VAS : Valued Services

The Indian telecom market is on the threshold of a more mature stage, and the

road ahead looks even more promising. Development in all the sectors of ICT

industry has heated up the competition in the region. Operators are seeking new

sources of growth to capitalize on their share of the market. As a result,

operators are now looking at value added services to derive revenues.

The opportunity for MVAS in India is huge as the mobile customer base has

grown manifold and is continuing to grow with 9-10 mn subscribers being added

every month. The MVAS space has also attracted a lot of interest from venture

capital firms. While the world reels under recession, emerging players in the

MVAS business in India are not just growing but chalking out new plans with the

introduction of 3G services. Now the need is to translate these achievements for

enterprise also.

According to a report by PwC, MVAS in India accounts for 10% of the

operators' revenue at the present, which is expected to reach 18% by 2010.

According to a study by Standford University and consulting firm BDA, the Indian

MVAS is poised to touch $2.74 bn by 2010.

Business Trends



The mobile VAS industry is poised to grow and contribute greater revenues to

the telecom industry. The entry of various stakeholders like the operators,

content providers and handsets makers has led to increasing competition in this

sector with the launch of customized and innovative offerings. On the business

side, operators will make all possible efforts to optimize the VAS value chain

and a much higher integration of the VAS business with their respective

distribution channels. The VAS industry would also witness some consolidation

moves in the VAS vendors community.

On the technical front, from the operators side there will be greater

emphasis on consolidating service delivery to end consumer to facilitate ease of

use, higher recall and increased repeat usage.

Continued low ARPU, subscribers growth, customer acquisition, and deriving

excellent revenues from VAS remain the key focus areas of all the operators. In

the coming years traditional VAS (SMS) will contribute less than 50% to the

total VAS revenue in 2010 from 55% currently. Operators are now focusing towards

the high end VAS, to capture the steady flow of revenue. New VAS services will

get integrated into many new applications such as messaging, entertainment,

social networking, mobile advertising, and desktop applications.

Localization of content and social networking on the go can be touted as the

two recent exciting trends in the VAS space. The next wave in this segment is

coming from low-end users. This segment has a very low SMS usage but is more

comfortable with voice and local language. Adding regional flavor to the VAS

offerings helps in reaching out to the desired audience. Another important

aspect of localization is to generate relevant content not only catering to

regional differences but also in different languages.

Experts panel

Pankaj Sethi, president, corporate strategy and services, Tata Teleservices Anil Sabnis, senior VP, business strategy, Bay Talkitec Mao Mohapatra, CEO, Bharti Telesoft Jagdish Mitra, CEO, Canvas M Salil Bhargava , CEO, Jump Games Deval Parikh, chief officer, handsets, VAS and procurement, Virgin Mobile India Raghuvesh Sarup, director, portfolio and planning, Nokia India Manoj Dawane, CEO, Mauj Mobile Subhendu Mohanty, country head, home and networks mobility business, Motorola India Ajay Jain, director, telecom and mobility practice, Perot System Corporation Nitish Mittersain, CEO, Nazara Technologies Inderpal Singh Mumick, CEO, Kirusa Milind D Bhise, assistant VP, Aricent Gurpreet Dogra, country head, Telesoft Technologies

Today's generation is cell enabled, globally connected and socially

networked. Social networking is a rage among them these days and staying

connected with each other has become an integral part of their lives. Therefore,

social networking on mobile is one of the hot trends.

Handset integration with VAS is also an emerging trend. Besides, the growth

of infotainment services, availability of rich local content, awareness about

m-commerce, location based services and mobile advertising are some of the new

trends to look forward to in the VAS industry.

Mobile UGC is expected to take off in a big way. With the broadband emerging

strongly, mobile UGC is the next big thing. As the mobile platform has the

desired ubiquity, one can increasingly see digital communities migrating towards

the mobile phone. All stakeholders including operators, consumers and MVAS

players will play a key role in mobile UGC that will augur well for the entire

ecosystem.

Enterprise Needs



Enterprises are usually looking at VAS that can be used as a vehicle or tool for
reaching their customers, and hearing from their customers (A2P and P2A

applications). Enterprises mainly ask for a seamless infrastructure that can be

used to send and receive messages, and to advertise. At the same time, the

infrastructure should make it easy to run services in a scalable manner with

short deployment cycles.

The much anticipated 3G will undoubtedly provide the impetus required to

boost this medium.

With the coming up of 3G, there will be demand for key applications like

mobile broadcast/TV, on-demand video and video/audio streaming. Today, many

enterprises are looking for business applications and exploring m-commerce

applications in an effort to offer greater value to the customer.

