MVAS: On an Upswing

MVAS offers huge growth potential in the country. At present, around 10% to 15% of operators’ revenues come from MVAS, but typically, these revenues are high margin, and more critically, enable operators to differentiate their brand from other players in the market. This financial year, the MVAS industry will touch close to $3 bn in India. Due to the growth pattern and tariff structure of mobile services in the Indian market, this represents a small percentage of the global MVAS industry, at around 1.5%, but this proportion will change as subscribers start to embrace the wide range of services available.

The MVAS industry in India will continue to thrive as it offers mobile users multiple avenues to communicate, far beyond that provided by simple real-time voice calls. A key driver behind MVAS uptake is the convenience afforded - and as the name suggests – the way in which the service ‘adds value’ to the subscriber’s life. Beyond the ubiquitous, ‘killer app’ SMS, subscribers can send a text or voice message to callers when unavailable to talk, they can entertain callers with a tune, surf the web or get information using voice commands, top-up their prepaid accounts, download or listen to music or receive alerts about traffic-jammed streets.

There are technologies that have been available for many years that will continue to enable MVAS to thrive. USSD (unstructured supplementary service data) is one such technology. It has simplified MVAS access for subscribers with the simple to remember strings -helping operators to drive revenues, and it has enabled subscribers to get their first experience of self-care - bringing convenience to the user and cost-efficiencies to the operator.

Tech Advantage

These examples reflect the first generation of MVAS and while many were widely used, they barely scratched the possibilities of the mobile medium. Far richer applications will be launched in the coming months and years and these will have a profound impact on both lifestyles and livelihood in emerging market societies.

Technologies that have been around for a few years but are yet to become widely adopted – these include Multimedia Messaging (MMS) and Instant Messaging and Presence (IMPS). Given the cycle time for the adoption of new technologies, the time is ripe to see more usage of these services as well.

Now there are technological changes afoot which will enable these services – higher bandwidth with EDGE and the soon to be available 3G, bigger screens and more processing power on the handsets, mobile specific content standards and the wide availability of open environment phones at lower price points.

Mobile internet is already making its mark as a service that’s steadily increasing in popularity. Many people are experiencing Internet for the first time directly on their handset without experiencing it on the PC at all. Increased availability of GPRS and even EDGE handsets, the better responsiveness that they provide, and the wider geographical coverage for these services is promoting the usage of MVAS.

The higher processing power of handsets and the memory on them is also encouraging the consumption of higher quality media. Full track music downloads is a reality and video download and streaming is becoming an increasingly viable service. As 3G is rolled out in India there will be scope to offer multimedia applications – video services such as movie trailers, sporting highlights and video chat, surveillance and messaging services. Critically, only if these services capture the imagination of the end subscriber will they take off.

The ability to download applications on many different handsets carrying open application environments is triggering a rise in specialized services, which were earlier hampered by proprietary handset environments. One of the areas that benefits the most from this is that of secure applications. Mcommerce is taking off across the world as a result of enhanced security bringing the possibility of ubiquitous access to formal financial services to the many millions of unbanked subscribers. This will also provide new avenues of entertainment via gaming to people with otherwise very little access to contemporary gaming experiences.

With India home to a large segment of base of bottom of pyramid (BOP) people, technology must also address the needs of this segment if the industry is to grow.

As innovation in the mobile space continues, so the mobile environment becomes far more complex. Traditionally, operators controlled the services offered to subscribers. Now, with the realization that mobile financial services, including transactions, payments and remittances, can be provided over the mobile, the operator is no longer the sole player in the mobile space. Banks hold domain expertise as do operators – and both are now working together to fulfill the promise of mobile banking and commerce. Similarly, in new areas of growth, such as mobile advertising, the various players within the advertising industry will form a vital part of the ecosystem if the nascent industry is to thrive. Technology enables the multiple players to come together and collaborate and regulation serves to facilitate industry growth.

MVAS’s Value Add

There are many challenges facing the mobile industry in India. The ability to bring services to the entire population will help drive subscriber growth, but with this comes the challenge of increasing ARPU. MVAS is all about creating value for the subscriber and providing a valuable service in an affordable way. Looking back at the early years of this decade, mobile operators were facing the challenge of how to bring affordable VAS to a wider market. The introduction of electronic prepaid top-up services, to replace the traditional paper recharge vouchers, enabled operators to extend mobile services to new segments profitably. Similarly, now operators are looking at introducing new micro-payment schemes and service packages, such as advertising-funded services.

MVAS Future

India’s mobile subscriber base ranges from the very high-end users of smart phones, looking for content, commerce and interaction services - to BOP users who may need access to livelihood enabling services and who may also want to enjoy entertainment on their phone, such as simple mobile games. The scope for offering a wide range of MVAS that enjoy a wide uptake is therefore enormous.

(Contributed by Manoranjan Mohapatra, CEO, Comviva)