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Data Deluge: VAS operators emerge as key players in the 3G/4G ecosystem
India’s mobile telephony industry had a user base of 867.02 million as of April 2013, as compared to 6.68 million in 2001. While low call prices resulted in unprecedented growth, especially in terms of subscriber numbers, they impacted operators. Over the past two years, in particular, operators have been struggling with low ARPUs, dwindling margins and high debt.
The scenario has forced companies to rework their strategies. An important part of this exercise is to devise ways to increase the customer spend by offering an array of value-added services (VAS).
In India, VAS has for long meant only SMS, categorised into broad segments like astrology, devotion, Bollywood and cricket. Today, VAS includes several data-intensive applications ranging from voice SMS to social networking. According to a joint report by Wipro Technologies and the Internet and Mobile Association of India, the Indian VAS market, valued at $4.9 billion in 2012, is expected to reach $9.5 billion by 2015.
In the mobile segment, VAS uptake will be driven by the availability of smartphones, which offer enhanced access to data and information.
Currently, VAS accounts for 12-13 per cent of overall telecom revenues and the ecosystem for these services is maturing. Traditionally, the VAS ecosystem has centred on mobile carriers that offer these services, developed by VAS providers, to their subscribers.
The provision of relevant content is key to the growth of the VAS market. Content and media companies are emerging as key players in terms of providing customised content to VAS providers, who incorporate it into their services.
With the introduction of competitively priced smartphones and high speed 3G and 4G services, VAS is expected to play a bigger role in telecom growth. New data-intensive applications including messaging, over-the-top services, social media, photo and video services, live streaming, m-banking, mapping, cloud storage, desktop class web browsing, and mobile payments will increasingly gain traction in the Indian market.
A look at some of the major VAS players in the country, their performance so far and their future plans...
Formerly a Bharti group company, Tech Mahindra picked up a 51 per cent stake in Comviva in September last year. Thereafter, the company undertook a major restructuring exercise – it was rechristened Mahindra Comviva and a new corporate logo was unveiled for its domestic and overseas operations.
The deal was valued at Rs 2.6 billion, of which Tech Mahindra paid Rs 1.25 billion upfront. The remaining amount – Rs 1.35 billion – will be paid over the next five years, based on Comviva achieving mutually agreed performance targets. The company’s other stakeholders – Sequoia Capital and Cisco Systems – exited Comviva following the deal with Tech Mahindra. The deal was aimed at increasing Tech Mahindra’s presence in the growing Indian VAS market by strengthening its ties with global telecom players.
Meanwhile, it was business as usual for the VAS major. With deployments in over 40 countries, Mahindra Comviva’s footprint currently spans India, Africa, the Middle East and Latin America. Its customer base includes a host of domestic and overseas operators, including Aircel, Mobinil, Samsung Electronics, Videocon Mobile Services, Idea Cellular and NTT DOCOMO. It has also collaborated with technology firms such as Adax, Dialogic, Hewlett-Packard, Radware and Red Hat.
It operates in three business verticals-mobile financial, internet and broadband space, and mobile entertainment and mobile messaging. Financially, it is on a strong wicket. In Asia alone, Mahindra Comviva’s caller ringback tones business grew by 20-25 per cent in 2012. Revenues from content-based services witnessed a 5-10 per cent increase on a monthly basis (as of July 2013).
Ranked amongst the top three VAS players in the country, the company has been focusing on expanding its footprint in overseas markets, launching new VAS products and consolidating its presence in the domestic VAS space. For instance, with over 30 large-scale deployments and over 150 content partners, the company recently became one of the largest content aggregators across Asia and Africa. It currently owns rights for over 260,000 music assets, in addition to 300,000 other content assets (video, images, voice and text). It has over 200 product categories in the SMS/USSD-based service segment and a strong WAP product catalogue.
It also recently formed a strategic partnership with MasterCard to launch the open loop Mobile Money Partnership Program. This is targeted at providing over 2.5 billion financially underserved consumers across the world access to mainstream financial services through mobile handsets. Similarly, the mobiquity solution was selected by Guyana Telephone & Telegraph to provide mWallet services in Ghana.
