According to him, the commission has engaged mobile network operators on this subject. He said that NCC further directs that the phrase ‘MTN generated SMS’ referred to Part d of the duration issued on April 20, to MTN and other network providers shall be taken to mean “messages and calls”. “With respect to only information on emergencies for example, national security, fire notifications on network maintenance programmes down times and notification regarding subscribers bundle usage and service renewals. “ Other text messages and voice calls informing subscribers of new products and service offerings are not regarded as network generated and therefore regarded as “unsolicited marketing messages”. “The NCC has therefore asked these network providers to ensure that information on the Do Not Disturb service should be disseminated after every revenue generating activity via the End of Call Notification (EOCN) for the period not less than 45 days within the hours of 8 a.m. to 8 p.m. daily from the receipt of the latest letter on the subject. “The operators are also admonished to deploy this information through all their channels of communications, including websites, social media platforms, bill boards, flash messages, text messages, Interactive Voice Response platform, radio jingles, newspapers advertisements and television commercials. Ojobo said that this notice served as a pre-enforcement notice and failure to comply with the directives in furtherance of the direction of April 20 within seven days from Nov. 14, 2016 shall result in the imposition of appropriate sanctions. But he also pointed out that that “the menace of unsolicited text messages has been a nightmare to millions of subscribers and the commission could no longer accept any excuses whatsoever from the network providers”.
Obviously, the service providers are waiting to see if the regulator was indeed serious with its claim of ending unsolicited messages, having succeeded in blocking or suspending the attempt at regulating the VAS segment. But industry analysts have expressed concern that in as much as the Nigerian telecom regulator want to maintain its consultative approach to regulations, it may be acting contrary to its mandates if it refused to take the bold step against the threat of unsolicited messages based on the disapproval of regulation by the MNOs and the VAS providers.
..And the Blame Game Continues
In reaction to series of unsolicited text messages complaints by subscribers, especially at the Consumer Parliaments, a regular consumer forum organised by the regulator, that brings all the operators face to face with the consumers, who poured out their issues with the network operators, the operators defence has always being that they were not responsible for those messages. Although that would sound ridiculous for the fact that some of those unsolicited messages bear the name of the MNOs and sometimes their reserved numbers, they usually blame it on some unknown spammers, who according to them, are spamming the networks with their own message.
And as mark of assurance to the consumers and the regulator, they are quick to add that they have introduced ‘filtering mechanism’ to filter out those messages from the networks. On the other hand, they blame the regulator for licensing too many VAS content providers, who are pushing too many messages though their networks. But it is a known fact that as average revenue per user (ARPU) continues to drop from voice calls, the telcos are latching onto value added services to shore up their revenue. It is also a known fact that there are existing deals between the telcos and the VAS content providers who use the network to disseminate their messages, with revenue sharing arrangements.
Curiously, the VAS content providers do also not owe up to the responsibilities for the messages passing through the networks but are also quick to blame it on faceless, unidentified ‘spammers’. According to them, the number of unsolicited messages received by subscribers is on the increase because of the increasing number of ‘spammers’ who are flooding the networks with messages. “Spamming remains economically viable because the abusers have no operating costs beyond the management of their mailing lists, and it is difficult to hold senders accountable for their mass mailings. The volume of unsolicited messages has become very high because the barrier to entry is low and spammers are numerous” the umbrella body of all the VAS providers, Wireless Application Service Providers of Nigeria (WASPAN), has said.
The question is: If these service providers believe there are some external ‘unknown’ forces driving these messages to consumers’ phones, why would they go against a regulation that would sanitise the segment and bring every service providers under the purview of the regulator? Why would they want to remain unregulated?
In several countries of the world, telemarketing is subject to regulatory and legislative controls related to consumers’ privacy and protection. The United States has restricted telemarketing at the federal level through the enactment of the Telephone Consumer Protection Act of 1991 while many associations of telemarketers have codes of ethics and standards that members comply with.
In Canada, telemarketing is under strict regulation and it is being handled by the Canadian Radio-Television and Telecommunication Commission while in Australia, the practice is restricted by the Australian federal government and policed by the Austrian Communications and Media Authority. In Australia, telemarketing is also restricted by the government and enforced strictly by the Australian Communications and Media Authority. There is a law in the country that provides for a restriction in calling hours for both research and marketing calls. Specifically, the law stipulates that “a caller must not make, or cause to make a call that is not a research call, or attempt to make such a call, on weekday before 9 am; or a Saturday after 5 pm; or a Sunday or any of the public holidays.”
