Contribution of VAS or non-voice revenue of Indian mobile operators is 13% of the total revenue or Rs.13,026 crore in FY11. Higher spectrum bamdwidth to push VAS in India have been around for about and year now and there are movements which if not scape changing and huge, are definitively moving towards a wiser set of Value Added Services with deeper reach.VAS in India contributes approximately 13% of operators’ revenues, whereas in other countries its contribution is around 25-30 percent. On another note, it is an observation that, VAS services come to full bloom ion an average 2 years after the implementation of 3G. That has been the case in European and American roll outs. India was late to the 3G technology club, and hence VAS services have not found the required network environment to push higher end services.
Despite getting huge recognition and prominence in the telecom industry, Indian VAS players need to shake away a few more crucial bottlenecks to reach a full bloom. The VAS industry also faces challenges like reconciliation issues with operators, delayed payouts from operators, and lack of a common body to offer unified short codes, which work across all operators at the pan-India level.
Even though the VAS players know their customer’s demands, majority of content producers are only producing VAS content that has low cost of production, eg, wall papers, ringtones, astro, or other plain vanilla text based content. Since the content producers get extremely low revenue shares from the mobile operators, hence they are doing so. And, since the mobile operators do not get any specialized content, therefore they give low shares.
The mobile VAS industry needs to work towards building up an ecosystem where in each and every stakeholder should benefit in the value chain process. The time has come to break away from this vicious cycle and convert this process into a value chain.
Today, a typical value chain in the MVAS industry encompasses content creators/providers, mobile advertisers, aggregators, technology enablers, telecom service providers, and end-users or subscribers. Also, it’s to be noted here that in the value chain of MVAS, telecom service providers are a very big entity in comparison to the content providers/content aggregators who are basically SMEs.
Since there is no standard format of agreement between the telecom service provider and VASPs for VAS, hence the telecom service providers being the core of the MVAS value chain, usually dominate in finalizing the terms and conditions of the agreement.
The VAS industry in India is at a nascent stage. In the present scenario, there are quite a large number of small and medium sized content aggregators and technology enablers.
Generally, such VAS providers depend on the facilities provided by the telecom operators. Effective cooperation and collaboration among various stakeholders is a key factor to form a healthy value chain of VAS. Looking at the potential of MVAS, there is a need to develop a suitable framework, which will enable consumers to access a variety of VAS, promote entrepreneurship, and at the same time create additional revenue streams for the service providers.
to be continued
So what’s driving applications as the future of applications?
Operators need to re-cover costs and investments in 3G through data revenue.App centric business model drives higher profits for Telcos
The cost of advanced wireless networks and 3G infrastructure investments recovery by 3G operators are a negative drag on the balance sheets of customers.Very few companies have recovered their costs and investments in 3G business. More telling is the fact that the profitable operators have a significant play in the application business. The hyper-competition in the voice space isnt helping the cause either. The case study of NTT Docomo which pioneered the apps-centric model by offering iMode service with optional adds ons such as Osaifu-Keitai mobile wallet,i-motion multimedia services, i-area location-information services. Connectivity and high speed data transfers are sold as enablers of various i-Mode packages and not the as the principal offering.
Following the success of the Apple and Android Marketplace, operators are making a bee-line for apps stores. However, a thoughtless approach to Apps Stores can be more harmful than being just the dumb content carrier.
Understanding and meeting the needs of the emerging digital consumer may be the starting point of the journey towards mobile lifestyle enablement.
Users are demanding more and more applications
Consumers are increasingly taking to internet services. An example to this effect is 170 million application downloads in one month (November 2009). The ubiquity of mobile devices has driven adoption of internet based services. Consumer inspired innovation and a falling cost of acquisition of feature and smart-phones are the sub factors powering users adopting and accessing more and more services and applications through their mobile phones.
Mobile ubiquity will compensate for the functional limitations imposed by the small screens of handheld screens.this trend is already visible. Value added services account for almost 30% of telecom revenues in China and Japan and 20% in Europe.
Developer-innovator networks are lending impetus to applications
The robust demand for versatile mobile applications is matched by the push of developer networks that have proven their innovation potential on the internet. Leveraged effectively, these two forces create the suply and demand cycle that work in tandem to put an increasing number of innovative applications into the hands of end users faster than ever before.
All these trends point to a dramatic transformation in the role of the operator and a clear opportunity to lead the way with new applications and services are delivered to subscribers in an Internet-like “have it your way” model.
In continuation of my earlier post discussing the key terms of the Mobile VAS and Mobile Apps globally, this is the follow up post on the key terms N to Z.
This list would serve as a reckoner for people associated with Mobile VAS And Apps globally as a glossary. Many of the terms and concepts discussed in this glossary are very profound in there implications and carry the force to alter the way people interact with mobiles and communication itself. Relevant Mobile Apps like Money Transfer, Education, Healthcare can be a very significant change in many regions and economies globally.
More than half of the people globally will access the Internet first time from their mobiles. Applications will lead the way to Internet acceptability by enabling task/purpose specific content and traffic. Here’s my compilation of things that will lead the increasing Mobile VAS/Mobile Internet acceptance. A few of these applications such as Mobile money transfer, Mobile Healthcare, Education Classes through Mobile will be ground breaking in scope and scale.
This list is a good reckoner and starting material to understanding how mobile VAS applications would alter the way of lives for billions. CMOs and CTOs could use this list as a check list to check whether their offerings are close or relevant to this glossary.
