Global experience suggests that the share of non-voice revenues grows rapidly with the introduction of 3G, especially in markets with a high PC and internet base. On the other hand, there appears to be a latent demand for data connectivity in markets with low PC / internet base, which gets fulfilled through internet access over mobile handsets.
Recent trends in the Indian market indicate that the MVAS industry in India is nearing an inflexion point, with improving data access speed due to the advent of 3G, increasing penetration of smartphones and feature-phones as well as increasing maturity of the content ecosystem.It is expected that access to relatively higher speed data on HSPA, EVDO and LTE networks, and a renewed focus of operators on the mobile data opportunity will help drive growth in the Indian non-voice market in the immediate future.
As in any rapidly growing ecosystem, there exist operational issues which limit market efficiency and consumer welfare. For the on-deck MVAS delivery model, the issues are centred around the absence of a governing body to address operational issues such as MIS reconciliation and dispute resolution. The issues affecting the off-deck VAS delivery model are structural in nature, with the low penetration of financial instruments such as credit & debit cards resulting in the carrier being the predominant means of reaching and billing mobile subscribers. In addition, there are operational issues around interoperability, with D2C providers required to negotiate bilateral agreements and execute system integration with each carrier individually.Similarly, for the SMS channel, absence of handsets with a common local language standard limits the penetration of SMS, which in turn limits the reach of mobile enabled services to the mass market, including for services like education and health.
For the rapid growth of the mobile VAS ecosystem in India, these issues need resolution, either through market mechanisms or by regulatory intervention.
Global experience suggests that a policy framework without licensing and market determined revenue shares is the right way forward. For on-deck, an industry self-governing board that can act as a formal forum for participants in the MVAS ecosystem can be beneficial.For off-deck, a policy framework (without licensing) that will mandate a premium number policy can potentially address the challenges of lack of alternate billing. For local languagepromotion and interoperability, mandating the incorporation of a standards based local language solution on all handsets can help drive SMS penetration.
With the right policy and market enablers in place, MVAS can reach Rs 671 billion, contributing 31 per cent of total wireless telecom revenues in India.
A majority of this growth in MVAS is expected to be driven by mobile internet, with data accounting for 54 per cent of mobile VAS revenues by 2015. Revenue from data access on handset, dongles and CCDs (Connected Computing Devices), downloads from app store and subscription to video VAS such as mobile TV are the main components of mobile internet.In contrast to growth in the data market, it is expected that the share of traditional services will begin to stabilize or decline due to multiple demand and supply side constraints.
Among emerging services, it is expected that mobile commerce and utility services will have a significant social impact, while also driving down churn. We believe that carriers are well positioned to make a substantial social impact by leveraging their retail distribution reach and offering banking, payments and domestic remittance services for the urban and rural poor. One of the major limiting factors in driving the adoption of utility as well as financial inclusion services is the multiple stakeholder partnerships required by carriers in developing the market ecosystem, which necessitates significant effort and time, and can reduce speed-to-market for some of these services. Regulation and Government initiatives for G2C services are other factors that will impact success.
The opportunity for growth of non-voice revenues in India remains significant, as has been witnessed in multiple other emerging markets, especially after the introduction of 3G. However, unlike most other markets, India will be a mobile-first market with the latent demand for data being fulfilled by internet access through mobile handsets, tablets and other forms of connected computing devices.
The above analysis is based on the report title ?Evolution of Mobile VAS in India?released by telecoms, media and technology adviser Analysys Mason in partnership with the Internet and Mobile Association of India (IAMAI). The report summary presentation and the launch presentation can be accessed at: http://www.slideshare.net/analysysmason.
