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Beyond the tip of the Ice-Berg- The Multi Billion $$ Indian MVAS market Opportunity

Posted in Industry updates, Value added services and applications by Manas Ganguly on March 30, 2013

Presenting a few key take outs from the WCIR (Wipro Council of Industry Research) and IAMAI report on the Future of the India MVAS industry – Beyond what is now to where it could be headed in times to come.

1. Number of mobile Internet users in India set to explode by a factor 2X between December 2012 and March 2014, from 87.1mln to nearly 165 mln.
2. Indian MVAS market will grow at a CAGR of 25% between 2012 and 2015 to reach US $9.5 billion in 2015, from an estimated US $4.9 billion in 2012.

Total Indian MVAS Market Size (in US $ blns)

3. Even though 96% of the survey respondents accessed the internet on mobile devices, only 56% had subscribed to some form of paid MVAS
a. Most of these subscriptions are basic offerings such as SMS alerts and CRBTs
b. Paid services used today only enable limited value delivery to providers and consumers alike
4. VAS services available today are perceived to lack customization and are easily replaced with freely available options.

Reasons for not subscribing to Paid VAS

5. Complexity is consistently rated as a key barrier to service adoption. 64% of participants believed that advanced mobile health services would to be too complex to use.
6. Users express concerns about the unique aspects of the mobile experience that could compromise usability. 56% of participants were concerned about the screen size of mobile devices.

VA Service Usage by Classification

7. Researches such IAMAI and Wipro establish that they are willing to pay for services when they perceive value.
a. 80% of the respondents believe that enriched and transformational data services will save time.
b. Therefore, the use of basic services is projected to decline, while enriched and transformational services are projected to rise from current usage levels
c. Transformational services will reinvent the consumer experience – and may ultimately replace the brick and mortar alternatives or complement them
8. In terms of VA services, mEntertainment is expected to be the largest contributor to operator MVAS revenues and provides key opportunities in localized vernacular content, on-demand music and video content and live TV shows and events
9. Innovation in other MVAS categories such as mEducation, mFinance, mHealth has largely stalled out with basic SMS and IVR based information services.
10. Services available today only skim the surface of consumer experience. As categories reach higher and higher maturities, consumer requirements will evolve faster- driving a rapid shift in consumer preference from basic to enriched to transformational services

With acceleration in 3G/4G deployments, increasing smartphone penetration and MVAS maturity – Users will migrate from the basic services to enriched services aand furthermore to Transformational services – and that will drive dramatic growth in the industry. Listing down a few recommendations maximize chances of success in the Indian MVAS market.

The new VAS paradigm - Charting Success Strategies


Source: Beyond the tip of the Iceberg IAMAI/WCIR report

Taking Mobile VAS further than just Infotainment

Posted in Value added services and applications by Manas Ganguly on March 15, 2010

Mobile VAS services and Data ARPU is looked upon as the redeemer of ARPUs in India. However, for mVAS to make an impact, it needs to be more than mobile infotainment. Profiling Conferencing, Mobile Adevrtisements, Education, Healthcare, Live feeds of Wholesale Rates, Mobile Payments, Ticketing and the UID tagging which will lift the mVAS game to mass usage levels.Here’s the top few expected to drive mVAS big.

Conferencing: Video Conferencing is increasing with companies cutting down their traveling to reduce costs and also for security reasons. This trend will not only help reduce costs but also reduce the Carbon footprint of physical travel.

Even if Mobile advertising in India is still at a nascent stage, Mobile as a medium has the highest reach in the country and the potential remains extremely high. 2009 saw a dramatic rise in Mobile advertising through the two main delivery mechanisms i.e. Voice and SMS. Mobile sMS Advertising will likely shift from being a mass advertising medium to selected targeting which will be based on subscriber profiling.

While Business and Advertising and Infotainment will be the drivers to MVAS in times to come, but the greatest challenge would be in terms of making MVAS mainstream.

Experiences in rural India show that information and communications technology can enhance poor people’s opportunities by improving their access to markets, health care and education.

Education: One such successful example of this is The Stanford Learning Lab that has created a prototype SMS quiz to aid learning of new vocabulary. The aim of this project was to provide highly flexible, mobile learning material that users could access in very short time-spans ranging from 30 seconds to 10 minutes. The constraints of the 160 character limit of SMS messages turned out to be an advantage as it forced the construction of suitably concise chunks for such short-term learning opportunities.

