Wednesday, May 09, 2007

Don’t pay for your calls...

... but rest assured you will pay for SMS, video, mCommerce, et al! VAS is the new emerging segment

It’s tough to charge you premiums for making calls nowadays with the cutthroat battle for market shares in the Indian telecom sector. As a logical follow through, companies are looking for attractive avenues to improve their ARPUS, and it is here that mobile VAS services come to the rescue. According to a recent report by the Internet & Mobile Association of India (IAMAI), the VAS industry in India is estimated at Rs.28.5 billion and is expected to grow by 60% to touch Rs.45.6 billion by the end of 2007.

It’s the right time to exploit all emerging opportunities in the mobile communications space. Sanjiv Mittal, CEO, Bharti Telesoft (VAS division of Bharti Enterprises Group), elucidates, “Th e main opportunity is the vast amount of content that can be delivered via mobile. The key is to collect that broad range of content and ensure it can be packaged and delivered in a meaningful & appealing way to individual subscribers and subscriber segments.”

Telecom companies, marketers, content providers and aggregators alike have realized this and are trying to reach out to conquer this relatively new terrain, but the road is tough. Anupam Mittal, CMD of People Group – Mauj Telecom, observes that as his company reaches the next level, “operational excellence, disruptive innovation and an unflinching focus on discovering customer needs is what we (Mauj Telecom) will need to distinguish ourselves.”

Entertainment hogs the limelight in the VAS space with P2P applications & ringtones attracting 75% of revenues. There are new, promising areas like mCommerce, which are yet to gain momentum. The low level of awareness, coupled with apprehensions of conducting transactions on mobile are the key reasons for the sluggish growth. The other prominent challenge that faces the industry at the moment is the revenue sharing mechanism in the industry between aggregator, copyright owner & operator. In fact, the discrepancy in revenue sharing is deterring lots of VCs from investing. With operators retaining the biggest chunk of revenues, the proposition of investing in content companies from the point of view of investors, becomes less & less lucrative.

This is a real concern, according to Rajiv Hiranandani of Mobile2win, one of the biggest players in the segment. “A lot of investments and resources go into creating and developing regional content. This can only be covered if telecom carriers give us a higher revenue share,” he said. Resolving issues like this, quickly, will benefit the sector.

With rapid mobile penetration, the VAS industry in India is standing at the vanguard of ocean of opportunities. Domestic and international remittances, cash-in and cash-out services and many other financial services on mobiles can become highly profitable stars in the near future, since there’s a rising need for speedy transactions. VAS will be the key differentiator for players in this competitive environment, as they will be able to profitably tap various customer segments for their services. As they say, companies always know how to make their customers ‘pay’!

1 comment:

Dinesh said...

Are you doing Marketing specialization?