As CPC Fails to Protect the Consumers
With issues around unsolicited messages and calls bordering on consumer privacy and service challenges, one would have expected an organisation such as the Consumer Protection Council to rice in the defence of the Nigerian telecoms consumers, which of course is its constitutional mandate to do. But observers have said that the body has remained ineffective for years to even think of having it spearheading the fight against unsolicited messages.
As a Parastatal under the Federal Ministry of Trade and Investment, established through Act No. 66 of 1992, CPC’s mandate requires it to, among others, “eliminate hazardous products from the market, provide speedy redress to consumers complaints, undertake campaigns as will lead to increased consumer awareness, ensure that consumers interest receive due consideration at the appropriate forum, and encourage trade, industry and professional associations to develop and enforce in their various fields quality standards designed to safeguard the interest of consumers.”
But according to its Director General, Mrs Dupe Atoki, what the Nigerian Telecom consumers need is awareness of their rights. According to her, the Nigerian consumers of telecom services have been unable to assert their rights due largely to ignorance of these rights and where to complain. “The Consumer Protection Council has therefore decided that the first step to obtaining redress for an aggrieved consumer is to empower the consumers; by letting them know their rights.” She said the Council developed and launched a Compendium on the rights of the Telecom consumer in 2014 for the consumers to know their right.
Interestingly, the Compendium highlighted unsolicited caller tunes; unsolicited SMS and Email; unsolicited adverts, automated calls/SMS; and unsolicited telemarketing as part of the challenges facing the telecom consumers in Nigeria. It also highlighted the consumers’: To privacy and safe protection of personal records and data from unauthorised use; To be informed and give permission for the use of personal data; To reject unwanted communication; To protection from fraudulent, misleading and deceitful information or advertisement or labelling; but fail to provide any avenue to seek redress when these rights are abused as being witnessed by many telecom consumers in the country presently.
VAS Providers Also Worried by Consumer Complaints
The two key principal actors involved in the Value Added Services debacle that constitute headaches for the consumers are the MNOs and the VAS content providers, both licensed by the NCC. Incidentally, both have jointly kicked against the planned regulatory framework for VAS, yet are expressing concerns over the plight of the consumers.
Specifically, the VAS providers under the aegis of Wireless Applications Services Providers Association of Nigeria (WASPAN), said, we are “concerned with the barrage of complaints that Mobile Subscribers have about VAS such as Unsolicited Calls and SMS, spamming, forced activations, deduction of call credit etc. We had addressed these issues in recent past and will going forward invest more in educating mobile subscribers and help them to be better informed and become more savvy in the use of their mobile phones and services that can better enhance the quality of their lives.”
Indirectly absolving itself of any blame, the group said most of the messages were handiwork of spammers, adding that subscribers are bound to receive spam text messages same way they receive emails. “Spam is the indiscriminate use of electronic messaging systems to send unsolicited bulk messages especially advertising. While the most widely recognized form of spam is e-mail spam, the term is applied to similar abuses in other media such as mobile phone messaging, instant messaging, web search engine, spam in blogs, wiki spam, online classified ads, social networking, television advertising and file sharing spam” WASPAN noted. It added that: “Spamming remains economically viable because the abusers have no operating costs beyond the management of their mailing lists, and it is difficult to hold senders accountable for their mass mailings. The volume of unsolicited messages has become very high because the barrier to entry is low and spammers are numerous. As the term rightly implies, calls and messages become unsolicited when the mobile subscribers have not requested nor given consent to such calls or messages.”
And again, WASPAN also has the consumers to blame for “ignorance of terms and conditions” when they subscribe to telecom services. “The challenge here is mainly because mobile subscribers do not read the terms and conditions of some of the services they subscribed to through their mobile phones. Often times, service providers also shroud such terms in and conditions in mystery. At other times, there is basic disinterest in wanting to know or taking responsibility for their action or inaction. However, there are clear cases of deliberate infractions hence, the problem of unsolicited calls and SMS. However, both VAS companies and Mobile subscribers have the dual responsibility to double-check services ahead of subscription to reduce the incidence of unsolicited calls and messages” it said.
But while it remains silent on its own activities, whether it constitutes unsolicited message to the consumer or not, the content providers said they are working together with the MNOs and NCC “to arrest the situation of unsolicited calls and messages through relevant solutions with a view to protecting and educating mobile subscribers and customers.”