Healthcare: Apollo Hospital group has set up a 50-bed telemedicine center at Aragonda village (Andhra Pradesh, South India). It has also set up freestanding centers at Guwahati and Kolkata. These centers are equipped with facilities like CT- scan, X-ray, ECG and integrated laboratory and are linked to Apollo’s specialized hospitals at Hyderabad, Chennai, and Delhi for seeking referral services, second opinion, post-acute care, interpretation services and health education. The hospital group has also a web portal, Apollo Life that allows patients to interact with doctors via the web, upload all their diagnostics and reports on the net. Escorts Heart Institute and Research Centre (EHIRC), Delhi through its Escorts Heart Alert Service (EHAS), Utilizes telemedicine in establishing prompt contact with patients in distress. The EHAS subscribers can record their ECG’s at the time of discomfort through the cardiac beeper provided and transmit them through a telephone to the “heart alert centre”. These tele-ECG”s can be monitored 24-hours at the dedicated center and fully equipped mobile cardiac care units from the centre can be rushed to provide intensive care to the patients before they brought to the hospital for medical investigation. India is a vast country and the role of Telecommunications for realizing tele-diagnosis, tele-consultancy and tele-education can be a boon to people who still have relatively low access to medicine and healthcare.

Access to Opportunity: With the advent of 3G, fishermen can negotiate prices for their catch before heading for shore by sending in pictures of the type of fish they have on board. Similarly, farmers and horticulturalists who have perishable produce can take advantage of 3G services to bargain for the best prices before harvesting, by bypassing middlemen. Services like Mobile Banking, Mobile Money Transfers, Utility Bill Payments, Payments for purchase of movie tickets etc are also likely to take off.

Giving the Indian billion an identity: Identity authentication at banks, gas connection centres or while providing rural jobs will just be an SMS away. The Nandan Nilekani’s project will provide a unique identification (UID) number, not a card and the authentication will be made by using mobile phones. Once the numbers are issued the authentication will be done Online. The authorities will send the UID number to the designated points through mobile phone message. Also, the fingerprint of the person can be sent to the central database and the authentication can be received within minutes verifying the identity of the person. It will help provide portability to our farmers, laborers. When they move from state to state, this UID will help them get employment without hassles. Banks, mobile service providers, LPG gas connection counters and many more partner organizations can use this UID to verify their customer. With the growing mobile phone network, this will become an easy process for authorities to verify people. Nandan Nilkeni’s team is likely roll out the first batch of UIDs in 2010. They plan to issue at least 600 million UIDs over the next 5 years.

Finally, in a country that has been Infrastructure starved for all times, Indian companies have already laid out a 670,000 kilometres network of optical fibres even in the remotest areas and the progress on this front still continues. rural network based on the extensive optical fibre network, using Internet Protocol and offering a variety of services and the availability of open platforms for service development, viz. the Next Generation Network, appears not only to be an attractive proposition but a powerful one as well. Fibre network can be easily converted to Next Generation network and then used for delivering multiple services at cheap cost.

A study earlier had indicated the Telecommunications sector will increase its contribution to the India GDP from the existing 2% to 14%. That sounds a few degrees steep. But then the power that can be generated by linked a billion people together is also incomprehensibly powerful.

Mobile VAS: Building a sustainable alternate revenue stream

Posted in Value added services and applications by Manas Ganguly on March 15, 2010

MVAS will drive data revenue/ARPU, but the telecom eco-system must have to look beyond the ABC of Mobile VAS as we know it.

Indian Telecom Market numbers continue to sizzle: Indian added 19.9 million new subscribers in January 2010, which (to give a perspective) is 1.5X the number of subscribers US added in the whole year 2009. It is like adding a whole Canadian wireless market every month. For the year 2009, India added 177 million subs versus 106 million for China. A lot of this growth is powered by the tariff hyper competition and the ARPU have now dropped 30% YOY (INR 155.6 for OND 2009 Quarter versus INR 220 for OND 2008).

Now, with operators having no price differentiation, quality will be the driver for growth. Also this will most likely lead the valuation model to move from subscriber based one to a model based on margins and minutes of usage. With the lowest tariffs in the world, industry analyst have started raising questions on the viability of the business. With MNP round the corner where a subscriber move to another service provider it is unlikely that the tariffs will rise from here. The rapid re-basing in pricing by incumbents will seriously affect and threaten smaller, regional and startup operators, perhaps shortening the period before which industry consolidation inevitably takes place.

Operators are looking at more avenues and revenue streams to augment their Incomes and stay afloat and the M-VAS industry holds a great deal of promise out there. The Indian MVAS industry estimated at more than USD 1 Billion in 2009 is expected to grow at a CAGR of 50% in 2010 and help the Service Providers arrest the fall in their ARPU’s and improve their profit margins. 90% of Operators revenues in India come from Voice and Rentals. Of the balance 5% comes from SMS’s and MVAS accounts for only about 5% of revenue. Clearly for Indian Operators, MVAS is the next revenue opportunity.

