NEWS: Content providers want out of USP fund

KUALA LUMPUR: Mobile-content providers want the Government to do away with the requirement that such companies must contribute 6% of their annual revenue to the Universal Service Provision (USP) fund.

Azli Paat, president of the Malaysian Mobile Content Provider Association (MMCPA) said the USP fund is an infrastructure fund and not a content fund, so content providers (CPs) should not be required to contribute to it.

“The telecommunications companies are already contributing to the USP fund, which will eventually be beneficial to them,” he said. “Once an underserved area is developed (using the fund), the telcos can profit from it by charging for their infrastructure.”

“We get some benefits because we can then sell our content in these developed areas, but not as much as the telcos because we do not have the infrastructure to profit from,” Azli said.

The USP fund was established in 2003 to help provide telecoms facilities and Internet access to underserved areas. The fund currently totals RM5bil and is managed by the Malaysian Communications and Multimedia Commission (SKMM), the telco industry regulator.

CPs in the country, such as M-Mode Sdn Bhd and Radius Sdn Bhd, develop and sell content, including wallpapers, ringtones and games, for cellphones and other portables.

The CPs claim that their profits from such content are dwindling. They said the value of the local industry has shrunk from about RM540,000 to RM300,000 in just one year.

“The mandatory contribution to the USP fund is stifling the growth of CPs,” said Azli. He explained that CPs that make more than RM2mil in annual revenue are required to hand over 6% of that to the fund.

“This requirement is counter-productive. Some CPs are purposely trying not to exceed RM2mil in annual revenue because of this. This puts a damper on CP growth,” he said.

The MMCPA informed the SKMM of this in November and are awaiting feedback. The association has also requested a meeting with Information, Communications and Culture Minister Datuk Seri Dr Rais Yatim over the issue.

Another thorn

Besides the USP fund requirement, the set up of a so-called Preventive Gateway is also causing CPs that develop content for mobile devices to suffer declines in their revenue.

The gateway is a technology that helps screen out unscrupulous CPs, such as those who deliver content to consumers without asking first, and then bill the consumers for the content.

This electronic gateway checks SMSes from the CPs and consumers to ensure that the consumers have given consent for the content to be sent to them.

“This is all very well but another 3% of our revenue is taken away for maintenance of the gateway annually,” said Azli. “The law-abiding CPs are also being made to pay for the sins of a few unscrupulous vendors.”

The MMCPA also believes that the revenue share that telcos demand from CPs for pushing their content is too high.

“In Japan, it is an 80%/20 % revenue share between CP and telco. But here, the telcos demand a 50%/50% share,” Azli said.

He said the association had asked the telcos to switch from revenue share to a fixed rate but the call had fallen on deaf ears.

“This unfair revenue split is forcing most of the local CPs to do business overseas where they can enjoy better returns. We are focusing our business on Indonesia, Thailand and China because it is too limiting here,” he said.

The MMCPA is two years old and looks after the rights of mobile-content providers. The organisation has 31 members now. There are 300 CPs dealing in mobile content nationwide.