WASPAN cited the introduction and enforcement of DND as part of the joint resolutions reached by the trio of WASPAN, MNOs and NCC.
“The MNOs have immediately deployed DND portals that are accessible to all subscribers. Any subscribers who wish to be on the portal would be requested to SMS’STOP’ to any short code on ANY Network to get on to the DND List. All VAS Licensees shall be directed to implement the ‘STOP’ functionality across all short codes. There will be transparent accessibility by NCC to the DND database of each Mobile Network Operators when required,” the VAS providers said. Interestingly, WASPAN said part of the resolution was also that “all marketing and promotional SMS originating from VAS Licensees shall not exceed 6 per day. This was reached in line with the 12-hour daily marketing window directed by the NCC”, which means a consumer can be disturbed ‘just’ six times in a day.
Meanwhile, the association of VAS providers has promised to set up a Call Centre to assist subscribers with all processes relating to stopping unwanted messages. “The Call Centre shall serve as a one-stop shop for all subscribers issues related to Value-Added services. The Call Centre shall submit periodic reports to the MNOs and NCC. Any VAS licensees found to be in breach of the resolutions shall be duly sanctioned.”
The Regulatory Framework Rejected by MNOs and VAS Providers
Determined to sanitise the Value Added Service segment of the telecom sector through a regulatory process, the NCC had come up with a regulatory framework. But the regulatory document was completely rejected by those it was meant to regulate.
The Regulatory Framework Rejected by MNOs and VAS Providers
Determined to sanitise the Value Added Service segment of the telecom sector through a regulatory process, the NCC had come up with a regulatory framework. But the regulatory document was completely rejected by those it was meant to regulate.
Below is an extract from the document:
FUNCTIONS/RESPONSIBILITIES OF MARKET PLAYERS
VAS Developers: A VAS Developer must be the owner of a unique content or application and will have additional responsibilities for the following:
➢ Registration of copyright for its VAS /content and its protection against copyright violations and all other related legal issues
➢ Obtaining third party authorization for his content/VAS where required e.g. CBN license for financial services or lottery commission licence.
➢ Register with CAC as a body corporate Developers would be placed under a class license to be issued by NCC, details of which are available in the Commissions website.
VAS Hosting Service Providers
➢ Acquire technical platform for hosting VAS (application or content)
➢ Acquire software platform for receiving and processing requests for service via SMS messages and other methods , traffic metering, message logs, transaction accounting , traffic and security management
➢ Obtain operating license from NCC
➢ Acquire and pay for block allocation of short codes from NCC
➢ Manage the assignment of short codes to content/ VAS products being hosted on behalf of developers. They would be allocated blocks of short codes by NCC for onward assignment to developers/contents being hosted and monitor the usage of the assigned codes
➢ Acquire administrative office for operations with fixed identifiable address
➢ Settlement of payment to VAS developers being hosted based on agreed terms and conditions
➢ Install transmission links and facilities for interconnecting with all mobile/wireless network operators with a minimum technical requirement stipulated in the Commission’s technical guidelines for VAS.
Responsibilities of NCC – Regulatory oversight functions
➢ Issue VAS Hosting service licenses to hosting service providers
➢ Assign block short codes to Hosting service providers
➢ Assign short codes for government use and network operators
The Commission will however reserve the right to delegate the above responsibilities to any authorised third party or an industry working group.
Mobile Network Operators
Providers of two-way termination services to VAS Hosting Service Providers (VHSP’s). They must possess a Digital Mobile License, Universal Service Access License (USAL) or Private Network Link’s License from NCC.
The Commission will ensure that market rules are put in place to avoid abuse of market power or anti-competitive activities.
VAS Reserved for Operators only
The following Value added services which are either network dependent or best provided by operator network platforms are hereby reserved for operators only.
(i) Ring tones (ii) Caller Ring Back Tones (iii) Cell-ID dependent Location-based services
However, these services are to be offered only to each operators customers, consequently operators will not be entitled to Common Short Codes allocation.
Operators must sign purchase or lease agreement with owners of copyright on TONES, SOUNDS or MUSICAL CLIPS offered to their customers as ring tones or caller ring back tones.
Prohibition of network operators from offering VAS except for those listed above
Network Operators are hereby barred from offering value added services except for the services listed above
Registration of subsidiary company for VAS by network operators.
