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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

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