VAS : A Way of Life?

Fuelled by operators' expansion and government support, telecom growth is now
taking off in semi-urban and rural areas. In the near future, a majority of new
subscribers are expected from here. Mobile phones operators and manufacturers
see an enormous growth potential in the rural sector, and are now formulating
new ways to grab a larger share of the rural pie.

From launching low cost handsets to bringing down the tariffs and organizing
campaigns to advertise their plans, telecom players are now accelerating the
already cut-throat competition in the hinterland.

Next Wave

It is believed that the next wave of mobile growth will come from the bottom
of the pyramid. For a majority of the population in the rural segment, the
mobile phone is the first communication device. Going hand-to-hand with telecom
operators, MVAS providers are also ready to explore rural India. Rural should
not always be interpreted as poor and therefore some categories of MVAS might
apply directly to them.

The increasing rural penetration of telecom players is believed to help in
increasing the ARPU of VAS players as well. But VAS players have a different
opinion. They believe that rural expansion might not necessarily help in
increasing ARPU in the near-term, especially since rural services will take some
time to evolve, and in general, the rural consumers have low ARPU from an
overall telecom spend perspective.

According to Vijay Shekhar Sharma, MD, One97 Communications, "Rural expansion
will help increase the overall revenue-base based on the already deployed
infrastructure. In the long term, the operator's ARPU for this segment will
expand due to increased VAS take off."

Content is King

Rural VAS is turning out to be a huge opportunity as operators expand in
this area. But innovative and relevant content catering to the needs of the
rural masses would be the key to success for VAS providers. Basically, rural
segments have two sets of needs: needs similar to the urban market, for example
infotainment content, updates on various utilities; and second, needs unique to
rural areas, like rural-focused content, commerce transactions, updates on local
activities, etc. And to expand successfully in rural India, VAS players should
develop applications addressing both these needs.

Talking about applications for the rural segment, Sangeet Chowfla, CSO,
Bharti Telesoft says, "We have a host of offerings that enrich the lives and
enhance the livelihood of the rural segments. Some address the underlying needs
to enable greater uptake of mobile services, such as our PreTUPS prepaid
solution."

He adds, "We are working on a range of solutions in three core areas:
content-together with the content providers we aim to provide relevant
infotainment services to the rural segments such as economic data,
agriculture-related information, as well as mobile music and entertainment
services; commerce-by enabling mobile banking, remittance and payment services
via a trusted financial institution to ensure access to financial services for
the many rural dwellers currently relying on informal, and often unreliable and
expensive methods; and community-via IVR services that are available in local
languages and messaging services that are intuitive.

On the other side, One97 Communication has developed and deployed the VAS
platform for the Airtel IFFCO Kisan Sanchar Project to connect farmers by
launching their 'Dakia service'. This is a unique case of user-generated content
and collaboration application tailored to suit the needs of the rural
population.

"We provide a platform where people of a region having relevant information
can share it with other members of the group," says Sharma of One97
Communications.

M-commerce has considerable potential in rural India. As stated by TRAI in
its consultation paper, mobile-payment will be a great benefit, particularly in
rural and remote areas where there is easy accessibility of mobile phone
services, but banks are not easily accessible. The RBI has also taken some
initiatives in this direction.

Kirusa, a leading vendor of voice SMS and developer of MVAS, is also
enhancing its service portfolio to fulfill the demands and requirements of the
rural masses. The company is providing voice SMS services on fixed lines as
well. "People in rural India go to PCOs and sometimes the person they are trying
to contact is not reachable. So they can use voice SMS by just dialing the code
and communicate to the person easily without waiting for hours," says Inderpal
Mumick, CEO, Kirusa.

Kirusa is also providing IVR services in local language. This makes IVR
services simple and can be used by any person in the rural market. Mumick adds,
"The command to use voice SMS is very simple and can be easily explained to
people in rural India on the way to use. Those who are unable to read can learn
it from IVR."

MVAS is going to address two main needs of rural consumers-connectivity and
entertainment. Connectivity will provide information VAS. Mobile also has the
potential to evolve as a key entertainment mode considering the lack of other
entertainment options in rural areas. So, by leveraging these two aspects, MVAS
can be a success in rural areas.

Mauj Mobile has aggressive plans of penetrating into rural areas of India
with a holistic range of offerings suited for specific territories. It has a
large repertoire of devotional content, which has been very well received in
rural areas. It has already successfully leveraged key partnerships in the
southern markets for providing film contents. Mauj has also created Marathi and
Bhojpuri content for rural subscribers.

Demands of the Segment

According to Sharma of One97, "The focus of rural expansion has to be
services which enable the rural population to have access to infotainment
content, and updates on local utilities in local languages. The content has to
be delivered in a medium which is easily reachable and usable. The primary focus
is on voice applications for now. "

Going rural also means covering geographies where there are few entertainment
and information outlets other than television. This has given a fillip to MVAS.
Apart from having access to entertainment, rural consumers are also willing to
spend a little more on mobile phones, primarily because it is a device that
empowers them.

Expressing his view on the demands of this segment and focus areas for rural
expansion, Chowfla of Bharti Telesoft says, Developing affordable product lines
is the key to reducing cash barriers for entry and to expand the mobile market.
Performance ratio needs to be tailored to the distinct consumption profile of
people at the base of the pyramid."

Explaining the demands of potential and present rural subscribers, Manoj
Dawane, CEO of Mauj Mobile, says, "Rural markets are a different audience. The
content served to them needs to be customized to suit their requirements and
preferences. Localized regional content and utility-based info services have
great potentials in this market."

What Lies Ahead

According to a Gartner report, the total cellular service revenue in India
will grow at a CAGR of 18% from 2008-2012. The mobile subscriber base will
increase to over 737 mn connections by 2012. The cellular market penetration is
projected to increase from 19.8% in 2007 to 60.7% in 2012, due to the rapidly
proliferating rural market, low tariffs rates in the Indian market, increasing
focus on the rural market and lower handset prices.

Success in the rural market is dependent on the interplay of a multitude of
complex factors. On one hand, government policies will probably play the most
critical role in growth of MVAS in rural India. This will affect penetration
drivers such as the level of competition in the sector, tariff and non-tariff
barriers for ICT products, and use of Universal Service Obligations Funds for
the development of rural telephony.

Low literacy level of those living in rural areas will be another limitation.
Therefore, voice in regional languages would be a better option for
communication and will facilitate vernacular services in the rural areas.
Marketing the content in the rural market is going to be all the more
challenging. This would require right packaging and pricing of MVAS.

It is without doubt that innovative services by VAS players will make the
lives of farmers and rural inhabitants easy. But how can we overlook numerous
instances where there are mobiles but no electricity to charge them? There is a
long way to go before rural VAS becomes a way of life in the hinterland.

Arpita Prem

arpitap@cybermeda.co.in