Operators that wish to enter the VAS market in full should register subsidiaries with full accounting separation and governing board. Such companies will be entitled to common short codes but must be connected via VAS Hosting Service Providers like any other VAS developer.
Barring of operators from owning direct or indirect shares in Hosting service provider companies.
Operators are not allowed to establish VAS Hosting service provider companies and should not hold shares in such companies.
VAS License – license conditions:
All hosting service providers must abide by the conditions stipulated in the NCC’s VAS Hosting Service Provider licence. See section 16 below.
Terms and conditions for value added service provisioning
Separation of transport and product cost
Value added services should henceforth be regarded as sellable product with a fixed product cost and selling price. Product cost is the monetary value attributable to conceptualisation, R&D, intellectual property, source code, prototyping, debugging and documentation. While selling price is the sum total of product cost and overhead costs relating to marketing, branding, hosting, distribution, revenue collection and accounting.
Transport Cost: The airtime or data cost associated with messages sent by a subscriber to an application and the data cost for transporting the VAS payload from application/server back to the subscriber. That is, channel occupancy cost of voice call or cost of SMS message or access cost for internet data download. The cost of carriage associated with transporting VAS request and VAS pay load from subscriber to application and vice versa will henceforth be separated from the selling price for the application as a product. The above costs must be treated as separate entities when settling accounts among interconnecting partners in the VAS provisioning industry.
Unbundling of VAS Selling Cost
The selling cost of the product should, for account settlement purposes and flexibility, be unbundled into its component parts.
Separation of Customers’ voice, data and VAS accounts (single/ separate recharge source)
For prepaid customers three (3) separate accounts should be maintained, one each for voice, data and value added services. However, the customers who wish to maintain only two accounts can be allowed to merge VAS and Data accounts, but voice account (i.e. VOICE and SMS) must be separated from VAS/data accounts. Operator must not debit a voice account to pay for data or VAS services rendered and vice versa.
BULK SMS
Mobile Messages/ Mobile information, Personal and corporate information dissemination via bulk SMS is a useful service and is beneficial to the economy of the nation. However the frequency and timing of the messages have become annoyingly disturbing, leading to public apathy and resentment. In order to protect consumers from flood-like messages, the following rules shall apply.
All personal messages, either single or multicast via bulk SMS, must be accompanied by the registered telephone number of the sender. Where the caller desires to add a name or a title to the message the number must still be sent along. Any text message not accompanied by properly registered caller ID must not be switched by any operator. For multicast messages sent via bulk SMS, the identity of the Hosting Service Provider that owns the bulk SMS platform must accompany the message in addition to the sender’s identity.
CORPORATE MESSAGES:
All SMS messages, either single or multicast via bulk SMS, from corporate bodies must be accompanied by the registered telephone number of representative of the company or establishment. The telephone number must have been registered under the SIM registration database. In addition, the identity of the Hosting Service
Provider whose SMS platform is used for generating the bulk SMS must accompany the message. Messages not accompanied by the above information must not be connected or routed by network operators. Only messages sent through NCC-licensed hosting service providers should be accepted.
Hosting service providers will be held responsible for any SCAM, illegal and subversive messages sent via their bulk SMS platforms.
MOBILE ADVERTS:
All advertisements, product information, marketing messages and other unsolicited messages from companies, businesses and commercial houses and advertising agencies that are to be broadcasted via the mobile network can only be sent as an END-OF-CALL notification.
Such messages need not be accompanied by sender identity. A message sent as an end-of-call attachment can include contact information of sender in case the receiver is interested in the advert and wants more information. Also, where practicable, the SMS message can include a procedure for storing the advert if the receiver so desires. Operators sending the advert must ensure that the messages comply with industry code of conduct and Advertising Practitioners Council of Nigeria (APCON) regulations. Operators will be held responsible for any scam, subversive, inciting mobile advertisement sent via end-of-call notification.
All other forms of unsolicited mobile adverts are hereby barred on the mobile network, these include IVR-based adverts, SMS-based adverts and voice call based adverts (including robot calls). Also a subscriber who has given a ‘do- not-disturb’ notice must not be sent any form of advert.
DETECTION OF SPAM MESSAGES:
Operators and VAS Hosting Service providers are encouraged to make more effort in detecting and blocking spam messages by installing filters and other digital techniques.
