India telecom success story has just taken the first few steps. The subscriber base for fixed and mobile telephony services continues to maintain its growth during the month of July 2006 in line with the current trend. According to TRAI, during July 2006, about 5.28 million net mobile subscribers were added as compared to 4.78 million net mobile subscribers additions during June 2006. This has resulted in a total subscriber base of mobile users in India to over 110 million.

The increased demand for handsets and squeezing margins have resulted in mobile operators offering services over and above vanilla voice calls. Thus, the content or value-added services (VAS) market comprising music, wallpapers, ringtones, messaging, and a host of innovative applications and services is gaining importance and contributing in increased ARPU for mobile operators.

Mobile Value Added Services Components
Mobile data services comprise basic P2P SMS (peer to peer Short Messaging Service), GRPS/3G-based internet access services, P2P MMS and A2P (application to phone) or P2A (phone to application) text or rich content services. The A2P and P2A mobile data services are loosely termed as value added-services for mobile operators.

The voice and data revenues have grown with 40% CAGR during the last five years. According to TRAI, the revenues from value-added Services such as SMS, ringtones, and caller tunes, messaging etc. were about 10% of revenues in 2005.

The mobile operators in India have realized that like other mobile operators across the globe, their voice revenues are getting reduced and that they will have to focus on non-voice revenues.

The value-added services are focusing on the handset increasingly as an entertainer, an informer, a secretary, a guide, a companion, as an integral part of the user's life.

Most operators have experimented with value-added services by launching aggressive components in specific services. For example, the ringtone features have targeted the youth and the urbane population. It became an instant hit amongst youngsters with downloads reaching a peak of 500,000 per day across the country in 2005.

This was accompanied by cricket updates, motion pictures and film star information, news, astrology updates, etc. Despite having to pay a premium on this content, the Indian subscribers are paying for perceived value. Non-voice services like SMS, ringtones, logos and other downloads accounts for over for 10-12%.

Speaking at the Telecom Summit in New Delhi, Nokia's Chairman Jorma Ollila predicted in 2004 that the data would account for around 27% of the total mobile service market in 2007 compared to 10% in 2002. He said: “Consumer multimedia and enterprise solutions are expected to be the key drivers for this growth. The content development of devices and networks and their interplay is converting mobile devices into media devices. Mobile will bridge the two separate worlds of telecom and broadcast. This essentially means that the newspaper, TV, and radio as services or content will get integrated with the mobile device. Data will thus drive the mobile”.

With the number of mobile users growing, there is a huge opportunity for content providers. In India, wireless operators, music and film companies, comics content developers, game developers, and musicians are all entering the mobile content market for ringtones, gaming, mobile imaging, and streaming audio and video. Some players in the content segment are Mauj, Indiagames, Hungama, and Indiatimes. While, on the other hand, there are Mobile Virtual Network Operators such as ValueFirst that provide end-to-end mobile messaging services to the enterprises for critical and reliable messaging.

Presently, the Indian mobile market is riding high on rich media content that consists of SMS, music downloads, wallpapers and gaming, with SMS being the biggest share in VAS revenue.

Music and gaming are two big revenue streams. According to a Nasscom report, the mobile game-development industry is a $100 million business in India, and is growing at 100% year-on-year. By 2010, this industry is expected to be worth $500 million. Indian companies could book an additional $130 million meeting local demand for mobile games by then, up from the current $20 million. Currently, these games are typically priced between Rs 50 to 150. The key elements of VAS revenues are SMS, Premium SMS, Voice (in minutes), Ringback Tones, GPRS, and MMS.
Further, a big revenue opportunity for VAS revenues waiting to take off is related to mobile marketing. Contrary to the common perception, permission-based mobile marketing is interactive, fun and cost-effective for the consumers and businesses.

Mobile Marketing Opportunity
Mobile marketing is the use of the mobile medium as a communications and entertainment channel between a brand and an end-user. It is a new addition to the media mix, with great opportunities for direct interaction with customers and cost-effective data collection.

With almost 110 million mobile phone subscribers in India, mobile channel has now become an integral part of marketing and communication strategy. Mobile Marketing offers significant opportunities for direct interaction with customers. It has several applications for leads generation, promotions, brand building, and gaining consumer insights. It is the only personal channel enabling spontaneous, direct, interactive and/or targeted communications, any time, any place.

Mobile marketing is the only marketing medium that creates a personal channel enabling spontaneous, direct, interactive and/or targeted communications, any time, any place. It can be effectively used for product launch, sales promotion, brand awareness, branded advergaming etc.

The mobile marketing services that Mobile Virtual Network Operators such as ValueFirst provide can be classified as:

Targeted Marketing – Custom text and picture messages depending on the user profile are pushed to the target audience. Costs involved are the costs of the lists (individual customers may have own lists) plus the costs for sending the message. Messages can be created and pushed on the basis of pre-configured business rules.

Short-code services - A 4-digit number accessible by subscribers of any mobile operator is used to run campaigns, receive response from consumers, and generate an opt-in list. Used when the campaign is targeted at prospective customers and/or the recall value is important.

Long-code services – A 10-digit virtual/real mobile number that has to be rented out from an operator – work across all operators but cheaper than the Short Code. Has lower recall but potential for high usage in a closed user environment, say, to interact with members of a loyalty card scheme.

Selecting a mobile marketing partner that understands the medium as well your requirements is the key to success. It should have:

• A tie-up with multiple mobile operators in Mobile Terminated and Mobile Originated Service
• Its own software applications (not a third-party application) for Windows environment
• A client-server architecture with ASP model for enhanced scalability and reduced cost
• A scalable architecture with multi-threading approach
• Ability to provide a virtual mobile number-based SMS mobile-originated service.
• Existing agreements with more than one short code vendors to provide short codes services in India
• Business Rules Engine with the ability to create query-based business rules on-the-fly
• Auto-responder module to provide the ability to send template-based automated responses
• Delivery arrangements with overseas mobile operators as a failover mechanism
• Its own SMS gateway

Ability to send SMS in secure mode (128 bit encrypted data over HTTPs) and deploy the application and conduct user and administrator training in maximum of one week

Vijay Shukla
Country head, India and co-founder of ValueFirst

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