The Indian value added services (VAS) market is set to grow with the increasing demand for 3G and data services and the uptake of smartphones. However, a number of unresolved issues and concerns remain, particularly on the regulatory front.
In an interview with tele.net.in, Inderpal S. Mumick, chief executive officer and Founder, Kirusa Inc, talks about the current trends in the Indian VAS space and a likely future roadmap. Excerpts?
How has the VAS ecosystem evolved in India?
The Indian telecom sector has witnessed phenomenal growth over the last few years. The country has come a long way from users waiting for a landline telephone connection for months to the mobile telephone revolution in the mid-nineties which empowered people across the country.
The telecom industry has empowered consumers by enhancing access and enlarging the reach of information through a cellular phone. Value added services (VAS) have played an important role in this context. For a long time, VAS referred only to SMSs and other 2G services. Today, however, VAS is data intensive and the industry is dominated by various applications, ranging from voice SMS services to social networking, multimedia sharing, video, maps, location finders, news bytes etc.
VAS accounts for about 12-13 per cent of total telecom revenues and the ecosystem around such services is maturing. Traditionally, the VAS ecosystem has been centered on mobile carriers who offer these services to their subscribers ? the end users. These services are developed by VAS providers, who then provide them to customers via the operators, mostly as white labeled services. Content and media companies have also begun to play an increasing role ? providing content to the VAS providers, who incorporate it into their services.
The VAS ecosystem in India is evolving with the advent of 3G and 4G technologies and smartphones, as device platform developers are playing an increasing role. VAS providers are able to directly tap mobile users, by offering various applications through application stores in an over-the-top (OTT) model. At the same time, a few VAS services remain tied into the network, and built around the carriers, such as ringback tones.
What are the key growth drivers for VAS uptake in India? What has been the impact of launch of 3G and 4G services?
One of the key drivers for VAS in the country has been the universalisation of mobile telephony, including rapid expansion in rural areas. This has been made possible by the availability of inexpensive handsets. Given the fact that access to PCs remains constrained, a mobile phone is the only viable option for external connectivity.
The demand for Bollywood and cricket-related content and the availability of innovative services has significantly impacted the growth of VAS services in the country.
Moreover, increased uptake of mobile internet has resulted in a proliferation of data enabled services and applications around messaging, OTT services, social media, photo and video services, live streaming, m-banking, mapping, cloud storage, desktop class web browsing and mobile payments. Adoption of these services would not have been possible in the absence of integrated devices like smartphones, which use data connectivity supported by 3G and 4G.
What are the challenges faced by the VAS segment in India?
Conventional services have always faced the challenge of increasing penetration due to the lack of enablers such as local language text and high levels of illiteracy. However, voice SMS services by VAS providers help overcome these shortcomings as it enables users to send recorded voice messages.
The low-end user pricing, and low revenue shares has affected the VAS segment in India. Intense competition has forced VAS providers to lower their margins even though the cost of doing business in terms of spending on human resources and infrastructure is increasing. VAS providers also face pressure from operators to reduce revenue share. There is also the issue of inherent delays in payments.
Moreover, the lack of recognition and a comprehensive framework to protect intellectual property created by companies developing VAS services is another big challenge. Often, operators play the role of a gatekeeper leading innovation and new services which acts as a deterrent for VAS providers.
Contribution of the VAS industry to the Indian telecom space could be higher with better penetration of smartphones and data services and a supportive regulatory environment, which as of now are primary deterrents in the growth of VAS.
What are some of the most popular VAS applications used by consumers today? Going forward, which new applications will be seen in the Indian VAS market?
Popular VAS services in India include ? SMS, voice SMS, ring back tones, chat, bollywood based entertainment, cricket updates, devotional aaratis and pujas.
Going forward, with the introduction of smartphones and robust 3G and 4G networks, new data intensive services including messaging, OTT services, social media, photo and video services, live streaming, m-banking, mapping, cloud storage, desktop class web browsing, and mobile payments, will become increasingly popular in the Indian market.
The future in the VAS segment will be determined by how companies, including Kirusa, innovate and respond to the changing technology trends and consumers requirements. With improved availability of quality data and new age devices, the VAS industry is well positioned to leverage these services with enhanced quality and ubiquity.
