Marred by dwindling ARPUs, India's mobile operators are now looking to their Value Added Services (VAS) to help boost their revenues.
According to a recent KPMG International report, entitled m-powering, the revenue contribution of non-voice services has increased from 11.8 percent at the end of March 2010 to 15 percent by the end of March 2011.
The introduction of 3G services earlier this year is further likely to give impetus to the growth of non-voice revenues. (See MTS India Uncertain Over Voice Services, ValueFirst Plans IPO by Dec 2012 and RockeTalk - A Desi Challenger to Twitter, Facebook.)
The KPMG report predicts that the mobile VAS (MVAS) market will grow from INR 122 billion (US$2.28 billion) in 2010 to INR 482 billion (US$9.04 billion) by 2015. While MVAS in urban areas will revolve around high-end applications focused on information, entertainment and communication, in rural areas the growth will largely come through basic but more utilitarian services such as m-healthcare, m-governance, m-banking and m-education, states the report. (See India Wakes Up to a Smartphone).
Even though the real impact of 3G services on operators' revenues is still to be seen (with only 9 million or so mobile users opting for it by the end of May 2011), the rising popularity of social networking, video sharing, music streaming and instant messaging both in the consumer segment and enterprise space is quite apparent and will likely drive 3G uptake.
Besides, with the changing lifestyle that demands professionals to be on the move 24x7, mobile has evolved into a personal wallet and has become a device serving the purpose of 3 Cs -- connecting, communicating and collaborating. This, in turn, boosts the potential of further VAS demand.
However, there are plenty of challenges that may hinder the development of the VAS sector:
The lack of clear guidelines or regulations where VAS is concerned. The lack of awareness amongst the masses about VAS. The lack of compelling applications. The lack of localized content. The complexity of the MVAS ecosystem, which, according to KPMG, is a complex one involving a wide variety of stake-holders, often with overlapping roles. The stakeholders, including content providers, technology enablers or application service providers, handset vendors and subscribers need to synchronize their efforts to help the market grow. The approach of application providers and operators who, for the sake of maximizing revenues, have been largely focused on creating urban-centric VAS applications. While there has been marginal progress by the government and the handset providers in terms of making quality devices affordable to the masses, not much effort has been made to provide a supportive ecosystem to the application providers or content owners. This is particularly true in rural India, where the need and usage patterns of VAS services are different and centered around healthcare, banking, agriculture and basic education.With extremely diverse cultures abounding in India, it will be difficult for content providers to find a common ground. What the industry might need is comprehensive participation from all the stakeholders and creative ideas (such as chota recharge) to foster growth in the VAS market.
Jatinder Singh, Principal Correspondent, Light Reading India
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