`

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

Error
  • JUser::_load: Unable to load user with id: 122

VAS Uptake: 3G to drive future growth

November 30, 2011
E-mail Print PDF

The market for value added services (VAS) is expected to grow with the increasing demand for 3G and the consequent uptake of data services. In this context, the Telecom Regulatory Authority of India (TRAI) recently released a consultation paper on VAS to encourage the development of the segment. Senior officials from varioys VAS companies talk about the impact of 3G on VAS uptake, the issues related to operator-controlled VAS pricing and the factors likely to influence segment growth…

Debasis-Chatterji-CEO-NetManoranjan-Mohapatra-CEO-Shakti2

How is the National Telecom Policy (NTP) 2011 expected to increase the share of VAS in telecom usage and revenues?

Debasis Chatterji

According to the draft NTP 2011, rights to broadband, a liberal policy for mergers and acquisitions, the vision for “one nation one licence”, spectrum auditing, and the delinking of licence from spectrum are some of the key proposals. But let us wait and watch how these shape up by the year-end. All stakeholders will contribute to this process. Broadband is a major attraction. Once people adapt to broadband, mobile data usage will go up. That way, 3G will contribute greater revenues through data usage.

Manoranjan Mohapatra

VAS contributes 9-10 per cent of an operator’s revenue, which is impressive. However, the revenue-sharing model between operators and VAS players has been long discussed amongst industry players without any consensus being reached. The draft NTP 2011 recommends putting in place an appropriate regulatory framework for delivering VAS at affordable prices to fuel growth in entrepreneurship, innovation and provision of region-specific content in vernacular languages.

Sakthi Saravanan

The NTP 2011 augurs well for the VAS industry. While the glitches lie in the details, the intent spelt out by the draft policy promises a lot. A few aspects that will have a positive impact are:

•   Increasing teledensity in rural areas – This would have a direct impact on the number of consumers using VAS.

•   Instrument of empowerment – The focus on converting the mobile into an instrument of empowerment will open up new avenues, enabling VAS providers to move from entertainment-driven VAS to utility-driven VAS.

•   Network convergence – This will enhance customer experience, thereby making VAS consumption a delight for users.

•   Focus on VAS – The draft outlines a desire to make India a global hub for VAS. This focus would help the VAS industry grow in terms of size, resources and technology.

Has there been any noticeable impact of the 3G service launch on VAS uptake? What are the likely trends in this space?

Debasis Chatterji

3G has just been launched across the country. Apart from Bharat Sanchar Nigam Limited, no other operator was granted 3G licence in all 22 circles. So there is an inter operability issue. An operator needs to enter into a roaming agreement with another player for seamless 3G service. Moreover, an operator needs more towers to deploy 3G. Most importantly, the backhaul of 3G has to be completely internet protocol based. All these require some time. As of now, there is no noticeable impact of 3G on VAS because a proper end-to-end 3G network does not currently exist. The number of subscribers on 3G is very few (less than 5 per cent).

Manoranjan Mohapatra

3G promises to revolutionise the telecom world. Analysts have predicted that India’s VAS market will grow to over $10 billion in 2013, spurred by innovative solutions including those that facilitate social and financial inclusion. Living up to the promise, 3G has opened a plethora of opportunities for VAS players operating in the country. Mobile handsets not only consist of navigators, cameras, music systems and radios but also enable livelihood-changing services like m-banking and m-commerce.

With 3G, operators are able to offer richer services like mobile internet and video since greater bandwidth is available. While traditional services such as ring back tones, messaging and infotainment services will continue to be offered, the opportunity has emerged to offer services that require more video or image-based content like telemedicine, wireless teleconferencing and e-learning. A recent report on VAS predicts that by 2015, the total revenue from communication services is expected to cross Rs 200 billion, while total revenues from entertainment services would reach Rs 250 billion, and  the information services vertical would contribute Rs 79 billion. This forecast only reiterates the importance of VAS.

With the rollout of 3G services and the expected long term evolution and next-generation network technologies, the Indian telecom industry is set for a second telecom revolution in the wireless space. It will also benefit the sectors in which these services will be offered by providing better infrastructure and services.