Another interesting initiative was the deployment of integrated messaging solutions in association with Bangladesh-based Grameenphone. This is reportedly the largest messaging deployment in Bangladesh in terms of capacity, as the platform is designed for 5,000 transactions per second.
Expanding its product portfolio, the company has globally launched payPLUS, an integrated payment solution, which functions as a one-stop shop for small and medium businesses. The solution enables merchants to convert their mobile handset into a point-of-sale device.
In India, the company has launched a data management solution, which keeps customers updated on their data usage and balance. It is also focusing on big data-based solutions that analyse subscribers’ usage patterns, thereby allowing operators to offer customised plans.
Another recent launch was the Infotainment Portal, a mobile data-based application, which allows users to watch and download videos, and share and integrate content with social networking websites.
Going forward, Zunder Lekshmanan, vice-president, product development, expects the company to continue on its growth trajectory with a focus on innovation and expansion of its product portfolio. “Earlier, VAS was restricted to only SMS. However, with technology convergence, the concept has diversified to include domains like audio, video, text, images and applications. The future will be dominated by multiservice offerings such as m-commerce, m-health, m-governance, m-advertising and m-education. This is why it is critical to have extensive experience in a range of value-added services so as to be able to meet the changing needs of customers,” he notes.
Incorporated in 2000, Netxcell Limited, a part of the Prathima Group of Industries, has emerged as a key VAS player. It has marked several firsts. For instance, it introduced cricket- and advertising-centric VAS, as well as a cloud-based hosted model for the pack provisioning solution.
The company has operations in India and Africa and its product portfolio comprises video outbound and inbound diallers, cell broadcast platforms, real-time billing applications, call conferencing solutions, etc.
Netxcell’s customer base in India includes telecom operators, system integrators and enterprises. Its key clients include Bharti Airtel, Aircel, Bharat Sanchar Nigam Limited (BSNL), Idea Cellular, TATA DOCOMO, Ericsson and Wipro. Its key partners are Dialogic, Donjin, Bharti Telesoft and IBM.
Over the past year, Netxcell has expanded its presence in India and signed several contracts overseas. “We continued our focus on providing voice solutions while innovating in the areas of video, customer life cycle management, the participation platform and analytics,” says Haziq Khan, vice-president, sales and marketing.
The company has expanded its coverage to Ahmedabad, Kolkata and Chandigarh, in addition to its existing presence in Hyderabad, Delhi, Mumbai and Bengaluru. It has expanded its product range as well by launching the Self Care Pack Provisioning and Auto Renewal platform in collaboration with telecom operators. Other recent products include a campaign manager tool with an inbuilt business intelligence engine; the participation and the third-party consent gateway platforms; and the domestic and international call conferencing, self-care and diameter-based billing solutions.
A key development has been the launch of the TAPAS technology platform, which was developed in-house. It is targeted at mobile operators and system integrators and enables them to launch new services or applications in order to gain a competitive edge. The integrated platform can support various voice and video services by offering access and delivery channels, including, but not restricted to, voice, video, SMS, USSD, the web and WAP.
In December 2012, the operator developed and launched a solution to provide real-time subscription services on the cloud platform for TATA DOCOMO. The VAS player manages all activities related to pack provisioning and customer life cycle management, including the generation of real-time alerts for system utilisation, and notification of any breach of key service and performance indicators.
Netxcell has also made significant progress in the African telecom market. The company has formed a partnership with Funmobile, a leading content provider in West Africa. As per the contract, Netxcell will provide services for African operator MTN by leveraging Funmobile’s knowledge base. The VAS player will provide solutions such as interactive voice response (IVR)-based services, voice chat, and information and subscription diallers in Nigeria.
