Telcos fear new guidelines on VAS will hurt business

According to an industry source, if this proposal is implemented, it will, in effect deny the customers their right to consume entertainment content they wish to, which will become the reality as a result of the unviable business model

New Delhi: Value-added-services (VAS) providers are up in arms against the Telecom Regulatory Authority of India's (TRAI) proposed directives on the procedure for providing VAS to users as the former feel that this could kill the industry and may also cause a revenue loss of Rs1,500 crore to the government, reports PTI.

"It's not clear why TRAI would back such a move... it would result in a revenue loss of Rs1,500 crore to the government. Besides crumbling a Rs10,000 crore eco-system that employs over 12,000 people," one of the leading VAS providers told PTI.

TRAI had proposed directives in July to service providers on the procedure for providing VAS to users in a move to protect the interest of consumers.

As per the proposals, the service providers need to obtain confirmation from the consumer through SMS or e-mail or fax or in writing within 24-hours of activation of the VAS.

The service provider should charge the consumer only if the confirmation is received and in case they did not receive any confirmation services should be discontinued.

However, the service provider feels that such directives are not consumer friendly. Mobile subscribers like to have a simple user experience to enjoy their favourite services such as music songs, cricket scores, among others.

According to an industry source, if this proposal is implemented, it will, in effect deny the customers their right to consume entertainment content they wish to, which will become the reality as a result of the unviable business model.

TRAI's move is seen as restricting the growth of these services because the proposed directive expects the mobile users to send SMS as confirmation of subscription service every month.

The Indian mobile market has less than 45% SMS penetration rate and this gets as low as 20% in rural areas. The country has a very low literacy rate and the English literacy rate is even lower at 15% and such directive does not take into consideration any of these ground realities.

"Such a move, if implemented, will impact the mobile content industry adversely. As content partners, we invest to constantly bring sports, entertainment and other utility services to the mobile consumers while on the move, enriching their lives," said Jatin Ahluwalia, the founder of vRock Mobile, a start-up in the inmobile VAS space.

Last year, TRAI had floated a paper seeking comments from telecom operators on measures for protecting consumers' interest and redressal of customer grievances.

The consultation paper aimed to strengthen the regulatory framework and provide adequate protection to telecom consumers.


CAG seeks powers to evaluate SEBI, TRAI, IRDA

Once the Bill is approved, public private partnership projects and regulators like the Pension Fund Regulatory and Development Authority might also come under the CAG scanner

New Delhi: The Comptroller and Auditor General of India (CAG) is seeking to widen the scope of its powers to audit the performance of regulators such as SEBI (Securities and Exchange Board of India), TRAI (Telecom Regulatory Authority of India) and IRDA (Insurance Regulatory and Development Authority) as part of the new legislation that will replace the CAG Act, 1971, reports PTI.

The proposed CAG Bill, now under consideration of the finance ministry, is likely to be tabled in Parliament in its next session.

"CAG is looking into the books of regulators like TRAI, SEBI and IRDA, but now wants to audit their performance also," official sources told PTI.

The CAG has already submitted a draft Bill to the finance ministry for replacing the CAG Act. The new law is aimed at significantly expanding the scope of the CAG's audit responsibilities.

"We are looking at auditing the regulators. We have asked in the draft Bill to replace the CAG Act of 1971 to allow audit of the financial (statements) and performance of regulators and public-private partnerships (PPPs). We are hoping that the Bill would be tabled in the Winter Session," the official said.

The draft Bill is likely to have provisions for punitive action against companies that delay submission of details sought by the auditor.

"We do not have powers to ensure that records are presented to us as and when we ask for it... We do not have punitive powers and our resources are limited," he said.

Once the Bill is approved, public-private partnership (PPP) projects and regulators like the Pension Fund Regulatory and Development Authority (PFRDA) might also come under the CAG scanner.

Under the Companies Act, 1956, the CAG can audit the books of only those companies in which the government owns more than a 50% stake.


IIP plunges to 21-month low of 3.3% as slowdown sets in

The fall the industrial production numbers, as shown by the latest data, suggest continuation of the sluggishness in the economy, experts said. The IIP had expanded by 5.9% in May but there was brief revival in June with industrial production growing by 8.8%

New Delhi: Confirming economic slowdown, industrial growth plunged to 21-month low of 3.3% in July even as industry stepped up pressure on Reserve Bank of India (RBI) for a halt in interest rate hikes, reports PTI.

The July data was disappointing as compared to a healthy 9.9% growth a year ago and 8.8% in June.

The capital goods sector was the worst performer with a decline of 15.2% during the month, reflecting erosion of investor confidence. Manufacturing and mining were other laggards.

The slowdown in factory output is worst since October 2009 when it grew at 2.3% when the economy was reeling under the impact of the global financial crisis.

The slowdown is being attributed to high interest rates and worsening global economic scenario.

Sharing industry's concerns, a worried chief economic advisor in the finance ministry Kaushik Basu said, "We are balancing between two very difficult problems. One is inflation which is persistent at close to 10% and slowdown in growth... the RBI will have to balance it out and take a decision."

RBI, which has raised key interest rates 11 times since March 2010, is scheduled to review the rates again on 16th September.

A strong reaction was seen in the stock market to the data with BSE Sensex diving by 2.1% to close at 16,501.

The industry chambers described the situation as serious.

"Unless corrective policy actions are taken we may enter the negative territory soon," Ficci secretary general Rajiv Kumar said.

Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan said the growth target for the industrial sector for the current fiscal will have to be revisited on account of the moderation witnessed in July.

"As regards the estimate of industrial production for the year as a whole, we will have to revisit the area after one or two months," he said.

In its Economic Outlook last month, the PMEAC had projected industrial growth for the current fiscal at 7.1%. The IIP had grown by 7.8% in 2010-11.
During the April-July period of this fiscal, IIP growth stood at 5.8%, as against 9.7% in the corresponding period last year.

Production of capital goods declined by 15.2% in July, as compared to a growth of 40.3% in the corresponding month of 2010.

Output of the manufacturing sector, which constitutes over 75% of the index, grew by only 2.3$ in July compared to 10.8% expansion in July 2010.

Mining grew by 2.8%, down from 8.7% in the year-ago period. Production of intermediate goods fell by 1.1% against a growth of 8.5% in July 2010.
Meanwhile, the IIP numbers for April has been revised downward to 5.3% from 5.7% estimated earlier.

"It is clear that the IIP numbers are a disappointment. I think we need a pick up in investments," Planning Commission deputy chairman Montek Singh Ahluwalia said.

Moderating factory output will also have a bearing on the economic growth during the current fiscal which was pegged at 8% by the RBI. The GDP in the first quarter (April-June) fell to a six quarter low of 7.7%.


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