John (35) is a middle manager in a large corporate. 2 years back, John was diagnosed to be diabetic and he has to visit his physician every Wednesday for a weekly blood check. It is difficult keeping up with the time, manage office and traffic and more. Fortunately, John uses this new application on his mobile phone wherein he sends weekly blood tests data to the computer of his physician. He gets the blood tests done through his glucometer, feeds in the data to his smartphone and sends it over to his physician who does the regular data checks and advises on course of action/course correction. This way John has reduced his monthly visits to the physician to 1-2 per month instead of 4 per month.
Featuring Mobile Healthcare!
Bollywood, Astrology, Cricket and Devotion are the growth engines of mobile VAS industry. However, I strongly believe that value to the consumer will not be so much from the A-B-C-D of mobile VAS as much from the more relevant services, like education and healthcare. It may be due to lack of spectrum for large volume data transfers of legal implications of distance health monitoring, Mobile Healthcare is a nascent market in India. This in spite of the fact that most of the time, people consult their family physicians over phone and get the diagnosis done telephonically.
According to a recent report from Juniper, revenues from remote patient monitoring using mobile networks will rise to almost $1.9 billion globally by 2014, with heart based monitoring in the US accounting for the bulk of early mobile monitoring roll-outs. The Mobile healthcare market also includes health and fitness mobile applications that will thrive and eventually spawn a new market for advanced apps which integrate sensors worn on the body.
So what’s next on the horizon? How about Health care MVNE? A Fortis Healthcare Connection within an Airtel connection that gives the users (mostly Fortis patients) the ability to connect with their doctors on a call. Whats the number of such an MVNE? Well… just estimate the number of Heart patients and diabetics in India….
Mobile Internet is the next big thing in India going by recent reports by Google. Indians have emerged as the second biggest consumers of mobile internet with 5.9% share of 14 billion mobile page views. Though the report may be majorly flawed because Google has not measured the China numbers, the statistic is quite telling in favor of India.
The reported transition to the “fourth screen”, i.e Mobiles is well and truly happening as the number of new data connections added globally this year will be higher on the mobile than on the PC.
The rise in the numbers of mobile internet in India is fueled by both post paid data accounts (numbers 25 million of the 500 million or so mobile users in India) and another 55-65 million pre-paid users who use the operator WAP portals to access the Internet. Thats about 13% of the total subscription base* of India.The number of Internet users on PCs in India is growing at 50% per annum and would hit the 100 million mark by the end of 2010. In Comparison China added 100 million new users to the online community last year.
Interestingly however, the mobile access trends in India are completely contrarian to the global trends. Sample This:
1. Unlike almost every other country where the highest number of usage came from a smartphone, in India, the top two devices were mid-range Nokia phones — the Express Music 5130 and the 3110c, both of which cost between Rs 3,500 and Rs 5,500
2. The iPhone, the Rs 30,000 handset from Apple that accounted for nearly 40% of the global mobile web traffic in February, did not figure in the top 10 devices in India.
3. Nokia, which had just one presence in the world top 10 devices for mobile Internet, took all the 10 spots in India. Its devices also accounted for 59% of all mobile web traffic from India, followed by ‘Others’ and Sony Ericsson and Samsung.
4. Nokia’s N70, the only Nokia presence in world’s top 10 devices for generating mobile Internet traffic, was the most popular ‘smartphone’ in India, followed by other N Series devices such as N80, N73, N72 and the iPhone.
This thus re-iterates my view on the Indian Markets that low cost innovation would drive adoption in Indian Markets. The Indian markets have not seen any effort to reduce the cost of ownership of smartphones which has thus been an entry barrier to mass adoption of smartphones.
The voice network congestion, high data tariffs and low penetration of VAS services (compounding by lack of compelling apps and VAS) have been stumbling blocks to mass adoption of internet on Mobile. Regulatory clearances and 3G roll outs will help massification of the mobiel internet.
In the mean time, Indian markets have crossed the 600 million subscriber mark. The last 100 million subscribers came in a record of 3 months.
Over 2 and a half years after it was originally announced the 3G and BWA auctions finally seem to be underway with the March 19th deadline of bids of 3G and the March 21st bids of BWA spectrum being invited.
The reserve price for pan-India 3G spectrum is Rs 3,500 crore and for the BWA auctions, the reserve price is Rs 1,750 crore.
Predictably, the 3G auctions have attracted the existing 2G players with not even a single entrant:global or Indian in the list.The absence of global bidders is likely to ensure that the bidding will be conservative, and probably lower than the ambitious Rs 40,000 crore revenue target first announced by telecom minister A Raja. The BWA list has four new players — Augere, Tikona Wireless, Infotel Broadband Services and Qualcomm — while Spice is making a comeback into the telecom space.
However, the data revenue growth in the near term is not expected to be robust enough to justify extravagant bidding by the players. Given the absence of foreign players and an uncertain return mathematics, the mechanics of aggressive bidding will not be a part of the process.
The positive to all this is that Mobile VAS companies and the apps developer comunity in India which has been in an impoverished state for long, will find sudden traction given that all and most of these companies will try to maximize on revenues from the data stream. Airtel has sshown the way with 2.5 million downlaods of its Apps from its month old Apps store. Monetizing VAS downloads is going to be a different thing altogether.
There are those like MTS, Uninor and others who havent bid for 3G. Going forward there would a question of the seriousness of their efforts and commitment to the Indian Markets. We will watch the play here.
In an earlier post, i had spoken about opportunities, challenges and work that has been done on Indic Language SMS i.e SMS/MVAS in 22 Indian languages. The rubber looks to hit the road by mid 2010 and this post in my slide share account is a detailed report of the Indic Language SMS and the telecom eco-system.