Going forward, the company plans to enhance the scope of its existing partnerships with players such as IBM, Alcatel-Lucent and Cognizant. Another target is to improve its voice and data services. “In the foreseeable future, the Indian telecom market will witness rapid uptake of 4G services. We plan to leverage this opportunity and enhance our product portfolio to ensure our leadership in the Indian VAS space. Also, we are working on mobile applications as this will be another big business opportunity,” says Khan.
Over the years, the demand for consumer VAS such as music, entertainment, gaming and mobile browsing has given way to enterprise mobile VAS. Enterprises are now looking to adopt mobility applications for functions such as enterprise resource planning, customer relationship management, sales force automation, unified communications and billing.
Hyderabad-based IMImobile has been looking to capitalise on this opportunity and is expanding its enterprise product portfolio in both the international and domestic markets.
With revenues of over $100 million, IMImobile provides mobile VAS and customer lifecycle management services to telecom operators, mobility solutions to enterprise customers and audience management solutions to media companies. It is present in Asia, Europe and the US. In India, the company’s clientele includes Aircel, Bharti Airtel, BSNL, Reliance Communications, Tata Teleservices Limited and Vodafone India. Its enterprise client base includes Mahindra & Mahindra and Star TV.
To tap the potential in the cloud-based service segment, the company launched the IMImobile OPENHOUSE cloud-based mobile engagement platform in October 2012. The solution is aimed at simplifying mobile technologies for large, small- and medium-sized enterprises and businesses. The solution leverages the mobile, social and cloud platforms, thereby offering an open and collaborative environment for businesses to innovate.
OPENHOUSE offers interactive business tools like SMS broadcast, voice broadcast, short codes, long codes, keywords, missed call to SMS, missed call to call, SMS to call, click to call and virtual IVR systems. It also offers a messaging and voice application programme interface. The company is reportedly targeting revenues of over Rs 20 billion from the OPENHOUSE platform over the next few years.
In the global market, the company has formed a partnership with National Rail Enquiries in the UK to launch an iPad-based application for the latter. Similarly, it has launched an iPad-based application for Telefónica UK and Streetspace, which provides social workers an interactive tool to educate people looking for employment opportunities.
In particular, IMImobile has taken several initiatives in Africa. It has formed a strategic partnership with Content Connect Africa to provide premium local independent music and video content across the region. This includes the provision of tracks, ringback tones, animation clips and images to customers in Uganda, Nigeria, Cameroon, Ghana, South Africa, the Ivory Coast and Kenya. As part of this partnership, the company has developed the Kleek pan-African mobile music streaming service from the Universal Music Group.
According to Vishwanath Alluri, founder and executive chairman, IMImobile, the company plans to leverage the OPENHOUSE platform to develop solutions for various industry segments in India. Further, it will launch globally tested products such as the Magic Box solution in the Indian market as 4G services gain momentum.
In addition, IMImobile is planning to launch the OPENHOUSE platform in various overseas markets, including the UK, Africa and the Middle East.
The past year has been a challenging one for Noida-based mobile media and VAS provider mCarbon. Faced with rapidly declining profits, operators have pulled the plug on new investments and are focusing on improving services in the face of serious competition. According to Rajesh Razdan, co-founder and CEO, the company spent the better part of 2012 coping with this scenario.
“mCarbon managed to keep pace with the changes in the telecom space by moving from a licence-based business model to an application-as-a-service-based one. Over the past year, the biggest change for us has been the provisioning of subscription-based VAS offerings, which have moved from a push to a pull model,” he says.
Incorporated in 2008, mCarbon is among the leading VAS players in the country. In 2009, it raised about $5 million from Canaan Partners.
Since then, the company has expanded rapidly and is currently operational in India, Sri Lanka, Bangladesh and Africa. It offers services in three categories – mobile social community, mobile content delivery and the Greenroom network application store. The mobile social community category comprises the mNet mobile collaboration product, the gifting and VAS retailing platform, and cloud storage applications. The VAS player delivers mobile content via the Channel 99 Rich Media store, the Channel 99 magazine and the content management system. The Greenroom network application store is mCarbon’s flagship product. The platform enables operators and independent application developers to launch multiple products and solutions. The products offered on this platform include the call manager, call/SMS filter, SMS analyser and the Channel 99 magazine.
