VAS: Trends Changing Dynamics of the Game by :
Tarun Handa
VAS, SDP & Mobility Solutions
Tata Consultancy Services

1.    Entertainment to Infotainment & Beyond

Today Entertainment category of VAS contributes the highest share in any Indian operators VAS portfolio. Bollywood today is the world’s largest entertainment industry, producing more than a 1000 movies a year with an audience of more than

Source: Merill Lynch estimates, IDC, Yankee Group, CBIC World Markets, and inCode analysis

2 billion viewers across 127 countries and the content demand is not only high in India but also overseas. Interestingly today’s mobile devices have shifted the entertainment from a content or network play to a device based play. Mobile devices with integrated music and video player, FM and high memory features have flooded the market accompanied with low cost associated with it. Entertainment content from the web world is being fed into the device memory and is being used. Even games for this case are downloaded from the web and dumped into devices.
In such an unfavorable scenario, the Operators are making a lot of investments in infotainment content and services. The demand for infotainment content and services like news, astrology, location based services, maps etc; have had a significant growth in the recent past and is expected to grow even more in future.

2.    Focusing on Rural VAS

In emerging markets especially in countries like India, majority of the population is rural i.e. the Bottom of the Pyramid (BoP). Rural teledensity in India was at 16.54% as of May 2009 compared to urban teledensity of more than 88.6% around the same period. This figure is expected to reach about 36.25% by 2013.
Around 30% of Airtel’s wireless subscriber base resides in the rural parts of the country, whereas for Vodafone, BSNL, Reliance Communications and Idea Cellular, the rural user base is around 31%, 34%, 19% and 30% of their respective wireless pie. With such mass revenue potential hanging around, operators are shifting their focus on VAS for BoP. Initiatives by Airtel, Reliance and Idea Cellular to connect with their rural masses are already visible with their tie ups with livelihood content providers like IFFCO and Reuters Market Light for services related to agriculture, weather and livelihood. The below figure clearly maps out the characteristics of the different mobile population and their mobile content needs.

However, finding localized content for the BoP mobile population remains a food for thought for the operator. Though many content providers are emerging in this value chain that can help with rural and livelihood related content, monetizing the content will require quite a bit of effort form the operator in terms of creating awareness and delivering true value addition.

3.    Subscription to On Demand VAS (Sachet)

To give mobile users flexibility, especially the ones at BoP with Value Added Services, many operators have begun offering services like ringtones, alerts and games on a daily pricing model instead of monthly.  Reliance Communications rolled out this model in June 2009 however impact on its VAS revenues has not been known. In 2006 RCOM tested out  the ’sachet model’ in association with Jump Games, now a Reliance Entertainment company – it effectively reduced the price points as other operators were either offering subscriptions or bundling VAS. Many of us would believe that with lower price points the VAS ARPU would also be low but this type of packaging will help VAS become a larger part of the subscriber pie thus increasing the penetration. Moreover this would give an on demand user experience that makes the consumer feel more connected to its operator.

The above figure depicts the price sensitiveness of Mobile Content / VAS in a developed market like US where majority of the mobile population own a high end device. This gives us a picture that if developed countries like US with loaded gadgets and infrastructure are so price sensitive then what would be the scenario in emerging markets where majority of the population is at the BoP.

4.    SMS based to Voice based VAS
Voice based VAS services constitute around 40% of the total VAS market today and most of them are via IVR which is expensive to the operator as well as to the end user. Voice based VAS services are expected to grow roughly at a CAGR of around 80% in next 3 to 4 years. In geography like India where there are more than 1600 regional dialects and 22 constitutionally approved languages, it becomes difficult for operators to deliver text based services in vernacular.

Moreover Voice based services do not have any learning curve for the end user as compared to an SMS or a GPRS based service where the end user has to learn the process of using or accessing the services. And with majority of the population not tech savvy, this would act as a barrier to penetration and usage of mobile services as voice has the highest user experience level. Adjacent figure clearly depicts that only 8% users are GPRS users and 49% are SMS of which maximum is P2P.

The figure on the left is an outcome of a survey conducted by Ericsson on the control factors affecting use of m-content services in Uganda and India. The major barriers identified for access to mobile services in India were high cost of the service followed by awareness on how to use the services and its unavailability in local languages. Today an end user pays Rs 6/min for an IVR based service like listening to songs, setting CRBT, etc. which is way too expensive and is a major barrier for mass usage of VAS.

