MVAS in India : Awaiting the Second Revolution

Date:   Tuesday , July 31, 2012

Noida headquartered mCarbon is a platform product company in network Value-added services space. The company has developed Greenroom, a unique and first of its kind "network app store". This enables the company to quickly roll- out various network based products in diverse consumer segments including Voice, Data, sms and devices. mCarbon's Greenroom is a network app framework deployed across leading operators in India. mCarbon is already servicing total base of over 400 million subs across all major telcos in India.

Current Scenario

Consumer preferences and growing awareness is changing the landscape of services worldwide and India is no exception. With BWA/3G and further 4G/LTE network roll outs, speed that so long has been a deterrent for overall VAS adoption, is now a key enabler that will drive adoption of VAS. It is now time for India to evolve from the well established Mobile Messaging and commoditised voice play to focus on customer segmentation. Through the immense power of mobile devices, telecom operators have been able to provide voice connectivity to the most remote parts of the country. However, in the recent past Mobile-VAS (MVAS) has been driving the revenue for the operators.

Cricket, Bollywood, and Entertainment remain the top categories for MVAS apps. The new categories being worked out are around UGC, LBS, high-end segmentation, health, education and enterprise applications. Mobile phones today have moved beyond their fundamental role of communications and have graduated to become an extension of the persona of the user. We are witnessing an era when users buy mobile phones not just to be in touch, but to express themselves, their attitude, feelings & interests. Customers continuously want more from their phone. They use their cellular phones to play games, read news headlines, surf the Internet, keep a tab on astrology, and listen to music, make others listen to their music, or check their bank balance. Thus, there exists a vast world beyond voice that needs to be explored and tapped and the entire cellular industry is heading towards it to provide innovative options to their customers.

There is no doubt that the telecom industry has brought about enormous economic and social benefits in India in recent years. However, we have witnessed only the first stage of the revolution via the mobile phone. We are yet to experience another revolution via the mobile phone, one that will be enabled via non-voice services Ė typically referred to as Mobile Value Added Service or MVAS for short.

According to a study done by global consultancy firm Deloitte Value Added Services (VAS) will provide a huge fillip to the mobile industry which is expected to be $4 billion industry by 2013, and grow to Rs. 48,200 Crs by 2015.

Mobile VAS has come a long way from simple SMS-based services to multimedia-rich content. With advances in handsets, cellular networks and Web technologies, users can access much more advanced value added services from their mobile devices. The next wave of growth for Mobile VAS is expected from services that offer benefits such as personalization, convenience, security, high-class entertainment, etc.

The origins of MVAS in India lie in basic services like SMS, Ringtones and CallerID. With the advent of 3G, it offers still a bigger opportunity to MVAS players enabling them to provide high volume of existing services and an opportunity to move further up the value chain. India has the potential to take the lead when it comes to innovative MVAS basis quality of work. Services such as cricket, music, astrology, mobile Video streaming, mobile Gaming, mobile commerce (M-Commerce) for mobile transactions and local content rich services, m-education application (delivery of digital education content through mobile) and m-health application (delivery of health-care information & real-time patient monitoring through mobile) and dating applications are constantly enhancing the role in M-VAS business.

Challenges

MVAS segment currently is plagued by challenges like local language content, user awareness etc. Also MVAS as of today is primarily used as an entertainment medium though sectors like health, education, infrastructure, banking, commerce, hygiene, sanitation, law and agriculture offer immense opportunities. Providers also have to deal with regulatory challenges and interventions, lack of infrastructure and availability of funds.

However with growing consumer awareness and rise of a generation that is extremely net savvy the sector is likely to grow at a healthy pace in India in the long run. TRAI's recommendation to license VAS is driven by declared aim of allowing and encouraging new and innovative ideas to flower in the VAS business and smaller entrepreneurs to flourish. However the long list of security and other compulsory compliances that are pre-conditions of the license and the cost of such compliance would be a disincentive to innovators and start-ups. I would urge policy makers to frame policy that promote growth and enable service providers to provide high quality content and service at a lower price.

Mobile Value Added Services (MVAS) has enhanced the utility of mobile phone as a powerful medium to deliver information. The 3G services have further pushed the demand for quick delivery and more innovation. This has proved to be a huge opportunity for MVAS players enabling them to provide a high volume of existing services. India, no doubt has the potential to take the lead when it comes to innovations in MVAS that has emerged as a great opportunity to rescue the industry from the declining Average Revenue per User (ARPU). It is clear that the MVAS space is set to witness a high growth trajectory, creating tremendous opportunities.

The Road Ahead

Diverse demography, lifestyle and consumer preferences amongst urban, sub-urban and rural consumers across the country are destined to generate high returns for MVAS in India. Factors like rise in disposable income has revolutionized consumerís buying and spending trend towards PC, mobile devices, communication equipments and services. It has catalyzed the trend of smartphone & featurephone which enhance the scope for MVAS with mobile apps and rich mobile content. Also rise of usage of social networking sites amongst youth on the move will trigger growth of this sector. Lower 3 G tariffs offered by telecos will definitely boost usage and growth of MVAS in India.

As the telecom industry sees a rapid decline in voice tariffs, it is looking at services beyond standard voice calls, or Mobile Value Added Services (MVAS) to propel it to the next level of growth. Indian mobile value-added services (MVAS) market has been witnessing phenomenal growth since 2006 and has by far, outpaced other markets around the world. The sector has emerged as the most vibrant and transforming division of the overall Indian telecom industry.

The mobile VAS market has been growing around 60 percent year-on-year. This is mainly due to the factors attributed to mobile advertising, m-commerce, multi-media games, 3G, mobile internet for faster data upload and download and also the rural VAS market which has a huge potential in India. The industry is looking at various means to use MVAS as a growth driver and simultaneously as a key differentiator. Today, non-voice revenues in India only account for about 10 percent of an operatorís revenues, which is still far lower than the revenues for leading MVAS countries, pegged at approximately 23 percent.

Roll out of next-generation 4G Long Term Evolution (LTE) technologies is likely to be a growth driver for MVAS in India.