According to Razdan, the company is the only VAS player in India to deploy double consent gateways for some telecom operators, in line with the Telecom Regulatory Authority of India’s recommendation. Further, it has launched products for telecom operators – customer value management and the T-Commerce service. The latter is an m-wallet solution which was launched in collaboration with Bharti Airtel in India and Bangladesh for over 150 million subscribers. As per Razdan, the solution is currently used by over 2.5 million users through a single common channel such as the USSD platform on a daily basis.
In 2012, the company also expanded its product range. It collaborated with Bharti Airtel to launch the call-me-back service for the operator’s prepaid customers.
mCarbon launched the Global USSD Interactive Services suite on the Amazon Web Services cloud for an operator in Latin America. The solution has been built on its Greenroom platform and is fully deployable on the cloud. It is expected to enable operators to rapidly create and deliver VAS and dialogue-based services through an intermediate platform which links content and services to end-users and provides subscribers high speed interactive access to a range of VAS.
Going forward, the company will continue with its strong focus on India. “We are targeting a 50 per cent increase in our top line in India,” says Razdan. Over the next few years, mCarbon’s focus in this market will be on providing telecom operators customer value management tools to enable the tracking of subscriber usage patterns. “This will help operators address three important issues – acquiring new customers, retaining them, and increasing their value. Customer value management will help operators to evaluate subscribers in terms of their overall profitability,” says Razdan.
Following a modest beginning in 2000, handygo Technologies has carved a niche for itself in the Indian VAS space over the years. Amongst the first VAS operators to enter the untapped rural segment, the company’s product portfolio largely comprises applications pertaining to rural areas including health, education and entertainment. It provides this content through the IVR system, and SMS and WAP platforms of telecom operators in India and the Middle East.
Handygo Technologies was recently awarded a grant by the GSMA Mobile for Development Foundation to support the design and launch of the mKisan agricultural mobile VAS. The two-year initiative is targeted at about 1 million small farmers in India. It aims to empower these farmers by providing information on agriculture and livestock. handygo will promote the mKisan project in six states in regional languages. It will also launch several print and user connect campaigns.
The company plans to leverage its various partnerships and associations to develop and market mKisan. For instance, it has formed a consortium with CABI, the International Livestock Research Institute (ILRI) and Digital Green for this project. CABI will support the VAS operator in developing agricultural content, ILRI will create livestock-related content and Digital Green will provide video content on agriculture and livestock.
Prior to this, the company had launched several other initiatives targeted at the rural segment. These include Behtar Zindagi, Mobi Shiksha, Health & You and Soochna Shakti, which focus on the agriculture, education, health and women empowerment segments respectively. These were introduced in collaboration with various telecom operators as well as organisations such as Care India, Aviva Life Insurance, the Indian Metrological Department and Hariyali Kisan Bazaar.
The company entered the m-commerce space in 2012 with the launch of RockASAP Retail Limited, a “mall-on-the-mobile” application. It is currently available on GPRS-enabled handsets and on the IVR platform. Taking this initiative further, the company launched the Rockstand e-book and e-magazine application for mobile handsets and tablets. It is currently available free of charge on the Google play store as well as on RockASAP Retail Limited. Rockstand offers regional e-books in Hindi, Gujarati, Marathi, Punjabi and Urdu at prices starting at Re 1. Recently, handygo tied up with LAVA Mobiles to pre-install Rockstand applications in select handsets.
The company is exploring various options for sourcing funds of $20 million for this project and plans to launch the product on the iOS and Windows platforms and on BlackBerry devices.
Going forward, handygo plans to launch various innovative VAS applications for rural customers to strengthen its presence in the Indian VAS space. Further, it is planning to launch new features for the Rockstand application and form additional partnerships. It is also looking to expand its portfolio of regional books.
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