Another key demand of the enterprises is that the content that is coming from

different service providers needs to be integrated seamlessly with the existing

infrastructure and operational applications. They need to continuously build

different application adaptors to integrate, and the content and billing

application to be innovative. Also, the demand for vehicle tracking, remote

monitoring and security form the basis for vertical specific needs.

With more and more business being conducted over the Internet, it has become

imperative for the enterprises to have wireless Internet access. However, a

majority of Indians do not have access to computers, but do have access to

mobile phones and this base is growing rapidly.

Mobile will be an important means of providing remote financial and

commercial services than the Internet. Also, to carry out transactions over

Internet, usually one needs some form of bank account and credit cards, which a

large number of Indians don't possess. And this is a major opportunity for

enterprises like banks and mobile operators to plug this gap.

Enterprise need to tap this phenomenon. Mobile is the individuals' or end

consumers' constant companion and they use the mobile to connect, understand

consumers' likes, dislikes, create a bond via surveys, competitions and,

announcements.

In the current scenario, it is imperative for the stakeholders to work

together to address these issues and enable the market to grow. Some top of the

line challenges facing the MVAS market can be classified into two broad

categories- demand perspective and supply perspective.

• Lack of awareness: The consumers are not fully aware of the services
  
  offered in the MVAS market. The stakeholders need to ensure that the consumers
  
  are educated about the value of the services in the market.
• High cost of content: Currently, the value added services are priced at
  
  higher side. This is hampering growth of MVAS market. The stakeholders need to
  
  package the services in a manner that ensures correct mix of money and value
  
  to the consumers.

The future of MVAS space is looking at applications and services developed

around user generated content, location-based services, high-end segmentation,

enterprise applications transforming the mobile phone into a more informational

and transactional device.

Points to Ponder



Today more and more enterprises are looking for business applications on the

move. Enterprises are increasingly turning to communication technology to

proactively address their requirements for convenient and effective service

while improving bottom line performance.

At the same time, RoI is again a major concern. Due to several factors such

as growing VAS market, emergence of new technologies, increasing number of

content providers, and the link between mobile phone network and the Internet,

there are raising concerns about security. Security has become a single weak

link that can lead to content loss, unsolicited content delivery and

unauthorized access to confidential data.

Some enterprises want customized solutions and this may add to the cost.

Enterprises are looking to enable mobile access of SFA, CRM, HR, and some IT

applications. Security, ease of use, integration with existing infrastructure

and TCO are their key concerns. Additionally, forward thinking enterprises are

looking at ways to leverage social networking applications for business.

The combination of Internet access and mobility is a powerful driver for a

wealth of enterprise applications. Till some time back, email and browsing were

the only applications popular among enterprises. But increasing competition and

dynamic business environment have changed the scenario. There are considerable

opportunities for mobile operators to find a way through the complexity of

enterprise mobility, and offer innovative solution ranging from voice to email

and mobilization.

Roadblocks



Like any other promising industry, the mobile VAS space has its share of

challenges that will resolve with better infrastructure, advanced technologies,

more conducive regulations and well designed structure. In spite of increased

demand and lots of new innovations, the Indian VAS industry is facing lots of

bottlenecks. The tussle over entry of 3G technology being one of them.

VAS players constantly need to reinvent themselves and connect with the

existing higher value subscribers. High infrastructure cost, diversity of the

spoken language and culture across the country, accents based on the region, and

different dialects are some of the other roadblocks.

Another major challenge in providing quality content to the end users has

been the availability of bandwidth. Most of the applications are not able to

provide optimum user experience due to bandwidth issues. This is making

streaming and downloading practically impossible.

Another biggest concern area is the skewed revenue sharing models where the

content providers have to make peace with low revenue shares from the operators.

Besides, the limited awareness among the users about the VAS services, and the

high pricing of the offerings are the key impediments.

The Way Ahead



Indian Telecom industry has posed unique challenges for mobile operators.

MVAS has emerged as a great opportunity to rescue the industry from the

declining ARPU. MVAS space is set to witness a high growth trajectory creating

tremendous opportunities. However, stakeholders across the value chain will have

to work collaboratively to overcome barriers and create a business ecosystem

that will generate fair rewards for all the players.

In the year 2009, the industry is expecting a far more meaningful experience

of retailing, socializing, banking, blogging, movie watching and more via 3G.

The next big thing which can soon find wider application will be m-commerce and

mobile advertising. These will add new vistas of growth in the mobile VAS

segment.

Arpita Prem



arpitap@cybermedia.co.in