MVAS so far has been restricted to Mobile Infotainment. The VAS operators call it ABC in the Indian Context (A for Astrology, B for Bollywood and C for Cricket). In 2009, the most popular mobile value added services were songs and ringtone downloads, mobile games and mobile advertising. With the rise of reality shows, interactive participation in TV and Radio game shows and contests has already gained tremendous popularity. Given India’s demographics where more than 50% of the population is under the age of 30, infotainment is most likely to be the service that will run up the operators ARPU’s in 2010.

However with 3G roll outs around the corner, MVAS will assume greater dimensions than the ABC/Infotainment that it has so far been. It is anticipated that 2G to 3G migration of users in the first year of launch will increase the ARPU by Rs 200 per month per migrating subscriber.

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Vernacularization of mVAS: The Indian Challenge

Posted in Value added services and applications by Manas Ganguly on October 2, 2009

Telecom in India is an exciting opportunity. While voice roughly connects 40% of the Indian population, services through mobiles is the next frontier being sighted. However, every frontier has its set of challenges and opportunities. A short note of mVAS vernacularization in India. 

Indic

The Indian government sees mobiles as the next big opportunity to engage, empower and interact with its 1.14 billion population. That said while India has been leading subscriber ads and footprint expansion, the mVAS service usage has not been all too great. Indians on an average send 35 SMSs in a month compared to 100 in China and 750 in Phillipines. SMS today is seen as a mass media information delivery channel, being themost effective and timely way to reach out to people for business, economic and social perspective. 

 The differential in multiples is explained by lack of vernacular medium in MVAS and SMSs. Language SMS is available at most in Hindi only. India on the contrary has 22 national languages. On the other hand english literacy in India is only 10%. The next available opportunity is the roll out of 3G services and it is thus imperative that the telecom eco-system in India would need to gear up for content delivery in vernacular for rural penetration.

By COAI estimates, the MVAS industry is going to generate cummulative revenues worth Rs.121,000 crore in the next 5 years. Other industry figures put the estimate at $74 billion by 2013, with off deck downloads contributiong to $1Billion. Toward this then, Telecom Regulatory Authority of India (TRAI), Department of Telecomuunication (DoT), Cellular Operator Association of India (COAI), Broadband Wireless Consortium of India (BWCI),  National Association of Software and Services Companies (NASSCOM), Cenre of Excellence in Wireless Technology (CeWIT) have been working at creating standards amongst the eco-system: Operators, Device manufacturers and Application Providers for effective and efficient roll out of Language based mVAS services in India.

The challenge is making available a standard amongst eco-system (service providers as well as handset manufacturers). The task is thus

  1. To evolve a core system of Indic MVAS/SMS to be implemented uniformly across vendors and service providers
  2. Making SMS services cost effective. Presently India is high on the SMS versus Call costings. Penetration will be a factor of pricing.
  3. Font rendering to make the fonts standard across all handsets
  4. Key pad design challenge
  5. How do legacy handsets which donot have this Indic feature be included in them

Work done so far:The initail stages of work has been very encouraging. Unlike the Turkish and Philippines scripts which have a commonality with Roman alpha numerics or Chinese alphabets which are phonetic (and thereby easier to use), India provides a larger challenge in terms of number of scripts (Devanagri, Bengali, South Indian languages etc) and corresponding transliteration (a solution that needs to exist).

  1. 10 tables for 22 Indian Languages have been made. These may not be perfect, but give a 80% solution to the need of Vernacular SMS. A 100% Lingual text solution is still being worked upon
  2. There are some solutions that exist to graduate Legacy handsets to Indic MVAS/SMS though the solutions are not complete by itself.
  3. The code change in the Indic MVAS takes care of the fact that it uses 152 alphabets instead of 70 that was the prevalent solution earlier.
  4. There are basic two routes for Indic SMS/MVAS: Single Shift Mechanism and Locking Shift Mechanism. Out of this the Locking shift mechanism is more efficient in language styles.

 The scope of work next: The progress so far has been good and encouraging. However, there are challenges in terms of font, key design, legacy handsets support and SMS price normalization.

  1. Font rendering: Bringing all service providers, handset manufacturers and application developers is going to be a key standard platform for rolling out the language mVAS initiative.
  2. Key Pad design: Fitting in more than 100 characters of Indian languages in 12 keys plus the screen with dynamic and intutive strokes without expanding the application footprint  
  3. Inclusion of Legacy handsets: there are 500 million people in India with devices, many of which donot support the language based application. One would need to look at upgrading these people and getting them cconnected to the vernacular application. The delivery process and medium are a blackbox. 
  4. SMS pricing normalization: While India is one of the lowest tariff countries as far as voice is concerned, the SMS to voice Tariffs are not proportionate. More so with the vernacular medium which is 3X the ost of regular services. Regularization of these tariffs will be a must for mass acceptance of this media.
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