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The year 2009 can be termed as the year of innovation in MVAS globally, VAS players from across the world developed ground-breaking solutions. Also, it saw the growing penetration of mobile commerce which would go a long way in enabling financial inclusion. There have been 3G VAS product innovations offered by VAS players, despite the fact that 3G is yet to be launched in India.

Amid fierce competition with per-second tariff pulse, which is affecting their topline, mobile operators are now focusing on value added services, such as caller tunes, ringtones, and others to make up for the depleting revenues.

Mobile VAS solutions have evolved from a mere communications service to a plethora of information and varied customized solutions to serve enterprise requirements. In the changing market scenario, mobile solutions will fuel the market for a large chunk of revenues for service providers in the near future.

Today, mobile VAS in India is focused around a gamut of services around the technology platforms of commerce and utility. The future implementation will encompass several new and exciting areas in utility solutions such as mobile Internet, location based services, mobile advertisement, and regional content based services.

Tech Making a Buzz
The technologies that have dominated MVAS in 2009 are mainly user interfaces (UIs) and GPRS, which is 2.5 technology. UIs is the new favorite among Indian users which is reflected in the rapid adoption of smartphones. Another innovative technology in demand is electronic top-up solution to enable distribution of their services which are electronic in nature.

The market continued to be dominated by entertainment services like CRBT and SMS subscription services being the large revenue generator for operators. The key trend that was observed across operators was the huge upsurge in mobile data. Even on 2.5G networks, mobile Internet was the mega trend of 2009. Operators saw a huge incremental growth of data traffic month-on-month.

Mobile advertising is expected to grow consistently to reach a valuation of $12.8 bn by 2011. Taking on this opportunity, technologies like video SMS could be of much help to the mobile advertising industry.

With 3G services ironing its way in, the VAS industry is expected to increase its share manifold, with some industry estimates pegging the figure at Rs 200 bn by 2015. The prime movers in the VAS industry will be Bollywood and cricket. The latest trends in the mobile gaming space are 3D mobile games and multi-player games on large screen mobiles with improved GPRS networks. Among users with high-end mobile phones, there will be experimentation with applications like mobile broadcast/TV, on-demand video, video/audio streaming, etc, will gain traction.

As the penetration of MVAS grows in rural India, the necessity and importance of interactive voice response system will increase. Framers in the country with the latest market trends, weather forecasts, and crop information via SMS based service in the local language.

Also with regulations now becoming more favorable for operators to have customers' wallets being opened for limited functionality, and also the retailer's wallet being used for distributing services outside the telecom domain, the industry will see these kind of services picking up.

Mobile TV and mobile gaming are other technologies that would lead the Indian market. The year 2010 will also witness large scale adoption of mobile community services and the emergence of location based services across the operators landscape in India.

After testing the success of vernacular unstructured supplementary services data (USSD) portals, telenity is ready to introduce a large portfolio of location based services. On the other hand, after launching electronic top-ups service with Airtel, BSNL, and MTS, Utiba is in discussion with some more players to launch mobile commerce solution.

Comviva is coming up with its virtual SIM technology for rural and semi-urban areas. This solution enables access to mobile services for a large group of people, currently unable to afford mobile handsets. By using virtual SIM-without owning a handset or a SIM-the under-served segment can become a part of the global mobile community.

Kirusa is very hopeful about its two new technologies-LoudMouth, which is a broadcasting application used by enterprises customers to advertise their products; and Call-N-Tweet service for Twitter users to update their status by voice tweets.

After touching half a billion subscriber base for its offering, Behtar Zindagi, Handygo is focusing on enhancing this service with a 360° solution based on rural requirements. Also, the company is planning to launch location based services soon.

Bay Talkitec is introducing next generation SDP platform which is both 2.5G and 3G complaint and has a number of applications relevant for rural India such as mobile education, weather forecast for farmers, mobile yellow pages, etc.

Comverse is also ready to launch a number of services like ONE Billing and Active Customer Management, HUB value added services, and Netcentrix IP communications. Few other technologies in the pipeline are visual voice mails and RBT.

