Sunday, September 13, 2020 / 04:00PM /
Davidson Oturu & Kehinde Takuro of Aelex / Header Image Credit: Aelex
Information Communication Technology (ICT) has, without a doubt, greatly
impacted virtually every industry, and the communications industry is no
exception. Services such as bulk short message service (SMS), online games,
data services, telemarketing, text messages and media messages, all of which
are often referred to as Value Added Services (« VAS »), now constitute a part of
our daily lives. The invasive nature and increase in the commercialisation of these VAS has
increased the need for communications industry regulators in various countries
to protect the privacy of consumers/subscribers and regulate VAS providers.
In Nigeria, the Nigerian Communications Commission (« NCC ») is the
independent regulatory authority for the telecommunications industry. Its
mandate, under the Nigerian Communications Act 2003 and the Wireless Telegraphy
Act 1990, includes the regulation of VAS providers and operators. Pursuant to
its powers and mandate, the NCC has published frameworks for the issuance and
use of the VAS licence.
This article sets out the objectives of the VAS licence, the entities
who are required to obtain the VAS licence and the services covered under the
VAS licence in Nigeria.
VAS is defined, in the Value Added Services and Aggregator Framework
(Amended) Regulation1
(« VAS & Aggregator Framework »), as « any network-based service other than
voice conversation that is provided in the form of text, video, graphics,
picture, multimedia or data for the purpose of conveying information or
executable content either downloaded or accessed online and normally at extra
cost. »2
The inference drawn from this is that VAS constitutes all network-based
services other than voice calls. It is pertinent to note that the VAS licence
seeks to establish a structure to implement appropriate safeguards in relation
to the use of mobile VAS to:3
According to the NCC, a VAS Provider is « any person or organization
that engages in the provision of value added mobile/fixed services, including
premium rated services. »4
In this regard, any company that is a VAS Provider is required to obtain a VAS
Licence to be able to operate in Nigeria. The VAS Licence category is available
to VAS providers, application providers5
and VAS aggregators6. The
aforementioned entities constitute three out of the four entities that bring
VAS to the end user7. The
fourth entity is the network operator8
but the VAS licence category is not available to it. The NCC has also indicated
that the VAS Provider can combine the role of the application providers and VAS
aggregators and leverage on the infrastructure of the network operator to
provide VAS.9
The structural framework for VAS has been stated by the NCC to consist
of four broad segments with the following corresponding market players:10
i. Segment 1 – Network operators: They
provide the final link to the subscriber for the purpose of delivering VAS to
the end user.
ii. Segment 2 – Aggregators: These entities
provide a concentration point in order to limit the number of devices that will
be directly connected to the operators.
iii. Segment 3 – Content and application service providers:
They are the only players that will be allowed by the NCC to pool, host and
distribute content and applications using their own in-house software and
hardware platforms
iv. Segment 4 – Developers of content, applications and
platforms: These entities have been described by the NCC as « unlicensed,
freelance creators of content and applications or those who have franchise on
such value added services but who are not licensed to distribute such services »11. However, they do not need a licence
from the NCC to market their products, other than simple registration.
i. Information services/content: news,
updates, data, quiz, games, ringtones, video streaming, alerts, product
information, call center and database access;
ii. Interactive services/ applications:
charting, contest participation, e-voting, e-government, text -to-win, polls
and surveys, coupons, on-line games, promotions, prepaid calling card service,
call directory, location-based services; and
As a
result of the daily virtual development of new services, the NCC has reiterated
that the list of VAS set out in the preceding paragraph is not exhaustive. The
NCC’s broad definition of VAS as « any network-based service other than voice
conversation… » clearly buttresses this stance. Furthermore, the NCC in an
earlier-published regulation titled « License Framework for Value Added
Services »13 (« VAS
Licence Framework ») set out certain services and technological innovations
envisaged to fall under the VAS licence category.14 The said services (which can be said
to be covered under the classes listed in the preceding paragraph) were
stated to include:
Similarly,
the NCC in its VAS Licence Framework stated that certain services which it
expects VAS providers to render include:15:
iii.) Advertising: Drive purchases
to target markets, create affinity groups and ongoing communications of new
products using broadcast – television, radio – or print – online, newspaper,
magazine;
iv.) Commerce: Transaction fees for the redemption
of coupons, point of sale purchases and micro payments; subscriber rate plans;
v.) Some form of mobile Value Added Service such as
text messages, picture messages, ring tones, graphics, games, mobile internet
sites, videos, multimedia, call directory and call centre services.
It is
germane to note that the NCC has clarified that, as it relates to mobile
banking services, the provisions of its VAS licence framework does not
currently apply. This is because entities providing such services are directly
licensed by the Central Bank of Nigeria.16
Although,
the NCC has stated that the services listed in its regulations to be covered
under the VAS licence are not exhaustive, it is preferable for stakeholders to
err on the side of caution by referring to the services specifically mentioned
by the NCC as the current guide on what services are covered under the NCC’s
VAS licence, pending the inclusion of other services in NCC’s VAS regulations.
Also, entities intending to provide VAS in Nigeria should seek assistance from
their solicitors in order to comply with NCC’s mandatory requirement of
acquisition of a VAS licence.
4.
Page 1 of NCC’s License
Framework for Value Added Services (« VAS Licence Framework »). Also note
that the VAS providers usually has to sign a contract with a network operator
enabling the provision of such services.
5.
Application providers host
distribution of third party contents and applications, install hardware and
software platforms for hosting applications and contents, among other related
functions. See 1.6 of VAS & Aggregator Framework.
6.
Aggregators supply direct,
simplified and secure connection to content and application providers for
access to all network operators that have the capability to transmit VAS to end
users.
8.
Network operators provide
termination services to Aggregators and transmit requests for service from
subscribers to content and application providers through aggregators. The NCC requires
that a network operator must possess a Unified Service Access Service, Digital
Mobile License or any other license issued by the NCC which enables
transmission of VAS to end users.
9.
It is important to note
that the NCC has stated in the VAS Licence regulation that the VAS licence
category is not available to network operators.
11.
They also do not need a
licence from NCC to market their products, other than simple registration. See
1.1b of VAS & Aggregator Framework