Thus in order to increase usage of services and to reach wider audiences, operators need to focus on Voice delivery, but they also  need to work around innovatively  on the high IVR costs associated with current Voice based services.

5.    Increasing usage of Mobile Internet
With mobile phones becoming the fastest penetrating digital device and perhaps the most popular one, it has also become the easiest way to access any information on the fly. With internet boom in India a decade ago, we were right in believing that the world had shrunk and information on anything in any part of the world is just a click away. Yet the broadband rates, PC penetration, power supply and the last mile connectivity are key issues to be addressed for mass adoption of broadband.

Mobile adoption on the other hand has been phenomenal and with falling handset prices and enhanced features, it has enabled internet access to the masses. Though speeds are a challenge which we are sure 3G and forthcoming technologies will address to, but mobile has made the shrunk world more personalized because though PC stands for personal computer, it’s never personal. An average town family that has one PC has more than one mobile. In rural areas, where even mobile is a shared device, this helps in accessing information as the last mile connectivity and cost of devices are not a challenge in contrast to a PC.

According to TRAI’s March 2009 report, there are about 117.82 million mobile Internet users out of 415 million mobile users in India in contrast to 6.4 million broadband PC Internet connections. India had 101.1 million mobile subscribers owning phones capable of accessing Internet at the end of December 2008.

Source: InMobiAS – Getting the ABC Right

VAS – Getting the ABC right

For a VAS service to succeed in any market there are three basic key attributes that must be looked at. These are as follows:

1.    Accessibility of Service
2.    Bundling of Service
3.    Content Quality

A killer VAS is a combination of all these above attributes. Any standalone attribute cannot contribute to the success of a VAS.  The users will not subscribe for a VAS that has poor or unauthorized content, or will not subscribe the VAS in spite of good content if the packaging or pricing is too high or the delivery channel for accessing the service has a complicated learning curve.

Ensuring the fulfillment of ABC attributes is just half the job done. Supplementing ABC with the key marketing essentials like promotion, branding and lifecycle management completes icing on the cake. It is very important for a VAS to effectively communicate its value delivery to its target audience failing which the VAS is unable to connect with revenues that it can deliver. Success of a VAS also depends upon management of its lifecycle. VAS like CRBT would have not seen a boost if boosters like Press * to copy the song, Gaana Bolo Hello Tune Pao, etc; hadn’t been given. Today CRBT constitutes as much as 40% of an Indian Operator’s VAS revenue and is an unbeatable killer VAS.

Source: The Inquirer

The goal of the 24 operators is to unite a “fragmented marketplace” and give developers of applications a single route to users of different devices and operating systems, the group announced at the Mobile World Congress in Barcelona, Spain.

This will build a new, open ecosystem to spur the creation of applications that can be used regardless of device, operating system or operator.This is tremendously exciting news for our industry and will serve to catalyse the development of a range of innovative cross-device, cross-operator applications

The group, which includes AT&T, Vodafone and China Mobile, has three billion customers around the world.

Application stores are a key component of smartphones, but purchasers of a particular smartphone like those sold by Finnish wireless equipment maker Nokia and Apple cannot access stores provided by other makers.

In a sign of the popularity of such services, South Korean mobile phone giant Samsung announced Sunday it would expand its app store to more than 50 countries this year after launching it in three European nations in 2009.

Swedish telecommunications equipment maker Ericsson announced Monday that it was launching its own online store, open to all types of devices. The eStore already counts 30,000 applications.

The alliance launched by the 24 operators, named the Wholesale Applications Community, is backed by the GSMA, the industry group that organises the congress, and device manufacturers LG Electronics, Samsung and Sony Ericsson.

The other partners in the project include Orange of France, Deutsche Telekom of Germany and NTT Docomo of Japan.

Source: ABSCBN News

The Portio forecast also anticipates mobile email revenues will triple over the next five years, thanks to rapid adoption of smartphones and accompanying bundled data plans. Enterprise email accounts for between 70 percent and 85 percent of current revenues. Also growing: Mobile IM, led by the youth segment. About a billion consumers are expected to regularly use mobile IM by 2014, translating to revenues of $18 billion.

