Mobile VAS in India

Mobile VAS in India“.
Here are key excerpts:
Subscriber base:

* Population: 1.112 billion
* Fixed Subs : 39.41 million (Oct 2007)
* Mobile Subs : 217.14 million (Oct 2007)
* Internet Subs : 9.22 million (Jun 2007)
* Broadband Subs :2.67 million (Sept 2007)

Of the mobile subscribers:

* Prepaid connection comprise 85% of total subscriber base (expected to increase to 90%); and over 95% of new additions.
* By the end of 2010, the mobile teledensity will be almost 44% with 497 mn subscribers (driven by semi-urban and rural areas)

VAS in India:Past, Present and Future

* VAS constitutes 7% of of total telecom revenue for Indian operators.
* SMS consituted 55% of VAS revenue in 2006 [P2P/A2P/P2A, A = Application, P=Person), the growth was majorly driven by reality shows like Indian Idol/Kelloggs/KBC etc.
* Digital music (including CRBT and ringtones) constitutes 35% of VAS revenue.
* CAGR of 44% (2007 – 2010), VAS revenues will reach USD 2,744 mn (926mn $ by 2007): This is dependent on several factors like regulatory (e.g. number portability) and non-regulatory factors.
o Growth acceleration will begin in 2009, as various challenges are overcome, size of mature user base increases, and telco focus on high end user VAS heightens
* Bollywood and Cricket is the killer content - though no significant investment has gone beyond developing local apps or even content/services.
* Revenue share between telcos & content providers / aggregators is 70:30, substantially more skewed in favor of telco than in other countries - further aggravated by lack of payment mechanisms.
* SMS/IVR/Music downloads/Internet Apps/Search will see an upsurge; limited growth of UGC and mCommerce
* Almost half of Indians use ULCH (Ultra Low Cost Handsets)

Entities in VAS Value chain

* Content/Application Owner - cos. like saregama/mauj/Rajshri who develop coyrighted content
* Aggregator - aggregates content like games/wallpapers/ringtones and distributes it to suit customer needs [players : mauj, hungama mobile, indiatimes mobile etc]
* software developer – develops applications (like payment/games/middleware etc.) for mobile VAS [players - mchek/July systems/webaroo/affle etc]
* Technology Enabler – provides the platform that plugs into telco networks and acts like a bridge between aggregator and telcos [players include OnMobile, cellnext. mauj etc]

Operators still dominate the revenue sharing arrangement in VAS [Of the amount paid by end users, 60-70% is kept by operator, aggregator gets 20-25% and content app/owner gets 10-15% of the revenue]
Challenges:

* Lack of content localization
* Shortage of spectrum
* Slow adoption of GPRS mobiles (only 6.1 mn GPRS users compared to 200 mn overall subs)

Future VAS trends:

* Location Based Services
* Mobile Music update will increase with better bandwidth
* Migration to 3G will result in increased ARPU
* Local content is on the rise – regional/rural IVR seen as a major opportunity (see our earlier coverage of Ubona)
* Mobile commerce doesn not look too promising (India is still a cash and cheque country)
* IVR will see large scale adoption, especially in rural areas.
* Mobile E-Mail will primarily be driven by enterprises
* Stocks on mobile will see an uptake

The current state of VAS can be candidly summed in one sentence “Novelty of VAS on mobile is short-lived and innovation is the key to success which means technology companies like will have to increase their investments into R&D”

For more information please contact : sandip@routesms.com