A Tough Task
The biggest issue haunting the MVAS sector is the slow rollout of 3G services. The other major issue affecting the growth of MVAS in India is the lack of transparency in the revenue sharing agreement. The MVAS ecosystem has accommodated various players: content developers, content aggregators, technology enablers, short code providers, handset manufacturers, and operators. While operators command the highest share, rest of the payers get a minor portion. VAS players have always been getting the short-end of the stick in revenue sharing in which they have always been vying for their due share.

Also there is a lack of transparency when it comes to making payments to VAS providers. VAS introduction in rural India has been impending which is considered to revolutionize the VAS industry. The challenge also lies with providing them vernacular support of consumer choice across India. The mobility support to consumers, which offers them the services whenever and wherever they need them has to be strengthened with upgradation and offering new network services. Also, the new pricing model to suit the needs of end consumers has to be considered well in advance as they tend to prefer services which are available for free.

Technology understanding and acceptance is considerably low in Indian rural areas. Multiple languages will always be a challenge to provide the services and support. Mobile users also need to be educated and encouraged to start taking buying/selling decisions via mobile, and to look at mobile as an alternative to a debit/credit card.

M-commerce has not picked up very well in India so far. Different parties involved in the entire m-commerce value chain like wireless infrastructure providers, wireless service providers, certifying authorities, applications/software providers, equipment manufacturers, credit card companies, and banks as well as media houses and global brands have to coordinate and come together to establish the industry standards for m-commerce transactions.

Other factors hampering the growth are limited awareness of services, high cost of content, high exit barriers for MVAS consumers, limited availability of local content, low GPRS connectivity, authentication standards, copyright protection, low feature handsets, etc. Besides, commoditization of the existing VAS services due to intense competition is a major roadblock.

In Vogue
Location sensing is presently accessed through GPRS, but Wi-Fi will soon replace it. The mobile web is emerging as a low-cost way to deliver simple mobile applications to a range of devices. Another important trend in the VAS industry has been to offer browser based and voice based access to content and VAS. With browser based access using USSD technology, end user dials a simple string and then navigates his way to content and services.

Social networking on mobile is another upcoming trend in the VAS segment. Besides, Internet developers are also seeing mobile as a predominant avenue to reach customers.

The business trend has clearly been towards developing new business models through adopting a managed service approach to service delivery and management. The other trend is that operators have begun experimenting with mobile marketing and mobile advertising.

Lack of differentiation among existing telecom players has led to lowering of call tariffs in India. Low profit margins from existing businesses will push more companies to look out for alternative revenue sources in the form of VAS.

The continuous high penetration of smartphones is opening a new opportunity for VAS services based on mobile applications.

Pricing Issues
Price has been an issue all along. With operators' ARPU decreasing, it's getting increasingly difficult to get the fair share of the revenue on any VAS service. As of now, there are no solutions available unless VAS itself becomes a significant portion of the operators' revenue. The only way to get better pricing is to offer innovative solutions so that they enable better visibility and the value gets appreciated.

The current price war helps no one, not even consumers. MVAS is also suffering in this scenario as most VAS prices remain the same; only the call and SMS prices are crashing. This makes the other VAS appear more expensive than it really is, affecting its consumption.

Since majority of the consumer base is driven by the prepaid market, they will only be able to pay and value the services which are personalized. The services coming with a cost lose their value; therefore differential pricing for differentiated customer base is highly important. The cost-effective model and strategies which bring in more profitability and can be co-related with the purchasing power of customers are the prime focus. Innovative services and a greater focus on utility applications are what subscribers are willing to pay for.

The Road Ahead
Despite the downturn, VAS industry has seen its growth with new emerging opportunities of data services with high rates of adoption where entertainment VAS has been giving impetus to the industry with growing revenues.

Leading telecom players have adopted growth techniques by focusing on entertainment services like RBTs, voice and music portals, among others. The other services that they plan to adopt or to focus upon are coming from the value chain process which includes managed services like system integration, device testing and others which are primarily from the network side of operators.

Due to saturation in urban markets, the entire telecom industry is moving towards rural. Similarly, VAS has always been a bundle of innovation and attraction, and it will bring rural in its kitty too.

Arpita Prem
arpitap@cybermedia.co.in

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