For much of its formative years, the Mobile Value-Added Services industry has largely been driven by VAS providers who supply content and services to the mobile operators, who in turn take them to their subscribers. This has been largely termed as “on-deck” and is largely governed by bipartite agreements between the VAS providers and the mobile operators. VAS providers work closely with the operators to offer services across all the four bearer channels – SMS, operator’s mobile and voice portals, and USSD. This model is largely about sharing the spoils from subscriber payments.
In recent times, a second model has been emerging as some of the VAS players have chosen to take their offerings direct to consumers. This makes their business “off-deck” and pan-operator. These VAS players can be thought of as “VAS Operators” because of their exclusive focus on VAS and direct consumer relationships. Monetising off-deck services requires one (or more) of three models: subscriber billing through the operator (albeit for a greater share of the payment), creating independent subscriber billing mechanisms, or getting a third party to pay (for example, an advertiser).
Going ahead, I see both models co-existing. In the first case, the operator white-labels the VAS provider offerings for its subscriber base, while in the second case, the operator provides an access path to the VAS operator. While the second option may not seem exciting for an operator, it is exactly the opposite.
The future of VAS will be driven by many independent VAS operators who drive consumption of data services and thus drive up data revenue to more than compensate for the fall in voice revenues. Think of the multiplier monetisation that could have been happened on the Internet had there been an inherent subscriber billing option – this is where the mobile industry stands apart. The microbilling option combined with an open access platform for data services with the actual data revenue being retained entirely by the mobile operator is what can grow current VAS revenues to 10X in the coming years.
This is the next big opportunity in the mobile space. It needs mobile operators, VAS players and the regulator to work together to make it a reality. In this new world, consumers will benefit from services far greater than what a single mobile operator can offer, while the mobile operators will get the advantage of data coming as big a money maker as voice is today. For the VAS industry, it offers access to tens of millions of new potential customers in a manner which ensures that only the best survive.
To make this win-win-win future a reality, the regulator needs to step in and create a light licencing regime for VAS operators. Tomorrow, we will see why it is needed and how it can be done right.
