Expert Predicts Boom In VAS Industry As ICH Takes Off

Ghana is set to witness a rapid uptake of mobile Value Added Services (VAS) as the long awaited Interconnect Clearinghouse (ICH) gears up to take off.

This uptake, according to telecom expert Osman Issah, will result from the elimination of the bottlenecks and impediments that have hitherto prevented the cost effective and efficient provision of VAS services in the country.

Osman Issah is, among other things, a consultant to VAS operators and App developers in Ghana.

He noted that the major bottlenecks that have prevented the rapid uptake of VAS services in Ghana includes; high cost of setting up service infrastructure with telcos, delays in establishing interconnection with telcos, difficulties in reconciling financial records with telcos, difficulties in receiving payments from telcos, and anti-competitive practices from telcos when they start offering the same services as the VAS providers.

"The presence of the ICH will help eliminate all the challenges above," he stated.

High Cost of setting up VAS service infrastructure
Today in Ghana any VAS operator in order to connect to each of the 6 major Telcos will have to put a separate server and VAS infrastructure at the premises of the Telco. This means that for the same service delivery to the subscribers, each VAS operator will have to build 6 separate infrastructure at 6 times the investment required for each.

There are also additional expenses required in configuration of each infrastructure to make it compliant with the network setting of each operator. This has lead to situations where VAS Providers have not been able to roll out services to all subscribers on various networks as a result of lack of financing to put the entire required infrastructure in place.

With the presence of an Interconnect Clearinghouse, the high cost of setting up VAS infrastructure will be drastically reduced. Instead of building 6 separate servers and infrastructure, the VAS Provider connected at the Clearinghouse only needs to build one. It therefore spends only 13% of the current amount being spent to offer its services to the industry.

The Clearinghouse will be connected to all the Telcos and so the VAS Provider can leverage on this connection to the Telcos and does not need to build its own infrastructure to each Telco. This savings in setup cost will enable many VAS Providers get into the market and also enable them to devote scare financial resources to developing new classes of service to the industry.

The Clearinghouse will also take over the role of ensuring that the right technical interface and connectivity protocols are in place between the VAS Providers and the Telcos. This will save the VAS Providers a lot of money that hitherto would have being spent in interfacing their platforms to the Telcos. The VAS Providers therefore become more profitable.

Delays in establishing interconnection with Telcos
Under the current VAS provision scheme in Ghana, each VAS provider would need to negotiate a separate interconnection and service delivery agreement with the Telcos.

Issah asserts that VAS Providers are usually not well equipped to handle this critical aspect of the business relationship with the Telcos. The need to have a separate agreement with each Telco means that scarce resource that the VAS Providers have, make them ill prepared to be able to close the service agreements with the Telcos on time and under mutually beneficial terms. This has led to delays in the roll out of important VAS services to the industry.

When connection is established through a Clearinghouse, the VAS Provider only need to have one interconnect and service agreement with the Clearinghouse and it will be able to do business with all Telcos at the same time. The Clearinghouse would already have an agreement with the Telcos that covers the introduction of new VAS services. This drastically reduces the time and expenses required to get a new VAS service introduced to the industry. This will lead to rapid introduction of new classes of VAS services to the industry.

Difficulties in reconciling financial accounts between VAS providers and Telcos

Under the current business relationship between the VAS Providers and the Telcos, the VAS Providers depend mainly on the record of the Telcos for accounts reconciliation. It is either the VAS Provider does not have a robust billing and transaction recording infrastructure and so have to depend on the record of the Telcos, or if they have, in the event of a dispute on the call records, the Telcos will insist on its own record as being the accurate one.

In the absence of independent third party records for the transaction, the VAS Provider is left with no option than to accept whatever records the Telcos present to them whether accurate or not. This has prevented a number of existing VAS Providers from expanding their business relationship with the Telcos and introducing new classes of services. It has also prevented new VAS Providers from coming into the market as revenue projected cannot be confirmed once they start offering services to the Telcos.

When interconnection between the VAS Providers and Telcos is established through a Clearinghouse, the problem of irreconcilable call records is eliminated. The Clearinghouse is able to generate an independent call record for every transaction between the VAS Providers and the Telcos and this can be used for billing, invoicing, and settlement purposes, thereby ensuring there is equitable settlement of all transaction charges. This will boost the revenue accruing to the VAS Providers and ensure that new services are introduced to the industry as there is now guaranteed and accountable revenue that can be generated from the provision of VAS services to the industry.

Lack of timely payment of VAS Revenue
Apart from difficulties in getting accurate records of the transaction between the VAS Providers and the Telcos documented, the VAS Providers also have a lot of the payments due to them not paid on time. Most times the VAS Providers are forced to accept disputed accounts records in order to receive payments from the Telcos. This has forced a lot of VAS Providers with good class of service that should be beneficial to the industry to go out of business. Other VAS Providers have been reluctant to get into the business since revenue is not guaranteed

Once the Clearinghouse is launched and operational, VAS Providers will benefit from the same billing and settlement scheme that will be available to the Telcos. The Clearinghouse will be fitted with inter-carrier billing and settlement scheme, ensuring that all traffic across the Clearinghouse is settled in a timely manner with accurate and independent call records. This will boost confidence in the provision of VAS services in Ghana and ensure that more VAS Providers come into the market.

With the advent of the Clearinghouse, Ghana will benefit from the introduction of new VAS services and existing VAS services will be offered in a more efficient and cost effective manner to the industry.

Some VAS services that is expected to thrive in Ghana post Clearinghouse implementation in Ghana includes: Mobile Money services, Entertainment-Premium rate messages, Polling services, Directory services, Games, Chat and Quizzes, Advertising, Mobile internet sites, Videos, Multimedia, Ring tones, Test messages, and lot more.