For the next-generation of MVAS to flourish in India, it is important to add a capability of micro-billing of consumers. This removes the dependency on advertising as the only source of revenue for content and service creators. As we have seen from the first generation of MVAS, users have no problems in paying anywhere from Rs 3 for an sms to a shortcode to Rs 30 per month for various services.
Since RBI has put very onerous conditions and not differentiated small payments from large, the banking and mobile wallets route looks unlikely to gain wide transaction in the near future. That leaves the operator route. Operators should come up with a revenue share where the majority of what the user pays goes to the content and service providers, and payments should be made every month. This will create the necessary incentive for an entire industry of entrepreneurs to kickstart the Indian i-mode revolution.
The market is large. There are 100+ million mobile users in India who could easily pay Rs 50-100 each month for a wide range of data services. This is a market worth Rs 6,000-12,000 crore ($1.2-2.4 billion) annually. Operators would tend to make their money from increased data usage and the transaction fees, while the content and service providers would now also be able to get larger shares.