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Delivering Value: VAS applications in the market
Over the past few years, the value-added services (VAS) segment has emerged as a key business opportunity for telecom operators that have been exploring alternative revenue streams in the wake of shrinking margins, declining ARPUs and increasing voice commoditisation.
Operators have jumped onto the VAS bandwagon and have been increasingly relying on this segment to improve their financial performance. This is evident from the fact that while VAS accounted for 2 per cent of operator revenues in 2002, it now contributes 12-13 per cent to the same.
Over the past decade, the Indian VAS ecosystem has evolved in terms of applications and players. Today, the market has been flooded with a slew of applications ranging from voice SMS and social networking services to multimedia sharing, location finders and news feeds. Further, the number of players in this space has increased manifold.
According to Netscribes, the total mobile VAS market is likely to reach Rs 490 billion during the next five years, up from Rs 160 billion at present. As per industry estimates, the revenue share of these services is set to increase from the current 12-13 per cent to over 30 per cent in 2015.
Application-wise, the VAS market is still driven by the ABC (astrology, Bollywood and cricket) principle. However, according to KPMG, going forward, high-end applications focused on information, entertainment and communications will dominate the urban market while the demand for basic or utility-based services like m-health, m-governance, m-banking and m-education will be high in rural areas.
tele.net takes a look at the various VAS applications available in the market…
m-health and m-education
According to PricewaterhouseCoopers’ report, “Touching Lives through Mobile Health: Assessment of the Global Market Opportunity”, the growth of the m-health market will lead to a $0.6 billion revenue opportunity for India. Operators have already begun to offer such VAS. Vodafone India, for instance, has introduced an SMS service that enables users to identify and locate blood donors.
On the other hand, m-education refers to training/learning-related content provided to users through mobile applications over SMS, WAP and USSD.
This refers to the VAS content offered to users in remote areas in regional languages. The service provides users information related to agriculture, education, health, etc. For instance, Bharti Airtel’s Behtar Zindagi interactive voice response service is targeted at rural users in Rajasthan. Priced at Rs 30 per month, the service focuses on farming and allied communities.
According to Gartner, the Indian enterprise software market is set to grow by 13.7 per cent this year, with revenues expected to reach $3.45 billion. The market is expected to maintain its strong performance with an estimated compound annual growth rate of 14.6 per cent from 2011 to 2016.
Spurred by this growth, operators have developed a host of services for enterprise customers including applications for e-mails, enterprise resource planning solutions and corporate utilities.
With over 50 million monthly active users as of July 2012, Facebook is the most popular social networking site in India at present. According to a Nielsen Informate Mobile Insights survey, of the 27 million smartphone users in urban India (as of July 2012), 22 million use their smartphones to access social networking sites.
The entertainment segment largely comprises video and music streaming services from sites like YouTube and shazam, as well as mobile gaming. According to Google India officials, over 8 million users access YouTube via their handsets daily and the site has over 31 million users in the country. The Indian mobile gaming market has also witnessed substantial growth. It would be valued at Rs 14.3 billion by 2014, up from Rs 2.4 billion in 2010, according to a report by the Federation of Indian Chambers of Commerce and Industry, and KPMG.
Mobile TV is another promising VAS application. Currently, all major telecom companies – Bharti Airtel, Vodafone India, Idea Cellular, Reliance Communications, Aircel, Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited – are providing this service.
These include retail services, banking, near-field communications (NFC)-based payments and daily deals. m-commerce services are currently being offered by companies like snapdeal.com, flipkart.com, bookmyshow.com and makemytrip.com. This space is set to get a boost with reducing smartphone prices and increasing penetration of 3G services. According to the Boston Consulting Group, fee-based revenue from mobile commerce could amount to well over $4.5 billion by 2015 in India.
Though mobile banking is at a nascent stage in the country, it has witnessed tremendous activity in the past two years. Several operators have collaborated with leading banks to offer m-banking services.
At present, Tata Teleservices Limited (TTSL) is the one of the few operators to offer these services via the Offers Near Me facility. According to TTSL, this space has a potential value of $20 billion.Overall, while the Indian VAS space is growing significantly, key issues such as inadequate network coverage, limited availability of localised content, and regulatory challenges need to be addressed for this segment to achieve its full potential.
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