Barring of messages from and to illegal short codes and numbers
All short codes or full length directory numbers not issued by NCC or by its authorised agents are illegal. Operators are henceforth barred from routing traffic or delivering content to devices identified by illegal short codes or illegal directory numbers. Traffic or content originating from illegal numbers must not be accepted or routed by any operator 5.7 Barring of messages not accompanied by valid caller ID. All calls or messages, including bulk SMS that are not accompanied by a valid numeric caller identity (TRAILER) must not be accepted and routed by operators.
Barring of Bulk SMS messages without source identity
For branded bulk SMS messages, the alpha ID must be accompanied by a valid numeric source ID that can enable the receiver call back if required. Messages accompanied by only alpha ID must not be switched by mobile network operators.
Conditions for activation of VAS by operators or Hosting service providers
Each VAS must satisfy the under-listed criteria before being activated.
- a) Proof of ownership
- b) Must not be an unethical or inciting content
- c) Must not be an illegal content or application
- d) Application and content must be classified as VAS by NCC guidelines
- e) Must not require an incompatible connectivity configuration
- f) The owner must agree with the terms of connection and industry code of conduct.
Where a VAS has been rejected, the developer/owner shall be allowed to appeal to NCC against the decision. The Commission’s decision shall be binding on both parties. Each operator’s/Hosting service provider’s terms of connection and industry code of conduct shall be subject to approval by the Commission.
Condition for De-activation of VAS/short code
A Hosting Service Provider is only allowed to deactivate a VAS if:
➢The developer so requests.
➢If the VAS does not generate any revenue for 6 months continuously
The de-activation process must however be in accordance with NCC’s applicable guidelines
Quality of service for Value Added Services
Each stakeholder or interconnecting partner is responsible for quality of service in its own segment of the VAS value chain. Hosting Service providers and operators are responsible for making sure that all content or applications being hosted by them are of acceptable quality, accurate and of good legal standing.
VAS Call Logs – SMS, Data and Voice
Hosting service providers and network operators must capture and record the following data about all VAS transactions, these information should be archived for a period of 3 months:
Call logs:
(i) Telephone number of the device making request for VAS (SENDERS ID)
(ii) VAS providers short code
(iii) Network operator originating and terminating the call (SMS, Data or Voice)
(iv) Date and time of the day
(v) Cost of SMS, data or voice call charged by OPERATORS (i.e. transport Cost)
(vi) Cost of VAS payload charged by Hosting service provider (i.e. Product cost). This record should also be kept by the operator if payment is made via the subscribers VAS/Data account
Supply of Itemised Bill to customer:
The subscriber can request for a detailed record of all SMS messages sent, all VAS /content services downloaded and all subscription-based content services pushed to it by the VAS provider. This is in addition to the end- of-call price notification.
Tariff Regulation: The Commission will not for now regulate retail price paid by subscribers for value added services. This will be left purely to market forces. NCC may however review its position if consumer protection needs dictate otherwise.
Use of secured VPN by Hosting Service Provider
All VAS Hosting service providers must have connection to all licensed network operators and such connections must be via secured virtual private networks with adequate password protection, cyphering, anti- virus and other standard security measures
INTERCONNECTION WITH OPERATORS
All VAS Hosting service providers licensed by NCC are automatically entitled to interconnection with network operators and must not be denied such. All interconnection or franchise agreements must be covered by a contract document stating detailed commercial, legal, technical and operational terms including handshaking and revenue sharing formula where they exist. VAS Hosting service providers must also sign franchise agreements with content owners or developers of the contents/applications being hosted on their systems. All draft interconnect agreements must be forwarded to the Commission for approval before execution.
RELATIONSHIP BETWEEN VAS STAKEHOLDERS
REVENUE DISTRIBUTION GUIDELINES
Costs associated with VAS provisioning.
(a) Cost of message sent by the subscriber to request service. These include air time cost for phone-based messages or cost of SMS message for SMS-based activation or Cost of data sent by smart phones accessing application from app stores.
(b) Cost of transferring content from Hosting service providers’ server or app store to the subscriber
(c) Selling price charged for the VAS product by the developer
REVENUE ALLOCATION
(d) 100% of transport cost should go to operators. This is the case presently with subscriber who access overseas content and applications from hosting sites such as Apple Store.
Transport cost will enable operators recover expenses relating to network investment cost, operational expenses, customer acquisition and retention costs, and other overhead expenses
(e) The developer of the product should determine product cost
(f) 100% of Product cost belongs to the product developer/ copyright owner.
