With the falling of ARPU (average revenue per user) for the mobile operators, the operators are going to face tough times ahead unless they have some innovation in their approach. For them, three things are there to do aggressive – data service, video service and VAS service. Data service on mobile phones is bit costly as of now and every mobile user may not like to subscribe to this but with 3G pictures becomes clear, it will surely change the scenario of data and video. The last but not the least is VAS, which is kicking at this moment and more there is innovation in services, it makes more money for the operators.

Today, VAS market is quite healthy in terms of its contribution to the operators. As per an independent study, MVAS industry is going to touch $3 billion (Rs 16520) market in 2010 from $1 billion (Rs 5780 crore) as of June 2008 growing by 12 per cent.

Rajiv Kumar, Founder & CEO, RockeTalk, says, “MVAS currently constitutes nine per cent of the operator’s revenues and is expected to increase by 12 per cent in 2010. Out of which 44 per cent is dominated by SMS service but going forward it is going to be ring tones and caller ring back tones. Content will be dominated by Bollywood and cricket. Monthly services for news and astrology are also popular and now data consuming applications social networking applications have also stated to become popular.”

RockeTalk is a Multimedia interactive social media platform where users interact with each other using voice, pictures, video’s, they share UGC media with other users and their friends, they can browse and download content, join various communities related to interest groups. At present, the company is working with service providers like Idea and Airtel’s AppCentral but moving ahead the company will definitely work with other providers.

Giving his perspective Prem Rathi, Director - Business Development, Impetus Technologies, says, “VAS market in the country is expected to log in a turnover of over US $4 billion by Year 2015.  ABC services (A- Astrology; B- Bolloywood; C- Cricket) are revenue puller services of M-VAS. Today VAS is mostly entertainment related. Digital music (including CRBT and ringtones) alone constitutes 35% of VAS revenue. With an unprecedented increase in rural and semi-urban mobile connectivity, it is expected that the expansion of mobile services to rural areas would be the future driver of the VAS market, with as much as 40 % of VAS revenues coming from villages and small towns.

Today, Impetus offers a lot of services including Utility application (Mandi Bhav, Smart Call Manager, Green Charging, Auto Caller) , Entertainment application(Crack It, Paint Studio, Geo Scrapper), Music ( Jaltarang, Flute, Drums, Piano) and Edutainment ( Learn N Fun ABC Read/Write/Quiz), etc.

The company is working with most of the service providers including TATA, Reliance, BSNL, Loop Mobile, Airtel, Idea. As per Rathi, mobile value-added services hold a tremendous revenue-generating potential in Mobile Vas contributes 9-12% of the operator’s revenue and is expected to reach 18-22% by 2010.

In addition to this, Impetus is also working with international customers providing them tailor-made Mobile solutions.
Roamware offers a niche value added services like the option of multiple numbers on the same device across locations and in the same network. The company offers a solution where customers can have multiple phone numbers on the same device. It is different from the dual SIM card handsets. This application can be used on simple devices and multiple numbers can be used at the same time with multiple voice mails all converging on a single device and active simultaneously. Another service in a similar space is providing a local number at multiple locations. Punnoose adds, “If I am in Mumbai and need to conduct business in Baroda, Delhi and Kolkata, my customers would be much more comfortable dialing a local number instead of calling a Mumbai number. We offer a solution where a customer can be reached on a single device across multiple numbers across regions. So as a pan Indian mobile network one could potentially leverage a nationwide network and a customer residing in Mumbai could subscribe to SIM cards from 3-4 other circles. With number portability coming in, the risk of churn is high. While services like these will build on ARPU (average revenue per user) & AMPU (average margin per user), it would also build barrier to churn as customers have multiple subscriptions via a single connection and would be less likely to churn. This is even more relevant for international frequent travelers as the same service can be offered across countries.” “People in Hong Kong do extensive business in Bangkok, Taipei, Taiwan and China. Imagine having a local number in each of these countries could be a win-win situation for the customers and the telecom operators.  Roamware today already offers this service in Asia, and we are now rolling this out across other regions,” he adds.

However, Roamware believes to stay in the core service of roaming. Abraham Punnoose, Vice President - Marketing & Business Development, Roamware, says, “Roaming today between national and international roaming contributes an estimated 14-16% of revenues for GSM operators, which is around 80-90 million dollars of the GSM service providers with the international roaming provides the highest margin revenue vis a vis national roaming and together this business is estimated annually in excess of a billion dollars.”

Roamware today is part of the core roaming infrastructure of for all GSM mobile operators in India. Roamware advantage for Indian mobile operators is the unmatched ecosystem across 150 countries which enable them to provide these services across the roaming value chain with many of them being available for national roamers as well.
As per Hemen Goswami, CTO Infogain Corporation, “MVAS trends are different in emerging markets as compare to mature markets. In India, CRBT/RT, SMS, followed by Gaming applications are some of the widely used VAS applications. Whereas location based services; mobile commerce applications are dominant more in mature markets. Globally, the mobile VAS application focus is going to be driven by factors, like special apps for youth and masses. Advertisement based on personalized profiles/interests will emerge strongly.”

With the volume of scaling up there is surely a large scope for the entire ecosystem to make good revenue. Good news that the DOT has fixed the date of 5G spectrum auction as 9th April 2010. With 3G coming in the ambit of offering will surely be high and different, thus lays the opportunity of expansion in the market though DOT is also mulling over 4G services soon.

Goswami of Infogain is very excited about the 3G coming in as he says, “Entertainment, media, security, surveillance, etc. are going to be influenced by 3G technology. But he is equally apprehensive of whether 3G is going to completely change or dominate the VAS landscape.

Rathi of Impetus agrees that the introduction of 3G/4G in the near future is expected to facilitate a wider portfolio of VAS to mobile users and would bring additional revenues to SPs. 3G will surely bring plethora of services like mobile TV/video, full-motion videos, Mobile social networking and location based services , multi-player online games, and m-commerce. These services typically require high bandwidth and a superior level of support technology than the currently available 2.5G.

Punnoose of Roamware believes with 3G coming in consumers will have access to better quality of data connectivity and we believe the single largest consumption point would be data itself for email and other day to day requirements. India’ data availability deficit is among the highest in the world and 3G has the potential to change this. He adds, “Imagine half a billion consumers having access to high speed data and with handsets morphing into computing devices this presents limitless opportunity for the people at large from a core developmental perspective and would help in myriad aspects of social engineering that we desperately need.  The key would be a combination of affordable data services coupled with sub 50 USD data enabled devices.”

Now the question comes with 3G coming in what will happen to the VAS service, it will be costly or not - there are many questions to be answered. However, the existing situation of less amount of content remains the same. The industry does not have adequate content for the VAS and it will remain the same even 3G or 4G comes in. There has to be growth in the quality localized content services like Impetus does today for rural market, school results, local entertainment fixtures, availability of eateries and it should happened in multiple languages.
As per Impetus the company has plans of penetrating into rural areas of India with a holistic range of offerings suited for specific needs of BOP. Impetus also plans to provide weather information & Expert advice on Farming to the Rural subscribers via mobile application.

Finally
It is good to see more and more service providers moving to the Indian market and making telephony affordable for the customers. But with this the competition going high, the service providers and the VAS vendors should create differentiation by bringing in relevant content for the customers so that the value is compelling and the market for volume can easily turn to value.