Mobile Services In Rural Areas To Drive VAS Market

The Indian Value Added Services (VAS) segment is expected to log in a turnover of over Rs 20,000 crore by the year 2015 as noted by telecom experts during the 4th International Conference and Exhibition of VAS Asia 2008. The event was organised by Bharat Exhibition.

The industry, which is currently pegging a revenue of approximately $1.2 billion, will see major growth in the music and mobile gaming segments suggests a PricewaterhouseCoopers report. According to PricewaterhouseCoopers, for the moment the Indian VAS industry is being driven by SMS with about 44 percent of the share, followed by new applications, ringtones and RBTs, GPRS, CLI and other VAS.

OnMobile CEO and co-founder Arvind Rao said, ‘Ring Back Tones alone have a market of 40 to 50 million users and constitute almost 50 percent of the VAS market in India and this trend will continue in the near future also."

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According to various telecom experts, as a reality in the near term, the mobile phone will soon double up as a smart card, replacing plastic cards. Remittances of funds through mobile phones is expected to fulfill the gap in rural banking infrastructure, this would be yet another growth driver for the Indian VAS industry.

In the context of India rolling out 3G services shortly, the analyst report said that ‘Wireless operators see 3G customers more willing than 2G customers to use a variety of multi-media services’. At present, music and games are downloaded on GPRS or 2.5 G platform. One of the factors that foretell a huge market for VAS in India is the lowering age profile of mobile handset owners and falling costs of handsets with ever richer features.

While Rao emphasised the ‘R-factor’, the expanding of mobile services to rural areas as the future driver of the VAS market, he suggested that about 40 percent of VAS revenues in this category will come from villages and small towns.

Pankaj Sethi, Tata Teleservices president for VAS, said that the ‘bottom of the pyramid’ customers will expand their use of VAS and drive revenues of operators. Entertainment-led services and personalisation were some other areas that were pushing VAS use, according to Sethi.

Pradeep Shrivastava, chief marketing officer, Idea Cellular, emphasised that international mobile money transfer will gain momentum as it provided quick and efficient service in India with millions of remittances to homes from migrant workers and white-collared professionals. Annual remittances were now touching the $30 billion mark.

“The consumer must be allowed to try out many more services at zero or low cost. That can lead to usage expansion. Operators would have to work out new solutions to engage customers,” said Shrivastava.

Consumer-generated content would be yet another driver for VAS in the expanding mobile phone segment, many experts participating in the conference remarked. Abhay Savargaonkar, senior vice-president for 3G at Bharti Airtel envisaged total revenues from VAS to rise faster than that from voice services in the future. He recalled how Honk Kong was enabling high-definition TV to be available on mobiles and machine-to-machine translations over the mobile were becoming a rage in the US. “In India the missed call has become the biggest innovation. T-20 is tailor-made content for the mobile.” However, he felt scalability of services would be a big problem in a country of India’s size.

“The future lies in rural India, and we see that besides money transfers, the other two areas would be video and mobile advertisements,” said Vijay Shekhar Sharma, managing director, One97.

“There are very encouraging trends that will facilitate the evolution of the India VAS market. From co-marketing initiatives with operators to the focus on youth and visibility, we are very excited to be a part of this development,” said Simone Ranucci Brandimarte, CEO/COO, Buongiorno.

Discussing new business models for meeting these varied needs of the VAS industry, experts suggested India-specific plans to be innovated. According to Savargaonkar, ‘partnership with all sectors and companies to get as many applications as possible on the mobile’ would drive the market. ‘Close alliances and partnerships are seen as a more practical and flexible approach to bringing together the diverse building blocks for delivering high-value VAS’ noted the PwC report. Experts also cautioned service providers and content makers to arrive at proper models for revenue sharing to drive the market further forward.

As per the PwC report, ‘Customer focus will clearly be the differentiator and reliable and consistent delivery is seen as a critical need apart from innovative and exciting offerings’. “Add value to life through VAS,” concluded R K Agarwal, director, planning and new services, BSNL, who presided over the experts’ panel at the conference.