Helping Businesses Gain a Competitive Advantage

Valued at `65 bn, the VAS market in India is in a dynamic state marked by constant flux. Representing almost 10% of telecom operators' total revenues in India, it is continually on their radar. Now with 3G services on the horizon, the VAS industry is

expected to increase its share manifold, with some industry estimates putting the figure at `200 bn by 2015. With competition becoming increasingly fierce in this segment, and the need to innovate and launch new services remaining constant, the ability to deliver 'more for less' has become even more critical. While operators continue to focus on their core competencies and explore opportunities to generate greater brand value, they are looking for partners who can deliver a significant business advantage. The per paise ARPU is falling, however, the VAS percentage contribution is on the rise. The need to manage the VAS offerings has become critical than ever before. Operators today are looking at one partner to manage their entire VAS offerings-partners who are innovative and reliable to manage multiple VAS service vendors. The managed services approach to VAS service delivery and service management offers operators a way to radically improve business performance-by both enhancing the end user service experience and optimizing operations.

Managed VAS Services: A Strategic Choice
Managed VAS involves transferring day-to-day service management and operational responsibility to a trusted partner. The objective is to enable operators to focus on their core asset which is the customer and how to deliver greater value to the customer. Naturally,
there are improved efficiencies and cost savings. Improved revenues is the critical differentiator of managed VAS service offerings compared to other outsourcing models such as IT and network outsourcing. With a managed VAS services model, operator is entrusting a third party to deliver key competitive advantages like speed to market, improved service uptime, improved return on investment. Achieving these goals is tough, especially for new market entrants who need time to build a team of professionals and face tight financial goals. For established players, these challenges remain, whilst others too exist such as the need to manage multiple VAS services and multiple partners and the need to rationalize infrastructure and network investment to meet the performance target.

Outsourcing of VAS becomes critical in the light of falling APRUs. Though voice continues to command a large revenue share, it has long been considered a commodity. This leaves VAS as the key way in which operators are differentiating their brand.
With the emergence of multiple technologies, standards, applications, a myriad of content and in the face of changing economic conditions, operators need to formulate new ways to enhance business performance and deliver value to customers and stakeholders alike. A managed services business model enables operators to transfer end-to-end management of VAS services to a managed service provider with proven expertise in the delivery of a wide range of VAS services, and to focus on activities that generate greater value for the business by exploiting an operator's real core competencies like their knowledge about acquiring customers and maintaining customer loyalty.

Delivery of VAS: Extremely Complicated Process
A typical service like recharging a pre-paid phone or subscribing for a ring back tone involves delivering the service through multiple partners in the operator's ecosystem. Typically this involves an IVR, a SMS, content and deducting money from the account. In the VAS scenario, complexity arises when five-six network elements are involved from different vendors. In comparison in a network scenario, all of these are delivered by equipments from one vendor. Ensuring seamless service across these different network elements is the challenge managed VAS has to overcome, within the subscriber's expected time limits. For example, when a subscriber subscribes for a ring back tone service, the subscriber usually dials their own number right after setting up the tone to see if the tone has been provided. This process usually takes about 15 seconds. The challenge of managed VAS is to ensure that this service is delivered in those 15 seconds, and if not then identify the lag amongst the six different nodes that are required to provide the service.

Similarly, when subscribers do an electronic recharge, they expect the recharge to be done as soon as they pay the money to a shop keeper. The shop keeper would also like to complete the transaction soon, since there are other customers in his shop. The expected transaction time is about 5 seconds. Managed VAS ensures that this service is delivered to the subscriber within that time.

What's in for Operators?

By implementing a managed VAS model, operators are able to improve their operational performance with a reduction in internal resources dedicated to VAS solution management as the operations are transferred to a third party focused on this activity. Operators can then derive savings of around thousands of dollars from improved uptime performance. Consolidation of the VAS solution under a dedicated, experienced team drives efficiencies and delivers improved financial performance, thus, impacting both top and bottom lines. Managed VAS also helps an operator improve the time-to-market of their new services.

For mobile operators, their knowledge of the customer, customer profiles, how and when customers interact, spending power, service preferences as well as the ability to track their whereabouts form the basis for a strong competitive advantage. Understanding customer motivations and being able to anticipate their needs by offering relevant services and service packages are critical to business success, more so than the actual in-house development, deployment and management of these services.

As mobile networks move from being 'walled gardens' to 'open gardens' where the operator allows multiple application developers to offer services over its network, issues of standardization, optimal architecture and security come to the fore. Operators need to devote significant resources in assessing applications, negotiating agreements, integrating applications, measuring performance of applications, planning for service upgrades, and expansion and building the operator brand. With a myriad of application providers comes a myriad of complexities. An operator may have as few as twenty to as many as fifty VAS providers, each with equipments deployed at the operator site and each using dedicated hardwares and network resources.

Managed VAS services is a business model for operators who are keen to focus on building their core competencies and capture greater customer loyalty, market share in this challenging and growing market.

Ambar Sur
The author is senior vice president, managed services, Comviva
vadmail@cybermedia.co.in