(g) The product developer should compensate other stakeholders who participate in or contribute to overall service provisioning, such as product distribution, hosting, marketing, bills collection etc.
8.2 UNBUNDLING OF PRODUCT SELLING PRICE
Below is a breakdown of the components that make up total product selling price and the suggested weighting.
(i) Development cost: conceptualization, R&D, intellectual property, copyright, patents, third-party licences, upgrades etc. 40%
(ii) Hosting cost: servers, UPS, filters/firewalls, call logging etc. 20%
(iii) Distribution cost: VPN, fibre cable, data center leasing cost, multiple transmission links to operator networks 10%
(iv) Branding and advertising 15%
(v) Bill collection and accounting 15%
Revenue from product sales can be shared according to the above formula depending on the specific functions performed by each stakeholder. The developer may cede hosting cost, marketing, distribution and accounting costs to either VAS Hosting service provider as he or she may wish. The above cost allocation weights are based on estimates and international benchmarks, final figures will be left as a commercial agreement between stakeholders i.e. developers, Hosting service providers and operators. NCC may however intervene if there is no agreement and if a party so requests.
VAS FRANCHISE / DISTRIBUTION MODELS
OPTION A1 : Product developer/owner can decide to charge a one-time upfront product purchase fee for his content/application and thereafter cede ownership rights to the purchaser i.e. Hosting service provider or operator ( only for VAS reserved for operators)
OPTION A 2: The product developer can also lease the content/app to the Hosting service provider/operator for a fixed amount on a rental basis paid upfront or in arrears, either per month, per quarter or on an annual basis. The owner retains his or her copyrights.
OPTION A3: Product developer/ owner can engage the services of a VAS hosting service provider on a revenue-sharing basis. Total revenue from the product sale is shared on the basis of services rendered by each party in line with NCC guidelines. Product owner retains his or her copyright.
Model adopted will be left as a pure commercial arrangement between operators, Hosting service providers and content owners.
Revenue collection mechanisms:
TYPE 1: the content owner can engage the services of the operator in collecting revenue for the service through the customer’s prepaid/post- paid VAS account. The operator thereafter credits the owner or Hosting service provider based on services rendered by each party in line with the above guidelines.
TYPE 2: the Hosting service provider or owner can collect the VAS product cost directly via credit /debit card, pay pal, VAS prepaid card, Mobile Wallet or other mobile payment mechanisms. The owner/Hosting Service Provider thereafter credits the operator for service rendered, if any. Method used will be left as a pure commercial arrangement among VAS stakeholders.
CHARGING PROCEDURE FOR VAS:
(a) Subscription-based charge: a fixed amount is paid to cover a period of time. The frequency at which the subscriber receives the information or alert will be clearly stated. This is normally a push service in which the VAS hosting service provider initiates the call. The cost of transportation is charged as extra and goes to the operator while the subscription service revenue goes to developer/ the Hosting service provider.
(b) Pay per Access: The user pays a fixed amount each time he is given access by the owner or for each download. This is usually a pull service in which the subscriber initiates a request for service.
(c) Time-Based Charging: Price paid for the product by subscriber is proportional to time spent in using the application on line e.g. on-line games, chatting etc. This is in addition to the air-time or data cost paid to the network operator for the duration of the on-line access. Method used and revenue distribution among stakeholders will be left as a pure commercial agreement between stakeholders Revenue due to an operator for services rendered in respect of VAS product is in addition to revenue accruing from air time, SMS or data services associated with VAS services offered.
REMITTANCE OF REVENUE TO OTHER PARTIES: Each interconnect agreement between interconnecting parties should include time limit for settlement of revenue accruable to interconnecting or third parties and interest payable where there is a breach.
Registration and Vetting of agreements by NCC: All franchise and revenue sharing agreements between all stakeholders (Developer, hosting service provider& operator) must be registered with NCC by submitting a copy to the Commission for review.
SHORT CODE ADMINISTRATION
Numbering Regulation 2008
Short codes are essential components of the national numbering plan, therefore all usage conditions and rules stipulated in the Numbering Regulation apply equally to short codes.
Short code plan
NCC is developing a short code plan and all short codes assignments will be based on this plan when fully launched. Operators or Hosting Service providers are not allowed to generate their own common short codes either for their own use or for allocation to third parties.
BULK ALLOCATION BY NCC
NCC or its authorised agent will allocate short codes in bulk to VAS Hosting service providers.