Source: Fierce Wireless

In all, more than 46.3 million mobile subscribers worldwide used the Opera Mini browser in December, up 11 percent month-over-month and increasing more than 159 percent compared to December 2008. Users viewed more than 20.7 billion pages last month, increasing 10.1 percent over November totals and up 223 percent year-over-year. Opera Mini users generated over 315 million megabytes of data during the month, with data traffic growing 206 percent over December 2008.

Despite Facebook’s continued growth, the site remains the second most-visited mobile website in the U.S., trailing search giant Google. Yahoo, Wikipedia and MySpace round out the top five. Opera page-view growth in the U.S. grew 228.1 percent over December 2008, with unique user growth up 128.5 percent–users now view an average of 276 mobile web pages per month.

Source: Opera

Mr. Subhash Dhar, Member Executive Council and Group Head – Sales and
Marketing, Infosys* quoted in his keynote speech that till now Internet was
considered a radical phenomenon but now the Mobile is all set to create a
similar revolution. Mobile Value Added Services are about to create a huge
buzz in the market for the masses.”The point was supported by *Mr. Uday
Sodhi, Chief Executive Officer, Balaji Telefilms* “The current Average
Revenue per User (*ARPU*) lingers around 8-9% however by the end of this
year we shall see a rise to about 12-14% with an extensive increase to
nearly Rs. 11,000 Crore.” “The future of businesses will be driven by
broader digital engagement with their consumers and will act as a catalyst
in the future economy” according to *Mr. Dhar*. He further added that all
ecosystem players will have to join hands to bring Mobile Value Added
Services to the masses.

With over more than 500 Million mobile phone users in the country,
penetration to various areas with multilingual diversities and providing vast
content like games, applications, astrology, Mobile banking etc. and related
services is a challenge which has to be accomplished. The emphasis was on
the 3G/4G aspect and providing faster access like broadband availability to
take MVAS further. *Mr. Shyam Mardikar, Sr. Vice President – Networks,
Bharti Airtel Limited* said “Telecom is a mature business and the consumer
is choosy, quality of services needs to be refined, optimised and
manifestation of existing services has to be done”.

*Shri. SS Sirohi, Principal General Manager & Head, VAS, Bharat Sanchar
Nigam Limited* spoke about mobile banking transactions focus on volumes and
diverse content provisioning, mobile advertising, Location based services
like GPRS which are in their initial stages. Nearly 7.5 Lakh customers are
using 3G BSNL, currently available in 300 cities and the target is to spread
it to 700 cities by July 2010. 50 Million ringtones are downloaded every
month. The Indian Premier League shall be merging with Youtube and the
cricket match can be viewed from the cell phone with a staggering 36 camera
view options. The speed of 3G is 3.5Mbps if the download speed is enhanced
or the bandwidth is increased, user will have an enriched experience by
downloading movies, games, and utilities at a faster rate. He added, new
customers, new platforms, new generators, new operators are joining the
market everyday so the opportunity is tremendous.

The MVAS will bring about a change in lifestyle of the common man according
to *Mr. Lloyd Mathias, President & Chief Marketing Officer, Tata
Teleservices Limited,* he elaborated his point by giving an example of a
fisherman from Kerala who has to sell his fish to the dealer at the rate at
which the dealer pays him, however with the introduction of MVAS, he will be
able to get the best deal available. The *chief guest* in the conference *Mr.
RN Prabhakar, Member, Telecom Regulatory Authority of India, (TRAI)* had a
similar opinion and focussed on how MVAS has become so important and
innovative for the telecom operators with the intense competition bringing
down the ARPU and the tariff. Finally he concluded the speech saying “MVAS
will bring about a huge change and improve the living standards for all the
classes and the market is just ripe for bringing about and to be a part of
the change”.

Some of its features are:

• a 1 GHz Qualcomm Snapdragon processor
• a 3.7 inch AMOLED touchscreen display
• a 5-megapixel camera with LED flash
• a multi coloured trackball that changes colors depending on the application running
• noise cancellation technology for eliminating background noise
• new news & weather widget
• voice commands to all applications on the phone that have text input fields

Nexus One  will be sold directly to consumers through a newly launched web site at Google.com/phone.The phone is available unlocked online for $529 and for $179 through T-Mobile USA with a T-Mobile Even More individual 500 Plan, which costs $79.99 per month. Unlocked, the phone will be able to access AT&T Mobility’s EDGE data network.

Source: Fiercewireless.com

Source: Media Mughals