TECH TALK: 3GSM Mumbai: Value-Added Services

At 10%, VAS is an important element of the mobile operators revenue mix. VAS can be split into three primary streams: P2P (person-to-person) SMS which is about 7% of total revenue, ringtones (including ringback tones) at about 1%, P2A and A2P (person-to-application and application-to-person) SMS services at about 1%, and various other services like WAP and gaming making up the balance. Music has undoubtedly been the biggest success story in the form of ringtones and caller ringback tones, and FM. Most of this music comes from Bollywood.

The most important challenge that VAS providers in India face is the revenue sharing ratio in India. Unlike China, Indian mobile operators tend to keep a lions share of the revenues accruing from the user. There are also some issues with lack of transparency. From the operators perspective, they are making the investments in the network and customer acquisition, and therefore they believe they are entitled to a significant portion of the user payments. This is a debate that is likely to go on for some time.

Another issue which is hampering growth of the VAS industry in India is the slow adoption of GPRS, which is critical for getting users to download multimedia content, polyphonic ringtones, true tones, games, and access the Internet. Even though more than a fifth of the phones in India are GPRS-capable, only a very small percentage have actually enabled GPRS. This has to change if the industry has to grow its revenues rapidly.

Contentsutra wrote: Stars Viren Popli feels that the content business has to be a seamless experience on the mobile device and theres a huge opportunity in India to provide every Indian a chance to view what he wants to, when he wants to view it. GPRS needs to be driven to 40-50 percent, and not 10%… When asked about how open operators are to improving the VAS situation Popli said that for operators, VAS is still not a strategic decision – at a national level, the focus is on getting more subscribers, while in the metro circles, the circle heads are more open.

There was plenty of discussion around mobile gaming, mobile TV, mobile communities, search and advertising. But at the end of the day, one could not help feeling that the VAS industry is waiting for a magic wand to come and take it up into the skies of higher revenues.


Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.