Issuance of Short codes for VAS by Hosting Service Providers (HSP) HSP’s will in turn assign short codes to content/applications being hosted on their VAS platforms. HSP’s will be held responsible for any misuse of short codes allocated to them. HSP’s must inform NCC about all ACTIVATED short codes within 7 days of their activation.
Criteria for short code assignment to VAS (Content & applications) Only VAS (content/applications) that satisfy the conditions stated in clause 5.9 above can be assigned short codes
Payment for short code: fees payable for short codes shall be the same as applicable to the National numbering plan regulations. VAS Hosting service providers will pay NCC directly for all bulk short codes allocated to them. They will in turn collect the fees from any third party to which they allocate the short codes.
Ownership of short codes: All short codes allocated or assigned are concessions and hence remain the property of the Commission.
Activation and deactivation of short codes: The conditions for activation or deactivation of short codes are the same as for VAS and are as stated in clauses 5.9 and 5.10. Duration of Short codes assignments and renewal procedures/conditions Short codes will be assigned on short term, medium term or long term basis. The assigned duration will be as follows:
Short term: 3 months but renewable only once
Medium term: 6 months (not renewable)
Long term: 12 months and renewable yearly as long as necessary
Short code assignment shall be renewable every year on the payment of the renewal fee set by NCC.
Withdrawal of Short Codes:
(i) Use-it-or-lose-it: all assigned short codes not used within 60 days ofassignment will automatically lapse and will be withdrawn.
(ii) Any assigned code used for illegal or unauthorised purpose will be withdrawn by NCC without any compensation
Use of other numbers for VAS:
Full length directory numbers or vanity numbers may be approved for used for VAS access by the Commission but will be subject to the provisions of these guidelines.
Barring of Adult content: Shorts codes issued by the Commission shall not be used contrary to any existing law in Nigeria. Accuracy of content/applications offered to public: All companies involved in value added service provisioning must ensure that information content and applications being offered to the public are free of default, bugs and inaccuracies. The VAS developer and Hosting Service Provider will be jointly held responsible for any faulty or inaccurate VAS offered to the public and may be compelled to refund buyers if a clear case of negligence is established.
Harmonization of USSD short codes used for Consumer services: For ease of remembrance and seamless transition from one network to another in case of number portability, all operator USSD codes for accessing basic customer services will be harmonized across all mobile networks in Nigeria. Details will be made known when the industry working group on short codes releases its recommendations.
Opt-in and Opt-out procedures: All adverts for VAS must clearly state the OPT IN and OPT OUT procedures for accessing the applications.
Billing and charging of subscriber services: The Commission’s general regulations relating to subscriber bills and charging procedures apply equally to value added services. However the following additional conditions shall apply to VAS customers. For SMS-based VAS access the subscriber must not be charged for the SMS message if the service is not delivered by the operator/ hosting service provider. Also the subscriber must not be charged more than the standard rate approved by the Commission. VAS Hosting service providers must keep a log of all SMS messages delivered by the operators and should make the record available to the subscriber on request.
Hosting service providers must keep a record of all VAS request responded to and sent to the operator for onward delivery to the subscriber.
Where the request for VAS was delivered to the VAS provider and it is unable to provide the service requested, the cost of the SMS must be refunded to the subscriber by the hosting service provider.
For a subscription-based service, the VAS provider must clearly state total number of downloads/alerts and the volume of each download that the subscriber will receive for the amount paid. For example 10 downloads/alerts of 3 kilobits each for a subscription of N50/week.
Where the VAS provider did not deliver the total number of downloads promised the balance of the fee paid must either be refunded or carried over to the next subscription. The customer’s unused credit must not expire at the end of the subscription period.
Where the operator fails to deliver a VAS payload handed over to it, the subscriber must not be charged the transport cost. Details of rules and procedure guiding subscriber charging, refund and redress procedures should be clearly stated in detail in the consumer code of practice.
Industry Code of Conduct for Mobile Adverts:
The industry is expected to come up with an agreed industry code of conduct for VAS provisioning.
Regulatory obligations, privileges and fees
Operational Levy: VAS Hosting service providers are expected to pay 2.5% operational levy to the Commission.
Type approval of equipment: Hardware platform for hosting and transmission equipment to be used by Hosting Service Providers will be subject to Type Approval by the Commission.
VAS Hosting licence Fee: VAS Hosting Service Provider License payable is N1,000,000 (One million Naira) for a 5-year license.