Sakthi Saravanan

3G services are still at a nascent stage and their true impact is yet to be felt. 3G is a long-term business case and the impact of these services will be felt only after another six-nine months.

With operators currently controlling end-user pricing, how are VAS companies likely to address this issue in the future?

Debasis Chatterji

Since the operators own their subscriber base, they control the pricing for any products on mobile service that is offered on their network (ON DECK). On the other hand, OFF DECK products are controlled directly by VAS companies and therefore they control the pricing of these products.

Manoranjan Mohapatra

Currently, revenue sharing in India tends to be lower for VAS companies as compared to the percentage share in international markets, although the volume of usage is much larger. While a lower percentage share works well for premium or high-usage services such as ring back tones, for new and innovative services, there is potential for VAS players to have a greater share of the revenue. The probability for each application to an instant hit is very limited and therefore a low revenue share stifles innovation and makes the whole business case fall apart for developers.

The revenue share regime has been improving, especially with leading VAS companies like Comviva providing greater value than just aggregation, either in terms of differentiated VAS solutions or managed VAS solutions.

Sakthi Saravanan

Some VAS companies have started moving towards self-branded services in which end-user pricing and communication are defined by the VAS provider and not by the operator. We see this trend gaining more traction in the future.

What has been the response to m-commerce services? What factors have been impeding service uptake?

Debasis Chatterji

M-commerce has already started picking up pace in India. M-banking is the most popular and important among the m-commerce services currently on offer. About 20 public and private sector banks provide this service. However, it will take some time to engage the masses as this requires greater awareness and education with regard to these services. The main issue here is security concerns with regard to transactions. However, for a country like India, m-commerce has tremendous potential due to the presence of a large consumer population.

Manoranjan Mohapatra

M-commerce has emerged as a key trend and it will only strengthen in this decade. It will help empower a vast number of potential entrepreneurs, small enterprises and others, who are excluded from the financial sector. The Reserve Bank of India’s (RBI) recent directive on financial inclusion, which is pushing banks and other financial institutions to provide services like mobile wallets, would be a growth driver. According to recent RBI estimates, with 41 per cent of the population in India still unbanked, financial inclusion could not have taken centre stage at a better time. The coming year will witness unprecedented growth in m-commerce with clear benefits for financial inclusion.

India is still considered a cash and cheque country. Also, low consumer awareness is one of the key reasons behind the slow adoption of m-commerce facilities. It is essential to spread awareness and educate people about the convenience and economical viability of m-commerce services like m-banking, payments and remittance. Trust is a primary factor for scaled adoption and people must feel that their money will be safe, and that information pertaining to their transactions will remain confidential. It’s also important to note that the concerns related to security are not just limited to the technology. Establishing trusted relationships with agents and providers are also vital for accelerating adoption.

Sakthi Saravanan

While m-commerce services are yet to gather momentum in a major way, the undercurrents being observed promise significant growth for mobile commerce services in the medium/long term.

Going forward, what factors would determine the growth of VAS in India?

Debasis Chatterji

The contribution of VAS to mobile operators’ top line is just 10 per cent. However, research shows that for all the 3G-enabled countries, the share is about 23 per cent on an average. So, with a fully functional 3G network, VAS usage will go up mainly due to increased data usage. This growth will be determined by factors such as a huge consumer base as well as an educated and young population that constitutes this base. Moreover, India is a market that is opening up to technology. With new technologies emerging, there will be newer opportunities for VAS companies; Netxcell’s latest offering like cell site mapping and video outbound dialling are examples of this.

Manoranjan Mohapatra

The growth of VAS in India will depend a lot on the regulatory policies of the government. The draft NTP 2011 is a good initiative by industry bodies and the government. Till now, the focus of mobile VAS has been on infotainment, though it is accepted that there is huge growth potential in building various utility services that can digitally empower citizens by providing efficient access to essential information and services, and foster inclusive growth.

Sakthi Saravanan

The factors that are likely to have a significant impact on the growth of VAS in India are:

•   Regulatory environment

•   Penetration of data-capable handsets and services

•    Affordability of services

•   Evolution of the ecosystem to enable utility services/e-governance.

 
 
 Your cart is empty

Monday morning

Monday morning