`

Feedback

Reader's Poll

Which of the following technologies/concepts are likely to witness significant traction this year?
 
Any data to show

Teledata

Tele Data

Mobile Subscribers Yearwise comparision

Crossing Hurdles - Service diversity key to increasing MVAS uptake

July 15, 2009



 -
Even as mobile service operators increase their focus on value-added services (VAS), target a higher revenue share from VAS (up from the current 10 per cent) and companies jump onto the VAS bandwagon to capitalise on the opportunities in this space, the fact remains that VAS in India has not seen the same level of success as it has in China, Japan or the European countries.

Players in this industry have to contend with several issues that are impeding growth. For instance, revenue share skewing heavily in favour of operators has been a bone of contention for a while now.Estimated at $1.35 billion, a reality check on the VAS industry shows how, from the VAS providers' point of view, the industry is actually worth only about $200 million.Market analysts estimate that mobile operators take up 60-70 per cent of the revenue generated and the remaining is given to the VAS players.

In order to address this issue, VAS companies have approached the telecom regulator to establish a revenue benchmarking tool.

According to industry analysts, once the industry reaches its inflection point and revenue from data services increases, market dynamics will iron out revenue disparities between telecom operators and mobile VAS (MVAS) players.

Another bottleneck in the uptake of VAS is the lack of adequate and relevant content. According to a leading VAS player, telecom operators are reluctant to be innovative with content and continue to push music and SMS-based services, as these services have guaranteed users.

Currently, about 20 per cent of VAS companies account for close to 80 per cent of the revenue. And only one or two products offered by these companies are strong revenue generators. There is a need for content diversification. However, the biased revenue share hinders the development of quality content as VAS players lack the necessary funds for content development.

Mobile advertising, which has the potential to become a key revenue generator for VAS players, is still in its infancy.Advertisers have been reluctant to adopt the mobile platform as it is difficult to measure return on investment and they do not want to reduce their advertising budget for other media.

Mobile operators in India have to also make do with much less spectrum than is available almost anywhere else in the world. The big cities, especially metros, have a severe shortage of spectrum.Mobile operators, therefore, tend to focus on using the spectrum for voice rather than data.

Even as VAS players are gearing up for 3G services and coming up with innovative offerings, when it is finally launched in the country, 3G will actually be initially used for voice services. Moreover, it will take some time before this technology is available to a critical mass of subscribers.Lack of 3G-enabled handsets is another impediment to the uptake of VAS.According to industry analysts, only about 13 per cent of wireless subscribers have 3G-enabled handsets. Hence, it will be a while before 3G-based VAS takes off.

While rural VAS represents a great opportunity, relevant content in the local dialects is yet to be made accessible to the rural consumer. Considering the country's diversity in language and culture, low literacy ratios, combined with fewer people comfortable with English, content development in local languages is the major issue that needs to be addressed.

This requires significant investments from content providers. Stakeholders, unsure about the return on investment, currently focus only on mass-market services. The pricing model is yet another challenge as the high pricing of VAS is preventing large-scale adoption. Today, people are asking for more at a lower cost; "more for less" is going to become very critical in the next few months. Hence, it has become imperative to give better choices and services at lesser costs.

Reasonably priced flat-rate data plans can lead to an increase in the use of data.Operators in the US have been considerably successful by taking this route. While previously, the US market was lagging behind in the use of mobile data, it is now leading the way. In India, a plan like this at the right price point will encourage the use of mobile internet and other services, and create the necessary pull for companies to start building out mobile data services. Operators will benefit from large-scale adoption of data plans.

Clearly, the VAS story has just begun and undoubtedly there is immense potential. However, there is an urgent need to address the issues to enable the sector to continue on its growth path.



 
 

To post comments, kindly login

 Your cart is empty

Monday morning

Monday morning