 | Issue: | Latin America 2012 |
| Article no.: | 7 | |
| Topic: | Evolution of Mobile VAS industry in Latin America – auto-regulation for a sustainable environment | |
| Author: | Ron Czerny | |
| Title: | Chairman & Founder | |
| Organisation: | Metro Ethernet Forum | |
| PDF size: | 304KB |
About author
Ron Czerny is the Chairman & Founder of MEF (Metro Ethernet Forum) LATAM & the CEO of PlayPhone. As founder, CEO and board member, Ron Czerny serves as the visionary and the driving force behind PlayPhone’s corporate strategy. His more than 17 years of experience in the digital entertainment industry has allowed Mr Czerny to help establish PlayPhone’s dominance in the mobile media industry and has positioned the company to compete and thrive on a global scale.
In 2000, Mr Czerny founded Atrativa, a mobile and Internet consumer entertainment company with operations based mainly in Latin America, which was acquired by RealNetworks Inc. in 2006. As chief executive officer, he led Atrativa to its current status as the premier Web game provider in South America, supporting several major ISPs including UOL (South America’s largest ISP), Yahoo! Brazil, AOL Brazil, MSN Brazil, Ibest (Telecom Brazil), Terra Networks (North and South America) and many others. Mr Czerny also played an important role in Latin America’s video game industry between 1992 and 1999 as the co-founder of the Brazilian Entertainment and Video Game Association. He also served as the president of Romstar and Sports Arcade, companies with strategic and exclusive partnerships with Capcom for video game distribution in Latin America.
Ron Czerny holds a degree in business administration with an emphasis on international business from San Jose State University in California.
Article abstract
Regulation has the power to help the market to prosper, or the opposite – restrict innovation. Only minimal control is required at the early stage of emerging technology, but as more parties begin to offer services, rules are necessary to protect consumers. In Brazil, the four large mobile operators developed four different codes of practice, fragmenting the market. After two years of deliberations between these competing parties, the MEF (Metro Ethernet Forum) has successfully issued a universal Code of Practice, which is now widely adopted. The next step is to help all players, large or small, to offer compelling new services that can be certified and transparently monitored.
Full Article
There is no doubt about the mobile industry growth in the last ten years. The world reached the mark of more than five billion mobile phones in 2011, with more than 100% penetration in many developed countries, and with others following in a fast pace growth. The sales of mobile phone have already surpassed those of computers. Smartphones sales grew by at least 200% during the last two years, and for those that like weird statistics, the number of mobile phones has already surpassed tooth brushes in the world.
Along with the increase in the number of devices, a completely new industry flourished, bringing value and access to information, entertainment and services in a level never seen before. For millions of individuals worldwide, the mobile phone is a window to a world unreachable before.
This new industry is what we call nowadays VAS (Value-Added Services) Industry, a challenging one that is constantly evolving and bringing new opportunities. It is an industry that started with the sale of ringtones and wallpapers, and evolved in a short period of time to include games and music, education, health, government, financial services, and many other application areas.
However, for this industry to keep bringing value to the population, especially in a region with so many opportunities and challenges as Latin America, a sustainable environment needs to be in place, providing the right conditions for companies, individually and collaboratively, to innovate and grow.
This scenario is composed by numerous parts, with regulation being the most important one. Regulation can either help the market to prosper, or do the opposite, if it doesn´t observe market characteristics. That is the objective of MEF, the key trade body for mobile content & commerce industries. The initiative developed by the organization in Brazil is a clear example of how it is possible to create an effective regulation, benefiting the final users, improving the quality of the services and creating a better business environment for the entire industry.
Code of practice: the Brazilian case
The Code of Practice for VAS Subscription Services in Brazil is a successful case of auto-regulation: the rules where agreed by all players and discussed extensively in bi-weekly meetings during two years. The Code also received support from Anatel, the telecom regulatory body in Brazil.
The story of the Code of Practice started in 2007 with the first mobile content aggregators, mainly European companies, bringing the successful model to Brazil. As with any new service, there were no rules whilst there were no such services to regulate. It is important to stress that the early phase is crucial to the development of any new product, and strict rules would prevent emerging technologies from evolving. However, as these services grew popular in Brazil, many new entrants started to flourish, and so did bad practices. There is no question anymore that what is required for a healthier market is regulatory control, but it has to be minimal and supportive.
The first initiatives in this direction came from the mobile carriers. One by one, the operators started defining their own Codes of Practice, with rules that they believed would protect the mobile users from being misguided by unclear ads and subscriptions. This has helped to create the basis of a unified market. However, in Brazil, where there are four highly competitive big carriers fiercely battling on a market share, the industry has ended up with four different codes to follow. The lack of rules, or in this case, the existence of different and even contradicting rules, has created an unsustainable environment, uncertainty for market players and a lack of trust by end-customers.
MEF started its operations in Brazil with this clear objective: to help the market to develop a Unified Code. This would be based on the experience of the Brazilian companies with the existing Codes and also on advice of international expertise from other regions. It is important to stress here that MEF had important roles in the same area in the UK and in some countries in Asia, as Singapore.
The objective of this initiative was very simple: to create unified and clear rules for the market, making it easier for market players to follow them, for carriers and the entire industry to monitor and for end-users to understand their rights. With such rules, this initiative will guarantee continuing growth of a prosperous and sustainable industry.
After two years of uncountable meetings of all participating players, aimed to analyse, discuss and negotiate the rules, MEF accomplished its objective and the Code has been successfully launched by all the carriers. These rules are accompanied by a set of penalties when the rules not followed, thus unifying the process and guaranteeing that the rules are adhered to as agreed.
It was important to prove to the market that joint initiatives from all the players in the mobile value chain, competing or not, can generate considerable benefits not only for the mobile industry, but for the whole population of mobile phone users in the country.
Yet to come is the initiative’s third phase, where monitoring and certification is planned to improve services that are offered to users, and to help companies to offer compelling services. Our mission does not stop here. As the market evolves and more services become mobile, MEF mission is still far away from its end. Other initiatives are been discussed to help the industry to develop even more, bringing more services and innovative products for the industry. The mobile industry is still in its infancy with unimaginable space for growth. The MEF has been, and will continue to be, a driving force for this industry.
