Will operators be out of VAS in the future?
By Jaya Kishore B   |   Wednesday, 21 January 2009, 00:28 IST   |    2 Comments
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Bangalore: Though mobile value added services (VAS) poses huge opportunity for boosting the ARPU, many of industry experts feel that there is a possibility that Operators may go out of VAS business in the near future in India as there are no standards for revenue sharing between the key three players of the VAS value chain'content generators, aggregators and operators and all of them are eyeing on bypassing the operator route to offer their VAS directly to customers. It's a well-known fact that it is highly challenging for entrepreneurs to knock an operator's doors with new ideas. Even though he becomes successful entrepreneur cannot expect right share of revenue generated out of an application developed him from the operator. "In fact this driving an entrepreneur to bypass the operator route. If operators' rigidity with reference to revenue sharing continues, they will be the losers. They will go out of VAS business within next few years," said VP of a mobile Widget company who doesn't wanted to be quoted. Operator independent model makes its business "off-deck" and pan-operator. These VAS players deliver their services directly to the consumers through content downloading sites, WAP portals and many more sources. "As content providers started innovating on operator independent method to gather their revenue from subscribers by themselves, operators are bit worried now," he added. In the western countries, operators share a decent portion (60:40) of VAS revenue with content generators, where as in India revenue share between operators and content providers /aggregators is 80:20, substantially more skewed in favor of operators than in other countries, and further aggravated by lack of payment mechanisms. A representative from a mobile company was quick to clarify on this when interacting with SiliconIndia. He said that it is unwise to invest and lose out money for new and untested applications. Until and unless it is proved sustainable, we'll not be ready for sharing maximum amount of the share. Plus, Operators tend to justify their claim of a lion's share of the revenue due to the cost associated with network, billing, marketing, subscriber acquisition, and a declining ARPU and AMPU (Average Margin Per User). "We spend billions in creating the infrastructure and don't want the aggregators and content generators who spend just a few millions to take a bigger pie of the revenue," he contended. Despite this tug of war, industry is optimistic about explosive growth of VAS segment. In a Forum Nokia developer conference 09, held in Bangalore on Tuesday, Kenny Mathers, Head APAC, Forum Nokia said that the share of VAS revenue would expected to rise to 18 percent in 5 years and growth acceleration will begin in 2009, as various challenges will be overcome, size of mature user base increases, and because of proposed launch of 3G.

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