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Event
VAS Asia 2008
The event saw a shift of focus from voice- to data-based
VAS services. Industry players displayed their capabilities for the soon-to-come
3G network and discussed its prospects, writes Varun Aggarwal
Abhay Savargaonkar, Sr. Vice President - 3G & Network Quality, Bharti
Airtel Ltd. talking about successful growth strategies for VAS in the
Indian telecom industry |
Arvind Rao, CEO & Co-Founder, OnMobile Global Ltd. giving the keynote
speech |
Call rates have dropped to an all time low and Average Revenue
Per User (ARPU) is constantly declining. The white knight in this scenario is
Value Added Services (VAS) that’s expected to grow multifold with the advent
of 3G. During the fourth International Conference & Exhibition of VAS Asia
2008, experts predicted that the Indian VAS segment should log a turnover of
over Rs 20,000 crore by 2015.
Prasoon Sharma, Sr. Business Analyst, ZTE India R&D center, explained, “Overall
ARPU that stood at $111 in 2006 is now at just $92 and is expected to go down
to $84 by 2011. Breaking this up further, the voice ARPU (currently at $78 and
expected to be around $67 by 2011) would fall the steepest and, it’s only
data ARPU that is expected to stabilize.”
A PricewaterhouseCoopers report suggests that the industry,
pegged at $1.2 billion, will see major growth in the music and mobile gaming
segments. According to PwC, SMS is driving the Indian VAS industry for the moment
with that technology accounting for about 44% of the overall VAS pie, followed
by newer applications such as ringtones and Ring Back Tones (RBT), GPRS, Caller
Line Identification (CLI) and other VAS.
Sharma said that about 24-32% of revenues in India is eaten away by various
taxes—perhaps the highest in the world. It is much lower in other Asian
countries.
After SMS, RBT (caller tunes) dominates the Indian VAS market. OnMobile CEO
and Co-Founder Arvind Rao, said, “Ring Back Tones alone have a market of
40-50 million users and constitute almost 50% of the Indian VAS market and this
trend will continue in the near future.”
In the near term, the mobile phone should double up as a smart card, replacing
plastic (credit/debit cards). Remittances of funds through mobile phones
will fulfill the gap in the rural banking infrastructure.
Talking about 3G services, the PwC report said, “Wireless operators see
3G customers being more willing than 2G customers to use a variety of multimedia
services.” Meanwhile, games and music are popular downloads on the
GPRS (2.5G) 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.
Rao emphasized the ‘R-factor’—the expansion of mobile services
to rural areas as a future driver of the VAS market, suggesting that about 40%
of VAS revenues in this category will come from villages and small towns.
Tata Teleservices’ President for VAS, Pankaj Sethi found that the customers
at the ‘bottom of the pyramid’ were expanding their use of VAS and
driving revenues of operators in the process. Pegged at Rs 850 crore,
the regional content VAS market should double in two years.
Entertainment led services and personalization were some
other areas where VAS was doing well, according to Sethi. Mobile commerce and
mobile social networking were other growth areas pinpointed at the event. Consumer
generated content could also help expand the use of mobile phones.
| Abhay Savargaonkar, Senior Vice-President for 3G
at Bharti Airtel envisaged total revenues from VAS rising faster than from
voice services in the future. Hong Kong is enabling High definition TV on
mobiles and machine-to-machine transactions over the mobile are 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.”
Vijay Shekhar Sharma, Managing Director, One97,
said, “It is required for the industry to come together and have
an informed view about the existing state of VAS in India. The future
lies in the rural India, and we see that besides money transfers, the
other two areas are going to be video and mobile advertisements.”
Simone Ranucci Brandimarte, CEO/COO, Buongiorno,
said, “From co-marketing initiatives with operators to the focus
on youth and visibility, we are excited to be a part of this market.”
Pradip Shrivastava, Chief Marketing Officer, Idea
Cellular, emphasized that international mobile money transfer was a ‘huge
challenge’ as it provided quick and efficient service in India with
millions of remittances to homes from migrant workers and white-collar
labor. Annual remittances have touched the $30 billion mark.
“The consumer must be allowed to try out many
more services at zero or low cost. Operators have to work out new
solutions to engage customers.”
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Discussing new business models for meeting these varied needs of what has been
described as a ‘booming industry in India’, experts suggested that
companies need to innovate and come out with India-specific plans. According
to Savargoankar, “partnership with all sectors of companies to get as many
applications as possible on the mobile” will 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,”
said the report by PwC. The experts also cautioned that service providers and
content creators must arrive at proper models for revenue sharing to drive the
market forward.
“The customer focus will clearly have to be the differentiator and quality,
reliable and consistent delivery is seen as a critical need apart from innovative
and exciting offerings,” said the PwC report. “Add value to life through
VAS,” suggested R. K. Agarwal, Director, planning and new services, BSNL,
who presided the experts panel at the conference.
3G spectrum availability or the lack of progress on this issue sparked excitement
and apprehension in equal measure. The gathering felt that India could be potentially
the largest VAS market in the world if all concerned parties do things right.
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